Vertical Integration Case Study

1262 Words6 Pages
1. a. Describe and explain how you used the balanced scorecard in the simulation. The balanced scorecard is the most important measure of total performance. It provides a single number that can be compared between companies. As such, it is the main indicator for evaluating performance in the market. We have used the balance scorecard to measure our team’s ability to effectively manage financial, human, variable and fixed resources. Each quarter we have compared our number against the industry averages in order to determine whether we have been effectively managing our resources. These numbers provided us with the base information needed in order to identify our plan of action and strategies for each quarter. b. In the simulation how did…show more content…
Vertical integration also inhibits development of distinctive capabilities, as companies engage in an integrated share of current capabilities. If a company is capable of for example producing more, it needs to take into account that the production process in a shared process, where account needs to be taken for the capabilities of the partner company. Companies with different missions, visions and strategic goals might face difficulties when engaging in a vertical integration process. Managing of such processes can result in challenges and difficulties. Vertical integration limits flexibility in responding to demand fluctuations as there exists a limit in for example production capacity for technical integration engagements. The same accounts for responding to changes in technology and customer preferences as each product does not require the same technological metrics or are not focused on the same customer markets and preferences. At last, as companies integrated, their individual risks, become compounded…show more content…
Give an example of a company which is currently facing the challenge of deciding whether to become more vertically integrated or less integrated. Apple is currently facing the challenge of becoming more vertically integrated or not. As labor costs are rising in China, it is becoming more and more expensive to manufacture Apple products in China. They are looking into taking over the manufacturing process of the currently outsourced components by manufacturing these at a plant in Texas in order to lower costs and lead times. 4. a. Corporate strategy involves firms making decisions for growth via diversification. What is the basis for firm diversification? Competitive advantage is the basis of firm diversification. By diversifying products, your firm gains competitive advantage on other standardized products, which results in higher sales volumes and market share. b. How can firms create competitive advantage from diversification? Firms can pursue diversification practices from developments in corporate strategies (where to compete) and developments in strategic tools and

More about Vertical Integration Case Study

Open Document