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Questions and Answers

What are integrative growth strategies primarily focused on?

Internal growth initiatives

Developing new products

Acquisition of competing businesses (correct)

Enhancing customer service

Which type of integration involves acquiring another competing business?

Backward integration

Horizontal integration (correct)

Vertical integration

Forward integration

What is the primary purpose of backward integration?

To expand market presence

To reduce the cost of resources needed for production (correct)

To improve distribution channels

To eliminate future competitors

Which of the following does NOT represent a type of integrative growth strategy?

Customer relationship management Signup and view all the answers

What is an example of a company that used horizontal integration to expand its market share?

Jollibee purchasing Mang Inasal Signup and view all the answers

How do global strategies contribute to modern business practices?

By promoting international collaboration and market expansion Signup and view all the answers

Which model focuses on the assessment of business portfolio and resource allocation?

Boston Consulting Group Model Signup and view all the answers

What is the main difference between forward and backward integration?

Backward integration controls supply sources, whereas forward integration controls distribution channels. Signup and view all the answers

What does forward integration in an organization entail?

Taking over the marketing activities of retailers. Signup and view all the answers

What determines the classification of products in the Boston Consulting Group Model?

Market share and market growth. Signup and view all the answers

In the BCG Model, what category do products with high market share and low market growth fall into?

Cash cows Signup and view all the answers

Which category in the BCG Model represents products that are in a new market with high growth potential?

Question marks Signup and view all the answers

What type of products does the BCG Model recommend minimizing or avoiding?

Dogs Signup and view all the answers

What are the two parameters used in the General Electric Model to assess a strategic business unit?

Market attractiveness and business strengths. Signup and view all the answers

Which statement best defines 'market share' in the context of the BCG Model?

The sales percentage of a company relative to its competitors. Signup and view all the answers

What defines a 'star' in the BCG Model?

High market share in a high growth market. Signup and view all the answers

What is the primary aim of horizontal integration?

To expand market reach and maintain market status Signup and view all the answers

What is the purpose of backward integration?

To control the supply chain by acquiring suppliers Signup and view all the answers

What is an example of forward integration?

A clothing manufacturer purchasing its own retail stores Signup and view all the answers

How can vertical integration help an organization?

By consolidating control over suppliers and distributors Signup and view all the answers

Which of the following best describes forward integration?

Purchasing companies that handle distribution and sales Signup and view all the answers

What is a major benefit of effective backward integration?

Improved control over quality and costs of inputs Signup and view all the answers

Which growth strategy involves consolidating control over suppliers?

Backward integration Signup and view all the answers

In which scenario would an organization likely pursue vertical integration?

To gain operational efficiencies and control costs Signup and view all the answers

What is primarily measured by the General Electric (GE) Model?

Market attractiveness and business strength Signup and view all the answers

In the GE Model, which cells indicate favorable positions for investment?

Cells 1, 2, and 3 Signup and view all the answers

What type of strategy is a company engaging in when it operates in multiple markets outside its home country?

Multinational strategy Signup and view all the answers

Which of the following factors is considered an internal factor affecting business strength?

Brand strength Signup and view all the answers

What is a primary benefit of pursuing global strategies for companies?

Larger market resulting in increased sales Signup and view all the answers

Which cells in the GE Model signify positions where caution is advised for further investment?

Cells 4, 5, and 6 Signup and view all the answers

Which strategy treats the global market as a single entity with slight local adjustments?

Global strategy Signup and view all the answers

What should a company consider if it is in Cells 7, 8, or 9 of the GE Model?

Consider exiting these markets Signup and view all the answers

Study Notes

Integrative Growth Strategies

Invests resources in another company for growth, often acquisitions
Types include horizontal & vertical integration
Horizontal Acquires a competitor: eliminates competition, expands market reach, increases revenue (e.g., Jollibee buying Mang Inasal)
Vertical Consolidate companies across the product lifecycle from raw materials to distribution, gains control over suppliers & distributors
- Backward: Buys a supplier to control supply chain, ensure reliable input & eliminate inefficiencies (e.g., Nokia buying phone case supplier)
- Forward: Buys a distributor to eliminate intermediaries, control marketing & improve sales (e.g., garment manufacturer buying retail outlets)

The Boston Consulting Group Model

Analyzes Business Units based on market share & market growth
Stars: High market share + high growth, likely to become cash cows
Cash Cows: High market share + low growth, mature market with high profit margin
Question Marks: Low market share + high growth, new products requiring promotional strategies
Dogs: Low market share + low growth, minimize or avoid, expensive to maintain

The General Electric Model

Improves upon the BCG Model, analyzes a Strategic Business Unit (SBU) based on Market Attractiveness & Business Strength
Market Attractiveness (External Factors): Market size, growth, niche, demand, risk
Business Strength (Internal Factors): Brand strength, staying power, profit margins, quality, customer patronage
Uses a 3x3 Grid to classify SBUs:
- Cells 1-3: Favorable, attractive growth opportunities
- Cells 4-6: Medium attractiveness, cautious investment
- Cells 7-9: Unattractive, consider divesting

Global Strategies

Expand business globally, focus on international, multinational, and global strategies
International: Sell excess products outside home market, focus on home market
Multinational: Operate in several countries outside the home market, tailor products and services to local demands
Global: Treat the world as one market with minor local variations, focus on economies of scale and global branding

Benefits of Global Strategies

Larger market, higher sales and earnings
Global branding and recognition
Economies of scale - lower costs, higher profit margins

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Description

Explore the concepts of integrative growth strategies, including horizontal and vertical integrations, along with practical examples of business acquisitions. Additionally, learn about the Boston Consulting Group Model, analyzing business units based on their market share and growth potential.