The corporate level strategy is made by the Chief Executive Officer (CEO) of an organization who then passes down the strategic milestones to the respective business heads of the various divisions (Wheelen et al., 2017).

 The strategies are adopted by the top management keeping in mind the firm’s objective, allocation and acquisition of the resources and coordination with the various strategic business units for delivering optimal performance.

An organization with a multi business model will form their strategies in a manner so that their decisions are coherent, unified and integrated and helps in defining the long term objectives, resource allocation, plan and competitive domain. Strategies should also reflect the strengths, weakness, opportunities and external threats along with development of differentiating tasks and roles at all the functional levels.

They should consider their competitors target market. Also, there might be a niche market which may still remain untargeted or develop ways in attracting the same customers in a slightly different manner.

Horizontal Integration as Strategy; Advantages and Disadvantages 

Companies should leverage horizontal integration as a strategy as it enables the company to grow in size, enhance its product differentiation, helps in achieving economies of scale, reduces competition and allows access to newer markets (Strauss, Ruppn & Love, 2016). Examples include, Disney and Pixar.

Advantages of horizontal integration include increased economies of scale, increased efficiency of capital and rationalization of staffs. Disadvantages involve problems of bigger sizes due to expansion of the company which becomes difficult to handle.

Vertical Integration as Strategy; Advantages and Disadvantages 

Companies should leverage vertical integration as a strategy for reducing or eliminating the leverage that the suppliers or the buyers have over a firm (Madsen & Walker, 2015). A firm can thus undertake ownership of the upstream suppliers and the downstream buyers through acquisitions or merging specific portion of the supply chain. Examples include ExxonMobil, ConocoPhillips.

Advantages of vertical integration include increased process control, increased competitiveness and increase in market share. The major disadvantages of vertical integration remain in its expense.

Strategic Outsourcing and its Benefits 

Strategic outsourcing refers to the strategic decision related to planning of the organization and is based on the partnerships with the external suppliers of the goods and the services without them being developed within organization (Machado & Cresp, 2013).  

A smaller company would choose this over vertical integration for reducing cost and ensure quick organization of business functions. However the larger companies choose it for improving efficiency. The advantages of strategic outsourcing include expertise and swiftness.

Why and When Companies Diversify 

Companies diversify in order to reach longer range financial goals while minimizing the risks.

Companies diversify whenever they develop new products or have plans for expansion into the new market. Companies also diversify for managing risks through minimization of the potential harm caused during the economic downturns. Diversification may also be used as growth strategy.

Related and Unrelated Diversification 

The process taking place when the business expands the activities into the product lines similar to the ones currently offered is known as related diversification (Park & Jang, 2013). Unrelated diversification refers to manufacturing diverse range of products that are unrelated   to each other. However, related diversification sounds more sensible compared to the unrelated one because the company can not only share the assets but also the skills and the capabilities (Kang, 2013).

Reasons for Failure of Diversification 

Diversification fails when the competitors present in the new industry imitates the moves of the company (Griffin, 2013). Moreover, diversification as a strategy moves in an out of trend on a regular basis.

Advantages and Disadvantages of Acquisition for Entry in Newer Industry 

The advantages of acquisition include speed, competencies and new resources, financial gain, market power and reduced entry barriers. Whereas the disadvantages includes, financial fallout, hefty costs, issues of integration, unrelated diversification and distraction from operations (De Beule, Elia & Piscitello, 2014).

References:

De Beule, F., Elia, S., & Piscitello, L. (2014). Entry and access to competencies abroad: Emerging market firms versus advanced market firms. Journal of International Management, 20(2), 137-152.

Griffin, R. W. (2013). Fundamentals of management. Cengage Learning.

Kang, J. (2013). The relationship between corporate diversification and corporate social performance. Strategic Management Journal, 34(1), 94-109.

Machado Guimarães, C., & Crespo de Carvalho, J. (2013). Strategic outsourcing: a lean tool of healthcare supply chain management. Strategic Outsourcing: An International Journal, 6(2), 138-166.

Madsen, T. L., & Walker, G. (2015). Modern competitive strategy. McGraw Hill.

Park, K., & Jang, S. S. (2013). Effects of within-industry diversification and related diversification strategies on firm performance. International Journal of Hospitality Management, 34, 51-60.

Strauss, S., Rupp, S., & Love, T. (Eds.). (2016). Cultures of energy: power, practices, technologies. Routledge.

Wheelen, T. L., Hunger, J. D., Hoffman, A. N., & Bamford, C. E. (2017). Strategic management and business policy. pearson.