Vertical and Horizontal Integration

It is the goal of any business to be profitable and sustainable in the short-run and in the long run. To achieve this, many firms come up with a number of methods and strategies that tend to utilize their resources and capabilities in an effective and efficient manner. As a result, such organizations tend to become market leaders and command a large market share in their respective industries.Advertising We will write a custom essay sample on Vertical and Horizontal Integration specifically for you for only $16.05 $11/page Learn More Vertical and horizontal integration are amongst the most used methods in ensuring that companies have a competitive advantage over their rivals. These methods are therefore grand strategies that aim at giving companies the right direction in terms of their running, operations and management. Through their application, companies have the chance to have a competitive advantage over their rivals and command a large market share . Horizontal integration is the process through which firms in the same industry and similar level of production merge to jointly produce goods and services. This joint operation normally tends to reduce production and operating costs. As a result, such firms tend to produce their goods and services at a cheaper price as compared to other individual companies who undertake the whole process of production on their own. To stand on a stronger base, firms that decide to adopt this strategy should be experts in their respective fields. Through horizontal integration, firms are able to exploit the economies of scale to their advantage. This is because they incur costs jointly. Examples of costs that firms are able to incur jointly include transpiration, warehousing, advertising, selling and distributions, purchase of raw materials and labour costs. Such companies will thus produce their goods and services at a cheaper price as compared to their rivals. Due to this fact, they will stand a chance of sell their goods at a lower price as compared to other firms in the market. This will in turn increase their market share. As a result, such companies will have a competitive advantage in their industries. In addition, through merging up, companies that have adopted this strategy will enjoy the privileges of monopoly. The entry of new firms into the market will be difficult due to the high market share that they hold.Advertising Looking for essay on business economics? Let's see if we can help you! Get your first paper with 15% OFF Learn More In the motor industry, Volkswagen is a company that has benefited greatly from horizontal integration. The company merged with Skoda to manufacture vehicles. Their main target group were the members of the middle and lower classes of the society. Through their expertise, they were able to manufacture cheap and efficient cars that are desirable for individuals of these classes. At the present moment, Volkswagen is in th e process of merging up with Porsche to produce luxurious cars for the individuals of the upper class. Once this is in place, Volkswagen will have a large market share in the motor vehicle industry in Europe by having cars that meet the needs of all individuals in the society. As a result, the company will have a competitive advantage over other companies that target a specific class in the society. Vertical stratification is also another grand strategy that can enable firms to have a competitive advantage and command a large market share. This method is achieved by the acquisition of suppliers or consumers in a market by a firm. This strategy has the following options: Forward integrations Backwards integration Full integration Taper integration In forward integration, a firm acquires a company whose level of production is in a later stage while in backward integration, a firm acquires a company whose level of production is in an earlier stage. In full integration, a firm control s all the activities of manufacturing a product. In taper integration, on the other hand, a firm manufactures goods and services by merging with suppliers of raw materials and distributors of the products. Using the concept of vertical integration brings about a number of benefits within an organization. This concept tends to reduce costs, improve the efficiency of production and improve on the quality and quantity of the product. These facts are essential in ensuring that companies have a competitive advantage over their rivals. Porters Grand Strategies There are several factors that affect the manner in which firms operate within their respective industries and the profitability they enjoy. The attractiveness that a firm has in the industry in which it is operating is a primary factor in the determination of the profitability that the firm will enjoy.Advertising We will write a custom essay sample on Vertical and Horizontal Integration specifically for you for only $16.05 $11/page Learn More The position that a business holds within the industry is an operating in acts as a secondary factor (Quick MBA, 2011). Therefore, a firm may be in a state of earning profits that are below average but due to its strategic positioning it still earns high returns. According to Michael Porter, a firm positioning depends on the manner in which it is utilizing its strengths (Quick MBA, 2011). The strengths of a firm depend on whether a firm wants to cost conscious or differently from its rivals. While a firm is operating on a broad or narrow scale, it can achieve this either through cost leadership, differentiation or focus (Quick MBA, 2011). The following graph shows Porters grand strategy model. Using the cost leadership strategy, a firm will focus on reducing its cost of production. To achieve this, a firm may seek cheaper raw materials, use the most efficient methods of production or reduce its labour costs. As a result therefore, the avera ge cost of production per unit will be reduced. Such a company may sell its goods and services at the average market price or below the market price. Selling the goods at the market price will ensure that the company earns more profits as compared to its rivals. On the other hand, selling the goods below the market price will reduce the revenue of the company but will earn it market share. For this strategy to be successful, a company needs to have a lot of capital, expertise, skills and efficient channels for marketing and distribution of its products (Quick MBA, 2011). IKEA is one of the companies that use this technique. Since its incorporation, the company has been coming up with means of reducing its production costs in order to reduce the prices of its commodities. The strategy has been successful since IKEA has grown to become one of the leading furniture manufacturing and retailing companies in the world. This strategy has its own risks.Advertising Looking for essay on business economics? Let's see if we can help you! Get your first paper with 15% OFF Learn More Other firms may also decide to lower down the costs of their goods and services. Technological advancements also lead to the formulation of more efficient methods of production that reduce costs and increase the quantity of production. Other firms may also decide to target narrow markets. All these factors will reduce the competitive advantage that a firm had gained as a result of using this strategy. To build on its strengths, a firm may also adopt the differentiation strategy. While using this strategy, a firm will try to have a competitive advantage by producing goods that are different or unique as compared to the ones that are currently in the market. These new version or types of goods should suit the needs and requirements of consumers in a better way as compared to the goods that are currently present in the market. As a result, many customers will prefer the new version of the goods and services that are produced by the firm. This will in turn increase the demand for the go od and consumers they may become loyal to the product and the brand. In addition, they may recommend it to other individuals. This will in turn increase the market share of the firm in the industry. In addition, the company will have a competitive advantage over its rivals. To achieve this, a firm must be innovative and invest on research. It must also have a skilled and innovative team and must use brilliant marketing techniques to reach its target group. Imitations from rivals coupled with changes in consumer tastes and preferences are the main risks to this strategy. A firm that adopts the focus strategy is one that operates within a narrow range of the market. Due to this fact, such firms would like to achieve a mix of differentiation and cost advantage. To achieve this, a firm normally identifies a specific target group in the market and produces goods and services that meet their specific needs. Due to this fact, such firms are able to satisfy the needs of their customers and earn consumer loyalty. It will therefore be difficult for new firms to enter into this market due to the brand loyalty that the target group has for the firm. Firms operating in such markets may also sell their goods at high prices since they do not have close substitutes. However, there are some risks that are involved. These include changes in consumers tastes and preferences and imitations. Other firms may also focus on a section of this target market and supply them with a good that is of a better quality. Reference Quick MBA, n.d, Porter’s Generic Strategies. Available at:Â  http://www.quickmba.com/strategy/generic.shtml This essay on Vertical and Horizontal Integration was written and submitted by user Al1a to help you with your own studies. You are free to use it for research and reference purposes in order to write your own paper; however, you must cite it accordingly. You can donate your paper here.

Amritsar Massacre, 1919

Amritsar Massacre, 1919 The European imperial powers committed many atrocities during their period of world domination.  However, the 1919 Amritsar Massacre in northern India, also known as the Jallianwala Massacre, surely ranks as one of the most senseless and egregious.   Background For more than sixty years, British officials in the Raj had viewed the people of India with mistrust, having been caught off-guard by the Indian Revolt of 1857. During World War I (1914-18), the majority of Indians supported the British in their war effort against Germany, the Austro-Hungarian Empire, and the Ottoman Empire.  Indeed, more than 1.3 million Indians served as soldiers or support staff during the war, and more than 43,000 died fighting for Britain. The British knew, however, that not all Indians were willing to support their colonial rulers.  In 1915, some of the most radical Indian nationalists took part in a plan called the Ghadar Mutiny, which called for soldiers in the British Indian Army to revolt in the midst of the Great War. The Ghadar Mutiny never happened, as the organization planning the revolt was infiltrated by British agents and the ring-leaders arrested. Nevertheless, it increased hostility and distrust among British officers toward the people of India. On March 10, 1919, the British passed a law called the Rowlatt Act, which only increased disaffection in India.  The Rowlatt Act authorized the government to imprison suspected revolutionaries for up to two years without a trial. People could be arrested without a warrant, had no right to confront their accusers or see the evidence against them, and lost the right to a jury trial.   It also placed strict controls on the press. The British immediately arrested two prominent political leaders in Amritsar who were affiliated with Mohandas Gandhi; the men disappeared into the prison system. Over the following month, violent street scuffles broke out between Europeans and Indians in the streets of Amritsar.  The local military commander, Brigadier-General Reginald Dyer, issued orders that Indian men had to crawl on hands and knees along the public street, and could be publicly lashed for approaching British police officers. On April 13, the British government banned gatherings of more than four people. Massacre at Jallianwala Bagh On the very afternoon that freedom of assembly was retracted, April 13, thousands of Indians gathered at the Jallianwala Bagh gardens in Amritsar.  Sources say that as many as 15,000 to 20,000 people packed into the small space. General Dyer, certain that the Indians were beginning an insurrection, led a group of sixty-five Gurkhas and twenty-five Baluchi soldiers from Iran through the narrow passages of the public garden. Fortunately, the two armored cars with machine guns mounted on top were too wide to fit through the passageway and remained outside. The soldiers blocked all of the exits.  Without issuing any warning, they opened fire, aiming for the most crowded parts of the throng. People screamed and ran for the exits, trampling one another in their terror, only to find each way blocked by soldiers. Dozens jumped into a deep well in the garden to escape the gunfire, and drowned or were crushed instead. The authorities imposed a curfew on the city, preventing families from aiding the wounded or finding their dead all night. As a result, many of the injured likely bled to death in the garden. The shooting went on for ten minutes; more than 1,600 shell casings were recovered.  Dyer only ordered a ceasefire when the troops ran out of ammunition. Officially, the British reported that 379 people were killed; its likely that the actual toll was closer to 1,000.   Reaction The colonial government tried to suppress news of the massacre both within India and in Britain.   Slowly, however, word of the horror got out.  Within India, ordinary people became politicized, and nationalists lost all hope that the British government would deal with them in good faith, despite Indias massive contribution to the recent war efforts.   In Britain, the general public and the House of Commons reacted with outrage and disgust to news of the massacre. General Dyer was called to give testimony about the incident.  He testified that he surrounded the protestors and did not give any warning before giving the order to fire because he did not seek to disperse the crowd, but to punish the people of India generally. He also stated that he would have used the machine guns to kill many more people, had he been able to get them into the garden.   Even Winston Churchill, no great fan of the Indian people, decried this monstrous event. He called it an extraordinary event, a monstrous event. General Dyer was relieved of his command on grounds of mistaking his duty, but he was never prosecuted for the murders.  The British government has yet to formally apologize for the incident.   Some historians, such as Alfred Draper, believe that the Amritsar Massacre was key in bringing down the British Raj in India.  Most believe that Indian independence was inevitable by that point, but that the callous brutality of the massacre made the struggle that much more bitter. Sources Collett, Nigel.   The Butcher of Amritsar: General Reginald Dyer, London: Continuum, 2006. Lloyd, Nick. The Amritsar Massacre: The Untold Story of One Fateful Day, London: I.B. Tauris, 2011. Sayer, Derek. British Reaction to the Amritsar Massacre 1919-1920, Past Present, No. 131 (May 1991), pp. 130-164.