Corporate Integration Tactics For Success Of Business Entities Assessment Answer
The technological, market strategies and business have been a critical role within the failure or success of the organisation. Corporate integration refers to the extent to which interdependent and distinct business elements adequately along with rapidly adopt or responds to one other to pursue the corporate goals. It is accomplished when business goals are linked between the internal and external influences. This report will aim to demonstrate a brief understanding of corporate integration tactics for the success of the business entities. The organisation generic strategies and primary practices connected with the company's value chain will be discussed in detail with relevant examples.
(A) Three corporate integration strategies
Organisation integration tactics are utilized to cross-train staffs and management, decrease poor communication as well as decline the supplier costs. For the organisation in the business environment, integration strategies remain effective for the company to save money and time. Bagnoli et al. (2020) explained that integration benefits the company to streamline the operations, decrease overhead, personal costs by decreasing the requirement for additional resources of staffs they utilize.
Figure 1: Business integration strategies
(Source: Machta et al., 2019; O’Neill et al., 2019)
Vertical integration is an effective business integration strategy that helps enterprise take control of different stages within the distribution or production of the products or services (Machta et al., 2019). For example, BMW has opted strategy of vertical integration to confirm complete control on the raw material supplied for manufacturing of the car or automotive parts as a core product. Nie et al., (2019) argued that the car manufacturing brand has acquired electrical component and tyre factories as backward integration and opened own showrooms for selling vehicles models as well as offer after-sale services as forward integration tactics. The vertical integration remains beneficial with efficient supply chain, after-sales and distribution services; enhance entry barriers for newest entries along with developing core competencies (Chen et al., 2019). Another integration strategy for business is horizontal integration. O’Neill et al., (2019) stated that horizontal integration has been competitive tactics for acquiring business activities which are at a similar standard of the value chain within different or common industries. For example, Sainsbury has undertaken horizontal integration tactics to acquire supermarket chain and merge with the common business within other nation to acquire foothold within the international market. Sainsbury's acquisition of competitive business-like ASDA under horizontal integration strategy has been considered to grow the business capacity of accomplishing product uniqueness and economies of scale. O’Neill et al., (2019) added that horizontal integration becomes attractive for the business to grow differentiation, market power and capability to enter the newest marketplace. The third organisation integration strategy is personnel integration in which the corporate departments work collectively and enhance business efficiency (Stoyanova et al., 2019). The administration teams and staffs are a critical asset for the organisation. The logistic manager needs to acknowledge things that accounts payable executives need to perform and sales executives must acknowledge the specific function of the human resource manager. Stoyanova et al., (2019) supported that personnel integration helps to enable greater accuracy, automation, confirm continuous management of every system and eliminate repetition within the business process. In BMW, this integration strategy has amplified productivity and allows HR teams to offer higher value through consistent along with accurate reporting.
(B) Three corporate Generic Strategies as highlighted by Michael Porter
Michael Porter has been the professor at Harvard Business Scholl who argued that the company’s strengths at the end fall within headings of: differentiation and cost advantage (Semuel et al., 2017).
Figure 2: Generic strategies
Source: Islami et al., 2020
The cost leadership tactic occurs when the business emphasizes on decreasing the expense of delivering services or product to the user, confirming more profitable operation and add shareholder values within other organisation parts. This strategy proposed by Michael Porter become effective to enhance profit margin by sustaining the current cost and decrease service or product price to be the highly competitive business in the market (Nilufer, 2020). For the business entities, cost leadership tactic opens various alternative of resisting price hike when rivals are forced to perform so and invest the profits into diversifying commerce, automation for decreasing cost and better shareholder value offered. In another word, cost leadership has been the strategy to gain superior profit by lowering service or product costs. It targets the broader market; competitive edge is accomplished by driving costs down and the company could compete on costs with other industries along with earning higher profit units (Heller, 2019). For example, Walmart is the public organisation operating in retail sector has adopted cost leadership tactics to gain a competitive edge in the market (Nilufer, 2020). The main goal of the company has been keeping retail cost low and the business has remained successful at this (Heller, 2019). The brand has been rolling the ‘everyday low prices’ retail tactics to several international marketplaces for replacing the different usual high-low pricing within developing economies. Walmart also implemented a good structure which works with the initiative to empower the low-cost strategy. The success criteria for cost leadership within the supermarket retail industry for the company has accessed the capital needed to make a critical investment within the production assets (Heller, 2019). The design expertise for effective manufacturing, distribution channels and a higher degree of proficiency within manufacturing process engineering has remained core factors to gain cost-leadership in the business environment (Kharub et al., 2019). Nonetheless, the cost-leadership strategy also introduces the risk of advancing technology that allows rivals to grow production abilities, hence decreasing the competitive edge. Kharub et al., (2019) argued that company following the focus-strategy could become capable to accomplish even low costs in the respective market segment. The organisation like Sainsbury needs to have an efficient system in place to have cost-leadership of long-term basis and gain tactics of low prices on a daily basis. Therefore, cost leadership is one of the organisation generic strategies that are achieved by building major-scale operations which support decreasing the costs of every unit by eradicating additional feature within services or products. Walmart has been a significant example of an international company pursuing successful cost-leadership tactics.
The second generic strategy for a successful business is the differentiation strategy. Semuel et al., (2017) determined differentiation strategy occurs when the business emphasises on differentiating their services or products from the rivals existing within the market. These tactics have broad-spectrum from complete product diversity to the distinctive features in the core products. The elements to consider while undertaking differentiation is analysing the competitor's innovation, the maturity of the market for the service or product operation and research the market demand (Semuel et al., 2017). The adaptation of differentiation tactic opens various alternative to the company to enter within the newest market for diversifying revenues, grow current income stream within up-selling more deals and increase service or product prices. Sun and Lee (2019) opined that differentiation strategy is effective for the business entity to expand marketing channels with information about product, features and build the community in the user base around the newest features. The valued offered by the uniqueness of the services or products often facilitate the company to charge the premium costs for it. This competitive strategy needs research capability, flair along with strong marketing led by the organisation. For example, McDonald as the public corporate operating within the restaurant industry has considered differentiation strategy to enhance competitive advantage in the market (Um et al., 2018). The customers of McDonald have been of every class and mainly middle classes, largely working and individuals of every age. The brand strove to satisfy the consumer waiting time at less than 1 minute within line and thirty seconds at the order counter. For differentiating the product from other rivals, the company has understood parents making the purchase decision and thus marketed 'Happy Meal' with free toys to be sold, attractive large number of kids (Um et al., 2018). The company was capable to make food range ten-second faster in comparison to rivals. They have undertaken competitive pricing by offering better quality, value, service and convenience to the customer base. The success criteria for the restaurant business leading competitive differentiation strategy have been accessing to lead scientific research, company reputation for innovation and quality (Sun and Lee, 2019). Along with this, the differentiation success relies on the effective sales teams with the capability to efficiently communicate and market the perceived competitiveness of the products or services. Moreover, to successfully implement differentiation strategy, the risk of higher costs, imitation by the rivals and changes within the consumer taste must be addressed continuously. The customers may become price-conscious and buy products based on cost rather than its distinctiveness. Sun and Lee (2019) stated that for successful differentiation strategy, the business needs implementing tactical operation to address the risk of competitors pursuing the focus tactics enabling them to accomplish greater differentiation within respective market segments. While undertaking differentiation tactic, the company must investigate every practice to recognize ways to build greater value for the users. This could be done by building products easier to utilize, providing training on the services, goods and by bundling the products with the services.
The third generic strategy for achieving competitive advantage by the business entity is the focus strategy. Sanaei and Sobhani (2018) defined focus strategy to be the evaluation of the cost-leadership tactic, where 'focus' means company emphasizing on the niche marketplace by geography, industry and become successful within delivering for the same industry. This generic strategy has every advantage of the cost-leadership along with offering additional options for undertaking a partnership with suitable companies in the sector and offer better credibility level to overall company reputation (Sanaei and Sobhani, 2018). For the business entity, the focus strategy is beneficial to become a thought leader in the sector and build consumer loyalty by being the sole trusted provider within the business environment. This strategy with narrow market focuses result within companies pursuing the focus tactics to have low volume and less bargaining supremacy with the eminent suppliers. Grgić (2020) argued that company undertaking differentiation-focused tactic is likely to be capable to pass high costs on to users, where close substitute services or products do not exist. For example, PepsiCo as the public corporate holding business in the beverage and food sector has effectively undertaken 'focus strategy' for brand success. The success criterion for the company undertaking focus strategy has been making entry to the newest markets being easy and less expensive (Islami et al., 2020). For achieving this, PepsiCo has acquired leading beverage organisation like Quaker Oats, Tropicana products and South Beach Beverage corporate. The brand has remained successful in making a low investment within resources and business benefits from specialisation. Grgić (2020) supported that company utilizing the focus strategy mainly enjoys the higher level of user loyalty. The respective strategy in case of PepsiCo has offered scope of competitive knowledge of the market segment. The risk involved related to focus strategy including limited growth opportunities and companies might outgrow the marketplace must be paid attention by the company prior to implementing focus strategy. The strategy also brings the threat of imitation; changes within the target segments and decline within the selected niche (Islami et al., 2020). Hence for the long-term success of the organisation applying focus strategy, the continuous development of products and service feature as per changing market needs become the key element.
There are mainly three generic strategies that help business enterprise of the current era to gain a competitive edge within the intense business environment. Cost leadership has been about the company being the low-cost producer within the sector as the whole. The differentiation strategy is the process exploitation of service or goods which are believed as being unique in the market (Islami et al., 2020). The organisation often undertakes focus-strategy with restricting business practices to the only segment of the marketplace through cost focus or differentiation focus. In cost-focus strategy, the company gain competitive benefit by offering products or services at low costs to the respective segment. The differentiation-focus strategy allows the business to stay competitive by offering unique services or products to that segment.
(C) Five primary activities associated with the value chain of a firm
The value chain analysis includes operational activities of the business firm which is processed for delivering a valuable product in the specific industry. The concept of the value chain has been proposed by Michael Porter, which has been focused on the idea of evaluating the manufacturing procedure of the business organisation (Simatupang et al., 2017). The inputs, transformational process, logistics, labours, materials and sources of the business entity have been evaluated under the value chain for observing its competitiveness within the market.
Figure 3: Value chin analysis
Source: Simatupang et al., 2017
The activities of value chain are categorised under the primary section which deals with the core activities, functions, resources and materials of the business. It is been used to transform a valuable product as demanded in the market. The primary activities of the value chain analysis are related to the sales, physical creations, support and maintenance of producing the core products and services of the firm (Soeters, 2020). Each of the primary activities is linked with the supporting activities of the value chain to define the effectiveness and competitiveness of the business firm. The five primary activities associated with the value chain analysis are been evaluated and explained as follows:
Inbound logistics: The inbound logistics of the value chain describes processes of receiving, storing, developing and managing the materials from different supply chain. In the process of observing the internal operational or production activities, the inbound logistics helps to define the suppliers networking, supply chain and supplier’s relationship of the business firm (Bedeley et al., 2018). The process includes information about the raw materials, resources and goods obtained from the different suppliers, it is process of analysing the quality, quantity and stages engaged for inputting these materials into the production function of the firm (Yao et al., 2018).
In the case of Tesco Plc, the supply chain and operational activities of the firm is complex due to the supply of different materials used for the production of different portfolio products. Tesco involves in the distribution of hundreds of products in 6800 shops in the market (Putra and Muzakir, 2020). The company invests in the economical scale on the logistics and supply chain of the film to keep engaging the operational activities and meet the growing demands of the customers. Under the previous leadership, the supplier's networking of the company has become poor, which has increased delays in the production, out of stock issues; these have led to the customer dissatisfactions. However, in the present time, the company has been focused on enhancing the production function with the networking of 2500 suppliers in the United Kingdom (Wood et al., 2017). Thus, the inbound logistics has been defined the production function and capability of Tesco Plc, which has explained the importance of managing and maintenance of standard logistics and supply chain systems.
Operations: The operations are the second primary activity of the business firm explained under Porter's valley chain analyses. This operation of the business states the transformational activities of the firm, in which the inputs are been processed to turn them into outputs. In the process of operations, the raw materials and resources acquired from different suppliers, they are been engaged in the machinery for manufacturing or producing the final product (Adhikari et al., 2017). The operational activities play a vital role in adding value to the final product, which can have the capability to attract the customers within the market. As per the operational activities of the business, the value chain analysis elaborates the potentiality of the organisation to properly process and manufacture the products without any errors, damages or issues and introduce a final output which can satisfy the present needs and requirements of the targeted audience (Koc and Bozdag, 2017). The operational activities also concerned about the functioning and processing of the machinery, and its capabilities to produce proper and valuable products
Tesco operational activities are been categorised in retailing, banking and manufacturing procedures. Each of the categories are been introduced with installed machineries for effectively processing and producing quality products and services for the targeted market. In the retail segment, Tesco Plc includes about 80 million of shopping trips in the Tesco stores operating in 13 countries (Awadari and Kanwal, 2019). The company includes operations of its retail products through Tesco Metro, express, extra, superstores. In the case of manufacturing, the products and services which are been presented under brand of Tesco is been produced including highly equipped and technologically advanced machinery (Kang and Hwang, 2018). As per the primary activities of the value chain analysis, the operations provide the process of production engaged by companies like Tesco to introduce quality-based products and services. The banking services of Tesco Plc include another operational portfolio of the entity, which develops the financial services and needs for the customers as per their demands.
Outbound logistics: Outbound logistics is explained the distributional networking and channels, which helps to deliver the product to the customers within the market. In this primary activity of the value chain, the collection, storage, transportation, distribution and delivery to the customers are been scheduled planned and designed by the firms (Strange and Humphrey, 2019). The outbound logistics explains the participation, quality of working and engagement of intermediaries such as wholesalers, retailers and other intermediates for availing the products of the company to the customers.
As per Tesco Plc, cost-effectiveness and flexibility are primarily focused by the entity while engaging the distributional channel for the business and its products. The company includes a channel of stores, supermarkets and retail outlets for presenting the produced products to the customers in the market (Putra and Muzakir, 2020). The 6800 stores in 13 countries have been stated to be the primary outbound logistics of the firm. The online sources have also been another option, which has been added as outbound logistics for the company The Company has presented its products in own website and other eCommerce websites to increase its availability and delivery to the customers at the earliest. The Tesco Plc has used door to door delivery systems to increase the satisfaction level of the customers (Kang and Hwang, 2018). The outbound activities of Tesco have showed that the availability of the products in the market keeps the customers engaged. This has contributed to providing sustainable leadership positioning of Tesco in the UK retail market.
Marketing and sales:
The marketing and sales activities of the business define the strategic applications of the firm for targeting the right group of customers in the market. The activity of the value chain provides learning about effective strategy and competitive advantage has been properly communicated by the business firm for developing wariness, promotion and positioning for its products and services (Hernández and Pedersen, 2017). The marketing and sales activities are been included in the primary activities of the firm to provide an overall understanding of the capability of the business firm to introduce products or services in the market effectively. In these primary activities, the business firm includes the strategies that are applied to persuading the customers to purchase the products in the market.
In the case of the Tesco Plc, the company includes communication massage in the market "Every Little Helps" as their tagline for the brand. In case of the marketing, the Tesco Plc includes both online and offline media sources for advertising and promoting its existing and new products in the market (Wood et al., 2017). The company tries to cover maximum grounds to provide proper awareness about its products. The entity includes cost leadership strategy to reduce the pricing of its products average to the industry rate for proposing best-fit pricing offers to the customers and increase sales of its products in the market.
Service: The primary activity of the value chain analysis includes the procedure of the business firm for handling the customer responses, reactions satisfactions, quarries and complaints through after-sales services (Benito et al., 2019). The service activities of the value chain describe the capability of the business to maintain the value of the products or services in the customer's mind by providing outstanding service and quality supports. It defines that the services help and supports presented by the sales representatives and the business firm after the products or services been sold to the customers (Ruan, 2020). This primary activity of the value chain directly relates to the customer loyalty schemes, customer offers, and after-sales services proposed by the Tesco plc for its customers in the market.
(D) Any two support activities associated with the value chain
The value chain analysis has 4 different parts Out of which human resource management issues have been chosen. Effective Human Resource Management is being practised in the company. Human resource management creates high levels of potential and fair teamwork in the work environment (Simatupang et al., 2017). Walmart has more than 1.6 million workers to work and these are considered as associates but not workers. This is the reason the resource management of Walmart plays an important role in the organisation. The company believes that everyone is equal, that there is no boss and no worker. However, everyone is a Walmart partner. The human resource manager of Walmart works with three principal external recruitment, internal recruitment and motivation (Courtemanche et al., 2019). To achieve progress in the work, the senior motivates the team and the leader guides on each step. It not only creates a positive environment but also a friendly atmosphere. Walmart believes in internal promotion rather than recruiting the external steps
The policy is different and better than other companies. The internal recruitment helps the existing staff to upgrade their lifestyle and professional life. Walmart also focuses on external recruitment for managers post and senior position. The human resource manager successfully practised the best style of human Resource or helped to increase the potential of the staff. At the same time, the associates are provided with regular training if needed (Hernández and Pedersen, 2017). These training mainly help the sales team for better communication with the customers. Though Walmart has a great practice of Human Resource Management the employees can leave the organisation if there occur any issues. Employee retention is the biggest problem in these industries. Entrepreneurs keep on looking for new and best employees but it is tough to keep a particular employee in the organisation for a long time.
Walmart made extensive usage of the technology for advanced management of supply chain with sales and customers service as well. From the smarter apps in favour of the inventory management to the commerce sites, it implemented technology for gaining efficiency. Walmart uses the latest technology known as Alphabot to its grocery retailing business (Tan et al., 2018). It is observed that the platform needs to encourage it in picking, delivering and packing shoppers' online grocery orders much faster and with some headaches. It has been testing Alphabot since mid of 2019 at Walmart Supercentre at New Hampshire, Salem. From the latest mobile apps for both employees and customers to the robots upon the store floor, Walmart is utilizing tech to best rivalry
The marketing strategies and applications are been used for analysing the capabilities, strength and competencies of the business firm to sustain the present market competition. The incorporation of the corporate strategies provides a direction, which could be used for movement of the company to achieve its goals and objectives. The business firms use the generic strategies for the achievement of competitive advantage in the market, these strategies help to develop a differentiated image of the brand in the market. For analysing the internal capabilities, potentiality and strength of the business, the value chain analysis is been used. The primary and secondary activities present a brief evaluation of the internal activities of the business firm.