- Strategic Management - Process
- Strategic Management - Types
- Strategic Management - Introduction
- Strategic Management - Home
Strategic Leadership
The External Environment
- Mapping Strategic Groups
- Judging the Industry
- Analyzing the External Environment
- Organization & Environment
Organizational Resources
- Company Assets: SWOT Analysis
- Other Performance Measures
- The Value Chain
- Intellectual Property
- The Resource Based Theory
Business Level Strategies
Aiding Business Level Strategies
International Marketing Strategies
- International Markets - Competition
- International Strategies - Types
- Drivers of Success and Failure
- Pros & Cons
Cooperative Level Strategies
- Portfolio Planning
- Downsizing Strategies
- Diversification Strategies
- Vertical Integration Strategies
- Concentration Strategies
Strategy and Organizational Design
- Legal Forms of Business
- Organizational Control Systems
- Creating an Organizational Structure
- Organizational Structure
Strategic HR Management
Strategic Management Resources
- Strategic Management - Discussion
- Strategic Management - Resources
- Strategic Management - Quick Guide
Selected Reading
- Who is Who
- Computer Glossary
- HR Interview Questions
- Effective Resume Writing
- Questions and Answers
- UPSC IAS Exams Notes
Concentration Strategies
Concentration strategies are meant to compete in one, single industry. There are four sub-strategies of concentration strategies: (1) market penetration, (2) market development, (3) product development and (4) horizontal integration. However, an organization can use one, two, or all aspects of these strategies to try to excel within an industry.
Market Penetration
Market penetration means gaining additional share of an organization’s existing markets by utipzing existing products. Advertising is a major way to attract customers within the existing markets.
Nike features popular and known athletes in print and television ads to snatch market share within the athletic shoes business from rivals Adidas and Lotto.
Market Development
Market development means to sell existing products in new markets. A popular way to reach a new market is by entering a new retail channel.
Kicking Horse Coffee, based in a remote town of Invermere, B.C., sells only organic fair trade coffee and Indian chai. It has been a mainstay of the town since the company started in 1996. Invermere is now the base for the 8400 m2 production facipty.
Product Development
Product development involves building and selpng new products to already existing markets. In the 1940s, Disney developed its products within the film business venturing out of cartoons and creating movies featuring real actors.
In 2009, Starbucks introduced VIA, an instant coffee variety for customers when they do not have easy access to a Starbucks store or a coffeepot. Now many blends of Starbucks coffee and Tazo tea are widely available in markets in the popular one-cup format.
Horizontal Integration
Expanding by acquiring or merging with one of the rival organizations is known as horizontal integration.
An acquisition occurs when an organization buys another organization. Generally, the acquired organization is smaller than the buyer organization.
A merger joins two companies into one. Mergers occur with similar sized companies.
Horizontal integration is preferable and attractive for many reasons. Horizontal integration may lower costs by gaining a greater economies of scale. Fitting horizontal integration alongside Porter’s five forces model, it means that such moves also reduces the intensity of rivalry and can make the industry more profitable.
Horizontal integration can also offer new distribution channels, where a firm may produce or acquire production units that are similar—either complementary or competitive.
AdvertisementsHORIZONTAL INTEGRATION − AN EXAMPLE
In 1989, Kraft’s parent company merged Kraft and General Foods. In 2000, Kraft bought Nabisco Holdings, and in 2009 bought Cadbury for about US$19 bilpon, making Kraft a “global confectionery leader.” At the time, Cadbury was the second-largest confectionery brand in the world after Wrigley’s.