Vertical Integration - Innovation - and Alliance

Question: Discuss about the Vertical Integration, Innovation, and Alliance. Answer: Introduction: It would be correct to say that integration is one of the key aspects of competitive strategy. Typically, there are two types of integration strategies, horizontal and vertical. In the horizontal integration strategies, organizations would focus to acquire other firms in the same industry level. In the vertical integration strategies, organizations would focus to acquire the players in the supply chain. For example, the manufacturing firm can acquire one of the suppliers. There are times when the firms can practice both horizontal and vertical integration strategies. Typically the large organizations would follow the combine integration strategies of horizontal integration and vertical integration (Lahiri Narayanan, 2013). The organizations may not be able to get the immediate benefit with the integration strategies. However, it is expected that the organization would be beneficial in long term with horizontal or vertical integration strategies. In fact, this is the reason that orga nization focuses on horizontal and vertical integration strategies. The example of organizations that exhibits horizontal and vertical integration strategies can be discussed as: Example: Horizontal integration strategies: Microsoft acquired Nokia to boost its mobile business. This is an example of horizontal integration strategy (Guan Rehme, 2012). The objective of Microsoft was to maintain its presence in the smartphone business and this was the reason that Microsoft acquired Nokia. Example: Vertical integration strategies: Toyota acquired number of suppliers in China and Japan region to extend its supply chain. This is an example of vertical integration strategies. Toyota wanted to bring efficiency in the supply chain. By integrating with the suppliers, Toyota was able to save a lot of time and this also reduced the dependency of Toyota on the local players. References Guan, W. and Rehme, J., 2012. Vertical integration in supply chains: driving forces and consequences for a manufacturer's downstream integration. Supply Chain Management: An International Journal, 17(2), pp.187-201. Lahiri, N. and Narayanan, S., 2013. Vertical integration, innovation, and alliance portfolio size: Implications for firm performance. Strategic Management Journal, 34(9), pp.1042-1064.