Question

Q8. During the planning process, if there is a gap between future desired sales and projected sales, corporate management will need to develop or acquire new businesses to fill it. Identify and describe the three strategies that can be used to fill the strategic gap. (0.5 points) (20-70 words)

Answer 1

There are 3 ways if the company has decided to Aquire or build a new business to bridge the gap. The overall strategy is called integrative growth

1. Horizontal Aquisitions of Competitors to expand their product range and reduce running costs through synergy. Nvidia aquires AMD, a direct competitor in order to marry the two seperate ideologies of tech innovation.

• Verticle aquisitions in order to enter a different part of the supply chain. There are 2 ways of doing this:

2. Backward Integration - Go a step back in the supply chain and a aquire your current suppliers. Ex Razer, a gaming Hardware manufacturer aquires Nvidia, a company famous for making Graphics cards that Rzer use.

3. Forward Integration - Go a step forward in the supply chain in order to aquire your Distribution channel closest to the end customer. AMD, a famous GPU and CPU Manufacturer buys DELL, a company that uses AMD Chipsetsin their computers sold to the end customer.