Question

Business Strategy and Polices

Business strategy game

*What offensive strategy options does an athletic footwear company have? Identify al least two offensive moves that a company should seriously consider to improve the company's market standing and financial performance?

*What doe it mean when a company is vertically integrated? explain and give an example.

Answer 1

An offensive strategy is similar to a sports team attacking the opponent by strengthening its attack. An offensive strategy adopted by a business is generally expensive with large investments in technology, research and development to obtain a competitive advantage. An athletic footwear company can adopt ‘end run’ and acquisition offensive strategies to improve its market share. In the ‘end run’ offensive strategy, the athletic footwear company exploits the neglected or untouched markets in various demographic areas to improve its market share. In the acquisition offensive strategy, the athletic footwear company aims to remove the competitor by acquiring other firms in the industry or the market and becoming the market leader. This acquisition offensive strategy needs to comply with the antitrust corporate and competition rules. The acquisition offensive strategy is employed mostly by the market leader to become the best player in the market obtaining a major chunk of market share through buying other players in the market.

Vertical integration is controlling the entire supply chain of the business. A company is said to be vertically integrated when it controls more than one stage of the supply chain activity from raw material procurement to finished goods. Consider the example of a supermarket business operation. The products are procured from the farmers (manufacturers) by the wholesalers. Distributors procure the farm produce from the wholesalers. The retail stores or supermarkets procure the finished good from the distributors and finally, the consumer buys the product. In this example, a supermarket is said to be vertically integrated if it controls distribution or wholesalers and distributors in the supply chain.

Forward integration type of vertical integration strategy occurs when the farmer (manufacturer) go on to establish their own retail outlets in the market. Backward integration type of vertical integration strategy occurs when a business person begins their operation as a supermarket or retailer business and start controlling the distribution and wholesaler stages of supply chain procuring directly from the farmer (manufacturer). In both the types of vertical integration strategy, the main aim is to eliminate the intermediaries or middlemen in the supply chain and provide the end consumer with the finished product at a low price.