BUSINESS ORGANISATION

Business Organisation



Table of Contents

Introduction3

Discussion3

Vertical Integration3

Example of vertical integration6

Horizontal Integration6

Impact of Horizontal Integration7

Advantages of Horizontal Integration9

Lower Cost structure9

Increased Product Differentiation9

Industry Rivalry10

Increased Bargaining Power10

Drawbacks10

Example of Horizontal integration11

Vertical versus Horizontal integration11

Increased Cost Structure11

Technological Changes12

Unpredictable Demand12

Other type of integration12

Conglomerate Integration12

Example13

Conclusion13

Business Organisation

Introduction

The strategies in any company or enterprise are vital because they help to make decisions are important as reducing costs for businesses to be economically competitive can achieve, so that companies can survive now mostly seen in the obligation to diversify and there are several types of strategies. In order to diversify the conglomerate strategies are to be developed by the addition of fully independent and market your existing business. Business integration refers to the alignment of strategies, objectives, processes, systems, technology infrastructure and the firms operations with the changing market and the customer needs. Organizations all over the world use different strategies and models of business integration in accordance with the nature of their business and market. Some of the widely implemented strategies include vertical Integration, horizontal integration and conglomerate structures. They have their own set of advantages and drawbacks. Numerous factors must be taken into account by the management when deciding upon the appropriate strategy of integration (Cozzens, 2008, pp. 21).

Discussion

Vertical Integration

Vertical integration is an industrial business tactic that has increasingly been applied to the agricultural industry. It is also known as vertical combination, vertical expansion, or vertical acquisition. Vertical integration occurs when a separate corporation gains control over all aspects of a product, from the supply of raw materials and other inputs needed for production to the transportation, distribution, and sale of the finished product. Horizontal integration is a related tactic in which a corporation dominates a particular sector or aspect of production (Williamson, 1971, pp. 112).

Vertical integration exists to varying degrees within individual corporations. It can include control of input production, such as farm machinery, seed, feed, fertilizer, pesticides, grain silos and elevators, poultry hatcheries, or livestock operations, control of transportation, distribution centers and retail outlets, or both. Vertical integration can be achieved through a variety of methods, including mergers and acquisitions, the use of legally owned subsidiaries, control of contracted farmers or growers, and the use of tactics such as overproduction, rice reductions, and informal agreements to reduce the number of competing firms (Qureshi, 2007, pp. 247).

Historically, U.S. agriculture was a subsistence-based enterprise consisting mainly of small, self-sufficient family farms. These farms traditionally grew a diversified array of crops, raised animals, and provided most of their own inputs, such as seeds, tools, and labor. Family farms produced mainly for their private consumption, with any minor surpluses sold or traded within the local community. The development of the Industrial Revolution in England and the United States in the early 19th century changed the practice of agriculture as well as of business. Most factories were located in or near cities and towns, giving rise to ever-larger urban populations that no longer produced their own food, placing more commercial demand on farmers (Blank, 2008, ...