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Toyota employees a diversified business since it has spread its business operations all around the globe. The corporation tends to work in developed countries like America and developing countries like Pakistan. Therefore Toyota can deploy a number of techniques which could enhance the synergy created by diversification. The technique suggested here is that Toyota should further integrate related diversification by manufacturing motor-bikes, Scooties, bi-cycles since these are fuel efficient and eco-friendly transportation means. They can also focus on niche markets like manufacturing metropolitan buses.
Building on the topic above, determine how diversified the company you research could become before it created a negative impact on the company’s bottom line. Explain your rationale.
According to researches it is found that related diversification is more profitable than unrelated diversification and that there exists a non-linear relationship between diversification and the value created since after an optimal point diversification tends to become value-destroying (Galvan, 2007). Looking at the perspective of Toyota if the company diversifies on the markets it penetrates along with the related product line diversification it will tend to thrive. For example Toyota right now is focusing on diverse automobiles like hybrid, electric, SUVs etc. However if Toyota tends to start manufacturing totally unrelated products like leather shoes, bags etc. it would be a disaster since the corporation does not have sufficient competitive knowledge and competencies for competing in this market.
Galvan, A. (2007). Diversification: Value-Creating or Value-Destroying Strategy? Evidence from Using Panel Data. Retrieved from http://gredos.usal.es/jspui/bitstream/10366/17425/1/DAEE_04_07_Diversification.pdf
From the case study, evaluate the business-level strategy of Victory Motorcycles to determine whether you believe the strategy is appropriate to offset forces in the industry. Provide specific examples to support your response.
The business level strategy which has made Victory Motorcycles so famous around the globe is its diversification strategy. The business is highly diversified with a wide variety of products manufactured like motorcycles, snowmobiles and watercrafts. This makes the organization a highly diversified one. Furthermore the company also targets a diverse market across the globe. Their target market ranges from America all the way to China, Russia, Brazil and Australia. They tend to target customers through a variety of innovative designs and high quality motorbikes.
Make recommendations for improving this strategy as well as describing any challenges you foresee in executing those recommendations. Provide specific examples to support your response.
Since there are several other automotive firms in the market who have the tendency, capacity and technology to manufacture even better and highly efficient motorbikes the company need to take potential competition in check. What the company needs to do is formulate strategic plans for new automotive design and improve the efficiency. Along with that the company needs to manufacture environment friendly motorbikes like electric cars so that this challenge can also be met.
Explicate how the first company you researched was either helped or harmed by the integration strategy it chose.
There are several ways in which companies can integrate for example mergers, forward/ backward vertical integration and horizontal integration etc. The company we researched is Dell.com. Dell has integrated the concept of forward vertical integration in its business model by selling to the consumers directly through its web portal thus calling for a virtual forward integration. This strategy has helped Dell in a variety of ways like increased consumer satisfaction by providing them with customized product right at their doorsteps and an approach to study consumer patterns.
Magretta, J. (1998). The power of virtual integration: an interview with Dell Computer’s Michael Dell. Harvard Business Review. Retrieved from http://autodesarrollate.vitro.com/PORTAL/cdh/thunderbird/files/Power%20Virtual.pdf
Recommend at least one way this strategy could have been improved.
This strategy could be further improved by reducing the price of the products since due to forward integration the distribution and placement cost decreases thus the company should also benefit its consumers with the reduced prices.
Justify how the first company you researched could benefit from the vertical integration strategies it has not implemented. Include at least one advantage and one disadvantage of each strategy.
The company could further take advantage from backward vertical integration strategy in which Dell can focus on manufacturing its own operating system, application software and chips. In this way the company can target a broader market segment along with providing customization in the personal computer internal environment as well. However this strategy might increase the cost of manufacturing along with complexity since there might be bugs in the newly developed programs due to incompetent software developers and company might lose its customers.
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