SUDAIS ALI SHAH ROLL NO = 26

ASSIGNMENT = Explain types of Strategies with real example.

1. Integration Strategies:
Integration strategies allow a firm to gain control over suppliers, competitors and distributors.
Integration strategies have also sub types are as follow:
I. Forward integration:
Gaining ownership or increased control over distributors or retailors.
Real example of forward integration.
I’m going to give the real example of my relative businessman named Mr. Ishaq Qureshi.

He was starting a Chips factory at Town (Bannu) and produce a verity of Chips after
producing the Chips he deliver the product to his distributor. The distributors was at Bannu
bazar at Jahanzeb gali. So the distributor was gaining 20% profit margin at his products. So
he think if I may doing the distributor role at bannu bazar then I will get more 20% at our
hardworking and then he have used the forward integration strategy to create their own
distributors at their own name Ishaq trader. He is very happy with this strategy because he
have earned more 20% profit.
Why Ishaq have used forward integration:

 He have more employees to operate the distribution sides.

 He want to get more profit.
 He want to capture the whole market.
 He want to defeat the retailer’s competitors.
 To control distribution side.

II. Backward integration;

Seeking the ownership or increased control of a firm suppliers. This strategy can be
especially appropriate when current suppliers of firm are too costly or cannot meet the
firm needs.
Real example of forward integration:

Rallis India is a subsidiary of TATA chemical and the company have used backward integration
strategy to control the supply chain. So Rallis India is importing raw material chemical from
china and then china had increased the price of chemical and also did not meet the Rallis needs
so company create a source to seeking the ownership of chemical materials. Now Rallis have
created their own supply chain and enjoy the chemical with low rate and with easy required.
 Reasons:

 To control supply chain

 To reduce price of raw material
 Get materials with easy way
 To meet the firm needs easily

III. Horizontal integration

The horizontal strategy means to acquiring or taking the ownership of another business.
In simple words when one business or company purchased to another business or entity at
same products at same industry.
Real example of Horizontal integration;
Marriott and Starwood are both food company. The owner of Marriott Company was J Willard
Marriot and his wife Alice Marriott.
Initially they started a small café but they want to start the business with large scale and they
had started with large scale. Now In 2016 Marriott purchase Starwood hotel and create the
largest hotel of the worlds. Marriott was paid $13Billion to Starwood.
Reasons:

 Marriot want to expend their business at large scale

 To increase employees opportunities
 Create additional value for shareholders
 To earn a huge profit.

2. Intensive strategies.
Intensive strategies means to capture the whole market and businessman want to become the
king of market so intensive strategies works to develop market, Create innovation and
invention of a products, Defeat competitors by increase of quality of products and so on.
So intensive strategies have also sub types are as follow:
i. Market penetration.

Seeking increased market share for present products or services in present markets through
greater marketing efforts.
Increasing number of salespersons.
Increasing advertising expenditures.
Offering extensive sale promotion items.
Real example of Market penetration strategy:
In 2017 Apple Incorporation have increased a market share of more than 50% in the
smartphone market in the whole world.
Apple Company has always introduced the new version of iPhone mobile every year as a result
of its market penetration.
Apple Company has a huge market share than all of its competitors. However the Apple Still try
to add to its customer’s base by defeat its competitors.
Reasons:

 Apple incorporation want to increase number of customers .

 Increase sale of a company.
 Gain deeper presence in a market.
 Increase market share.

ii. Market Development:

Introducing present products or services into new geographic area.
In simple words when businessman doing business in existing market but also start a business
in another market.
Launch the same products in another market like in Hangu, Peshawar Karachi and so on.
Real example of Market development strategy:
McDonald is one of the most popular fast food incorporation in the world and its journey in the
USA.
McDonald had started a business just in the USA at small scale but it want to start a business
with large scale. So McDonald have used the market development strategy to develop new
market to sell existing products. However it did not want to confine itself in the home it had
expended and went beyond the national border. Therefore McDonald has started a lot of
branches at different countries to expend the business.
Currently McDonald doing Business in over 100 countries.
This strategy is so useful for McDonald incorporation and earn huge profit due to this strategy
Reasons:
 McDonald realized that millions of people like to fast food.
McDonald want to build strong brand in the fast food market.
It want to increase its investment at different market.

iii. Product development

Seeking increased sale by improving present products or services or developing new ones.
In simple words when organization want to increase their sale and customers then it will be
start innovation of products in existing market and create quality goods to capture the market.
Real example of products development strategy.
IKEA is a furniture retail company. IKEA is to sells furniture Kitchen appliance and other goods
and home services. IKEA headquarter in the Netherland. Now IKEA has used the products
development strategy producing new products and sell to existing markets. Product
development is one of the main growth strategy for IKEA.

IKEA is Furnishing has more than 12000 types of products in its range and also launces 2000
new products every year.
Reasons:

 IKEA focus on low cost at a consistent level of a quality

 Worldwide supply chain
 The company leased equipment to suppliers.
 The IKEA products demand are so high.
3. Diversification Strategies
Diversification means expend/broad.
Diversification strategy help to businessman to expend their business by open new similar
product business or open unrelated product business to expend their business.
If a company has huge capital and huge funds then they can use the diversification strategy but
if they have no capital and funds then they cannot use this strategy.
So diversification strategies have also sub types are as follow:
i. Related diversification:
Related diversification means that merging of an organization with another similar organization
it works to gain monopoly power because you have a verity of goods and also create economic
of scale because if you make more units then the units price will be decrease due to fixed cost.
This strategy allows the organization to expend their business, capability, resources, profit and
market share.
Real example of related diversification strategy:
Honda motor company was started by Honda Soichiro at 1946
Honda motor company is the best example of related diversification strategy. Honda is the best
for car and trucks it doing business for car and trucks for a lot of time and the Honda start out in
the motorcycle business Honda developed a successful ability to build small and reliable
engines. Honda also try to its engine building skill in the all-terrain vehicle lawn mower and
boat motor industry.
Honda was introduced c-100 a small engine in 1953.
Reasons:

 Honda have the ability to build small and reliable engines.

 Honda have also the ability in new business.
 Honda want to produce innovative products.
 To increase number of customers.

ii. Unrelated Diversification.

Unrelated diversification refers when one business start another business which are completely
different from their first one business, products, plane, employees etc.
It strategy helps to expend business in different products to get more profit and create
economic of scale.
(Don’t put all your eggs in one basket) it means that businessmen should not invest money in
one project but businessmen should invest money in different projects because if you invest
just in one project and accidently it occur loss then you will be bear a completely loss but if you
invest money in different projects then some projects will be earn profit and don’t worry if
some project will bear loss.
Real example of unrelated diversification.
American inventor George G. Blaisdell founded zippo lighter manufacturing company in 1932.
Produced the first zippo lighter at 1933 design made by IMCO. The name given by Blaisdell
because he liked the sound of word zipper, the zippo lighter was made in America so it was very
on pick and was getting a huge profit by producing the zippo lighter because no one can
produced like zippo lighter. But the future of lighter business become less and less because the
zippo company feel that the smoking is becoming less than less in some countries it make
perfect sense to the company to produce another products or start another business. So
company had developed the unrelated diversification to produce another products which do
not similar with the lighter business. So the zippo company was starting to produce *Pocket
Knives, Money Clips Pocket flashlights, key holders, writing instrument and tape measures.
Trying to win in the diversification option.
Reasons:

Zippo company was feeling that the smoking are become less and less due to this reasons zippo
start other products.
The company have more funds to produce more products.

4. Defensive strategies:
Defensive strategies means to reduce the company assets expenses cost etc. to protect our
business. Therefore it works in business to protect from huge loss. It have also sub types named
retrenchment, divestiture and liquidation strategy.
i. Retrenchment:
Retrenchment strategy means to go one step behind by reducing costs, expenses, sale of some
assets, return of investment and lay off employees etc. Retrenchment does not means that
employee’s performance but it can used when financial position is low of a company.
Real example of retrenchment strategy.

I’m giving the real example of retrenchment strategy which applied by PIA Pakistan
International Airlines in 2019. PIA feel that the company bear loss usually every year. So PIA
was decide to decrease the cost of operation by declining workforce through a voluntary
separation scheme in which PIA offered financial package to leave the company.
Reasons:

 PIA facing financial crises

 Rise in fuel prices
 Declining in Revenue
 Flourishing in operation cost

ii. Divestiture Strategy:

Selling a division or part of an organization is called divestiture. It can used for further strategies
and to raise capital or doing investment in other business.
As company grow, they become start and involved in some other organization lines, so
divestiture is the best way to focus just on profitable side.
Divestiture strategy may be used by bankruptcy, cutting back on location, selling losing assets,
political divestiture and so on.
Real example of Divestiture strategy:

I’m giving the real example of Yahoo’s Company which have used divestiture strategy.
Yahoo’s have sold out of his internet business to Verizon Company for $4.83 billion. The sale
was part of Yahoos plan to slim down and turn around its struggling operation.
Reasons:

 Yahoo’s company revenue fell and its talent fled to sunnier climes.
 It was failures which ultimately led to Yahoos absorption by Verizon.
 Yahoo’s want to sell unprofitable units to protect his business.

iii. Liquidation Strategy:

Liquidation strategy is one of the most shocked strategy. It strategy refers to sell all types of
assets of a business and pay debt to creditors and close the business. It is emotionally difficult
strategy.
It strategy used by businessmen from a huge further loss.
Real example of liquidation strategy:
I’m giving the example from the case study a well-known case study involving liquidation
strategy.
Toys “R” was an American retailer toys store. He sell the toys over 800 stores in the United
States and many in location. But the TOYS ‘’R” have used the liquidation strategy due to e-
commerce such as Amazon and big-box retailers like Walmart and Target.
In March 2018 Toys R sell and close if its U.S stores, and start the liquidation process and sell all
type of Assets trademark and pay to his creditors and the store fully closed.
Reasons:

 Toys R failed due to Innovation.

  Toys R did not start online business.

ASSIGNEMENT ENDED
GOOD LUCK DEAR SIR,