A vertical integration strategy and a corporate diversification Essay

A vertical integration strategy and a corporate diversification strategy - Essay Example First, it can reduce opportunistic threats from the firm's buyers and suppliers by making transaction-specific value-adding investments, e.g., by capitalizing on economies of scale (opportunism-based). Second, the firm can exploit any of its valuable, rare, and costly-to-imitate resources and capabilities, e.g., as part of the processes used to make its end-products (capabilities-based). Third, the firm can take advantage of stable or volatile business conditions to squeeze profits by reducing its costs as much as possible (flexibility-based). The value of adopting any of these three strategies would depend on how rare and costly to imitate these strategies are, whether the firm does something its competitors do not, the degree to which it exercises control, and the variety of uncertainties that it faces. Implementing vertical integration requires a high degree of control, so a functional or U-form organization structure is the most commonly used (aside from a good CEO), a necessity when adopting cost leadership and product differentiation strategies. The expected conflicts that arise from this structure can be resolved with the use of closely-managed budgets and management oversight committees.

Return on Investment Assignment Example | Topics and Well Written Essays - 750 words

Return on Investment - Assignment Example It is highly essential that trainers are able to estimate the ROI, cost benefit analysis and break even analysis as they need all these to assess the financial viability of training projects. A high ROI project may definitely be worth it but computing the cost benefit analysis side by side would also enable a trainer to estimate how much benefit can be obtained per unit of cost and decide if the project is even worth entering into (Powell, 2008). As for breakeven analysis, trainers need to use this measure to figure out when exactly will they be able to cover the costs they have spent in training and then start making profits as they might need this information for project budgeting and planning needs. Further on if a choice is to be made between mutually exclusive projects, than these measures would aid trainers in deciding what’s the best project to go ahead with. Thirdly and finally, the computation of these measures will aid training endeavors when they alter/re-plan their training projects to achieve the maximum benefit out of it or to cut down on their costs (Young and Aitken,