With horizontal integration you are acquiring a similar market entity to make it more powerful which puts an organization in a position to strengthen its competitive advantage and weaken competition. The aim of horizontal integration is to gain as big a share in the market possible for that product or service. Vertical integration the company wants to control the supply chain process which in essence would reduce cost. When an organization is able to own its own suppliers and distributors they eliminate the middle man and increase the organizations profits. Some variables that make each of these integrations valuable are both increase market shares, revenues,profits and reduce competition. Examples of recent integrations would be Apple Inc. vertical integration which controls both its manufacturing and distribution processes and Marriott’s horizontal merger with with Sheraton in 2015 to create one of the world’s largest hotel chains.
An organization should consider diversification as a viable strategy when the organization is at a point where they want to upgrade their products or services to improve their market shares or as an avenue for expanding into new markets, doing something totally different than what the company is based to do.
Some benefits global strategy provides an organization are increased market shares, the ability to enter new markets and the ability to increase its customer base. A situation when a global strategy would not be a viable option is when there is known political, economic and regulatory barriers present in a chosen country and an organization goes forward with its project knowing the consequences could either be hit or miss. Some organizations only see the potential benefits and are blind sided by the risks. Good strategy planning and management must look carefully at both. Another situation when global strategy would not be a viable option is when the potential benefits do not outweigh the potential cost.
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