Chapter 9 daily assignment

Chapter 9 daily assignment - differentiation, replication...

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Caitlin Vodopia Chapter 9 Closing Case 1. To strengthen its business model HP used a horizontal differentiation strategy. This is evident by its acquisition of Compaq and the resulting lower cost structure of the purchase, as HP was able to achieve economies of scale in the computer server and storage areas. By acquitting Compaq, HP was also able to reduce some rivalry in the industry because Compaq was one of its big competitors. Dell used vertical integration to strengthen its corporate business model by entering into new industries such as printers, mp3 players, televisions, and other electronics. Dell used forward integration by opening up its own upscale retail stores in malls, imitating Apple’s strategy. Dell hoped to use its strong brand name to get market share in the new industries. 2. The advantages of horizontal integration are a lower cost structure, increased product
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Unformatted text preview: differentiation, replication of the business model, reducing rivalry in an industry, and increasing bargaining power over suppliers and buyers. Disadvantages of horizontal integration include problems merging different company cultures, high management turnover in the acquired company when the merger is hostile, and underestimating the problems involved in mergers. The advantages of vertical integration are increased product differentiation, lower costs, or reducing industry competition. These benefits are achievable if it facilitates investments in efficiency-enhancing specialized assets, protects product quality, or results in improved scheduling. Disadvantages of vertical integration include increased cost structure, being locked into old technology when new more efficient technology is available, and unpredictability in the market....
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