Strategic Management Module 3 HW Assignment 1) Horizontal integration is not consistent with maximizing the wealth of stockholders when there are no prospective targets. This might occur if prospective targets have organizational cultures or practices that differ from the firm’s. Horizontal integration also has the possibility of an antitrust regulation. 2) The industry value chain is composed of all the value-creating activities within the industry. The internal value chain includes all the physical and technological activities within the company that add value to their product. The relationship between vertical integration and the industry value chain are that the more the value chain increases, usually so does the vertical integration to help increase profits. 3) In the 1920s, Ford and GM began to vertically integrate backward because the component supply industry was not well developed, so automakers manufactured some parts themselves. They also wanted to
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