Corporate-level Strategy :

Specifies actions taken by the firm to gaina competitive advantage by selecting and managing a group of different businesses competing insevera lindustries and product markets.

Corporate Strategy Directional Strategy overall orientation towards growth, stability, retrenchment Portfolio Strategy industries/markets that the firm competes in through products lines & business units Parenting Strategy coordination and transfer of resources between product lines & business unit. Integration : Vertical Integration: Coordinating upstream activities (those closer to the raw materials) with downstream activities (those closer to the customer) . Benefits of Vertical Integration reduces or eliminates costs of buying and selling (Transaction Costs) smoother, more efficient operation Limits to Vertical Integration Possible incompatibilities between managerial skills and corporate cultures that make upstream and downstream activities successful.

Horizontal Integration Coordinating across the same or similar value chain activities.

Horizontal Integration Benefits: Corporate managers have expertise to recognize undervalued stocks that many individual investors would miss. Corporations have economies of scale for financing acquisitions that individuals do not. Horizontal Integration Limits: Conglomerate discount: value of stock of conglomerate sells for less than total value of individual stocks. Takeover premiums: corporations usually pay a premium over the normal trading price of the targets stock.

Diversification :
Diversification is a corporate strategy to increase sales volume from new products and new markets. Diversification can be expanding into a new segment of an industry that the business is already in, or investing in a promising business outside of the scope of the existing business.

The different levels of diversification :

Related diversification (Concentric diversification):
This means that there is a technological similarity between the industries, which means that the firm is able to leverage its technical know-how to gain some advantage. For example, a company that manufactures industrial adhesives might decide to diversify into adhesives to be sold via retailers. The technology would be the same but the marketing effort would need to change. It also seems to increase its market share to launch a new product that helps the particular company to earn profit. For instance, the addition of tomato ketchup and sauce to the existing "Maggi" brand processed items of Food Specialities Ltd. is an example of technological-related concentric diversification. The company could seek new products that have technological or marketin g synergies with existing product lines appealing to new group of customer s.This also helps the company to tap that part of the market which remains untapped, and which presents an opportunity to earn profits.

Unrelated diversification (Conglomerate diversification)

The company markets new products or services that have no technological or commercial synergies with current products but that may appeal to new groups of customers. The conglomerate diversification has very little relationship with the firm's current business. Therefore, the main reasons for adopting such a strategy are first to improve the profitability and the flexibility of the company, and second to get a better reception in capital markets as the company gets bigger. Though this strategy is very risky, it could also, if successful, provide increased growth and profitability.

Why Choose Diversification? Have excess resources Permitting superior internal governance Transferring competences among businesses Realizing economies of scope

Disadvantages of Diversification: Seasonal, cyclical or economic downturns in related industries can be felt more severely The necessary integration, creation of efficiencies and cost savings, or achievement of competitive advantage may be elusive