Corporate-Level Strategy & Vertical Integration

Vocabulary flashcards covering the core concepts, strategies, and illustrative examples from the lecture on corporate-level strategy with a focus on vertical integration.

Strategic Management

An overall process that includes external and internal analysis, setting mission and goals, strategic choice, and implementation to gain competitive advantage.

Business Level Strategy

Plan for how a firm positions itself in the market, typically through cost leadership or product differentiation.

Cost Leadership

A positioning strategy focused on becoming the lowest-cost producer in an industry.

Product Differentiation

A positioning strategy that seeks to make a firm’s offerings distinct from competitors on features, quality, or brand.

Corporate Level Strategy

Strategy of multi-business organizations that answers the question: What businesses should we be in?

Scope of Markets & Industries

The range of product lines, markets, and industries in which a firm competes—one of the chief concerns of corporate strategy.

Mode of Entry

The approach a firm uses to enter new businesses, such as M&A, strategic alliances, or building from scratch.

Portfolio Management

Managing and coordinating a firm’s collection of businesses to optimize overall performance.

Vertical Integration

When a company controls more than one stage of its supply chain to create synergy and capture above-normal returns.

Backward Integration

A move up the supply chain in which a firm acquires or creates its own suppliers of raw materials or components.

Forward Integration

A move down the supply chain in which a firm takes ownership of distribution or retail functions closer to end customers.

Diversification

Corporate strategy of entering new, different businesses beyond the firm’s current products or markets.

Mergers and Acquisitions (M&A)

An entry mode in which a firm buys or combines with another company to enter or expand in a business.

Strategic Alliance

A cooperative agreement between firms to share resources or capabilities without full ownership change.

Value Chain Economies

Cost reductions or revenue enhancements gained by linking multiple stages of the supply chain under one firm.

Ford River Rouge Complex

Classic example of backward vertical integration where Ford owned raw materials, production, and assembly in one site.

Netflix Original Programs

Example of backward integration—Netflix produces its own content to hedge against rising licensing costs.

Zara (Inditex) Stores

Example of forward integration—Inditex owns most Zara stores, enabling rapid market response in fast fashion.

Apple Flagship Stores

Example of forward integration—Apple operates its own global retail outlets to control customer experience and sales.