Chap 3 BCG Matrix Analysis of Unilever's Major Businesses môn Principle of Management | Trường Đại học Quốc tế, Đại học Quốc gia Thành phố Hồ Chí Minh

CHAP 3:
HW: Research and collect information about a large diversified firm.
Then classify the firm’s various businesses into the four cells of the BCG
matrix. Guidelines: - Identify 3–5 major businesses/divisions/brands of
the company. - For each business, discuss: 1. Is the industry growing fast
or slow? 2. Does the company have a strong or weak position in this
business? - Place the businesses into the BCG Matrix. - Explain your choices briefly.
Selected Major Businesses
1. Beauty & Wellbeing (which includes brands like Dove, Vaseline, Sunsilk)
oIndustry growth: According to Unilever, the Beauty & Wellbeing group reported
underlying sales growth of ~7.4% in Q1 2022 and ~9.5% in Q2 2022. This
indicates a relatively fast-growing industry, especially in emerging markets and premium segments.
oUnilever’s position: Strong. The group says it holds “world-leading category
positions in hair care and skin cleansing” and that major brands within it (e.g.,
Vaseline) are among its fastest-growing.
oPlacement: Star (“High Growth / High Market Share”). Because the industry is
growing fast and Unilever has a strong position, this business fits the “Star” quadrant.
2. Home Care (brands like OMO, Sunlight, Cif, Domestos)
oIndustry growth: Unilever notes the Home Care business reported underlying
sales growth of 12.2% in Q2 2022, up from 9.2% in Q1 2022. This suggests a
fast-growing category (or at least a growth above average for FMCG).
oUnilever’s position: Relatively strong. The group lists major global brands in
Home Care and has a substantial turnover in the division.
oPlacement: Also fits Star, but depending on precise market share vs competitors it
might be a “Question Mark/Star” borderline. Given the strong growth and solid
market share, I'd place it in the Star quadrant.
3. Ice Cream / Frozen desserts (brands like Magnum, Ben & Jerry’s, Wall’s)
oIndustry growth: This category is growing but slower compared to high-growth
segments. For example, Unilever expects its spun-off ice-cream unit to achieve 3-
5% annual organic growth from 2026. That’s modest growth in FMCG terms.
oUnilever’s position: Strong brand portfolio (many top brands globally), but this
business is being spun off because Unilever considers it lower growth and lower margin relative to its core.
oPlacement: Cash Cow (“Low Growth / High Market Share”), because the
business has high market share and established brands, but industry growth is modest.
BCG Matrix for Unilever (selected divisions) High Growth Low Growth
High Market Beauty & Wellbeing (Star) Ice Cream (Cash Share Home Care (Star) Cow)
Low Market Not explicitly analyzed here (could be a Division with Not included in this Share
weaker share in a high growth segment) analysis
Note: For simplification I’ve only placed the three divisions selected; Unilever has other
businesses (Nutrition, Personal Care, etc.) which could be further classified.
Explanation of choices
Beauty & Wellbeing: Strong market share + moderate to high growth → qualified as a Star.
Home Care: Demonstrated high growth and likely strong share among global players in
detergents/home hygiene → also a Star.
Ice Cream: Although the brand strength is high, the growth rate is moderate (~3-5%) and
the business has matured. It is not pursued by Unilever as a primary growth engine, hence Cash Cow. Additional Notes
If I were to expand this further, I could identify a “Question Mark” business (high growth
but lower share) or a “Dog” (low growth, low share) within Unilever’s portfolio (for
example, perhaps a niche brand in a matured market).
The matrix helps Unilever allocate resources: invest heavily in Stars, maintain Cash
Cows to generate cash, critically review Question Marks, and consider divesting Dogs.
Unilever’s recent strategic moves (e.g., spinning off ice cream) align with this thinking:
focusing more on higher growth, higher margin segments like Beauty & Wellbeing.
PART 1: The Planning Process and Organizational Goals
1. Definition and Nature of Planning
Planning is the process through which managers define goals, develop strategies, and
determine the best ways to achieve desired results in the future.
It acts as a roadmap for the organization, guiding all activities toward a shared purpose while reducing uncertainty and risk.
Planning answers three essential managerial questions:
1. Where are we now?
2. Where do we want to go?
3. How will we get there?
Effective planning allows organizations to use their resources efficiently, anticipate future
challenges, and seize opportunities. Without a plan, decisions become reactive instead of
proactive, leading to wasted resources and unclear direction.
Example (Real Case):
When Starbucks began expanding internationally, it didn’t just open stores randomly. It planned
carefully by analyzing each country’s coffee culture, customer behavior, and economic
conditions. In markets like China, Starbucks adapted its menu to include tea-based beverages —
an example of flexible, well-researched planning that respected local preferences. Managerial Insight:
Planning is not a one-time activity but a continuous process. Managers must constantly monitor
results, adjust strategies, and update goals as external and internal conditions change.
2. Importance of Planning in Organizations
Planning serves multiple critical functions that help organizations grow, remain stable, and
perform effectively. The main purposes include:
A. Providing Direction and Unity
Planning gives the organization a clear direction. It ensures that all departments and employees
are aligned with the company’s mission and vision.
When goals are clearly defined, everyone knows what to focus on and how their work
contributes to the bigger picture. Case Example:
Google’s mission — “to organize the world’s information and make it universally accessible and
useful” — guides all projects, from search engine development to cloud computing.
This clarity of purpose helps Google’s thousands of employees coordinate effectively across departments and countries. Managerial Insight:
Managers must communicate organizational goals clearly so that every employee understands
their role. When workers see the connection between their daily tasks and the organization’s
mission, motivation and efficiency increase.
B. Reducing Uncertainty
The business environment is constantly changing — due to economic fluctuations, new
technologies, and global crises. Planning helps organizations anticipate changes, prepare
responses, and reduce risks. Case Example:
During the COVID-19 pandemic, companies with strong contingency plans adapted more
quickly. For example, Unilever adjusted its supply chain and increased online marketing to
maintain operations while many competitors struggled.
Its proactive planning allowed it to keep essential goods (like hygiene and food products) available worldwide. Managerial Insight:
Managers should use forecasting tools, scenario analysis, and data-driven methods to plan for
uncertainties. A good plan includes backup options and flexibility to adjust when unexpected events occur.
C. Setting Standards for Control and Evaluation
Planning creates specific goals and performance standards, which later serve as benchmarks for
evaluation. Without clear goals, managers cannot measure progress or identify problems effectively. Case Example:
Toyota sets specific annual goals for production efficiency, such as reducing waste by a certain
percentage. These targets become measurable standards. If results fall short, Toyota’s managers
can trace issues in production processes and make improvements using the “Kaizen” (continuous improvement) approach. Managerial Insight:
Planning and controlling are closely linked. A plan without evaluation is meaningless, and
control without a plan has no reference point. Successful managers constantly compare actual
results with planned objectives to ensure continuous improvement.
D. Encouraging Innovation and Coordination
When organizations engage in systematic planning, they are forced to analyze their environment,
assess alternatives, and seek creative solutions. This process often leads to innovation and
improved coordination across departments. Case Example:
Apple Inc. is known for its long-term innovation planning. Before launching a new product,
Apple plans years in advance — analyzing market trends, technology developments, and user needs.
For example, the success of the iPhone was not spontaneous; it was the result of years of
strategic planning and coordinated efforts between software, design, and hardware teams. Managerial Insight:
Planning enhances collaboration among departments. By involving employees in goal-setting,
managers can gather diverse perspectives and build commitment to the company’s vision.
3. Types of Organizational Goals
Goals can be classified according to their scope, time frame, and level within the organization.
Understanding these differences helps managers design suitable plans for each layer of the company.
A. Strategic Goals
Set by top management (CEOs, board members).
Long-term (3–5 years or more).
Focus on the overall growth, profitability, and position of the organization. Concerned with questions like:
“What kind of business should we be in?” “Where should we compete?” Case Example:
Tesla’s strategic goal is to “accelerate the world’s transition to sustainable energy.”
To achieve this, Tesla invests heavily in electric vehicle technology, battery innovation, and solar
energy systems. This long-term goal shapes every business decision the company makes.
B. Tactical Goals
Developed by middle managers.
Translate strategic goals into specific departmental objectives.
Medium-term (usually 1–3 years).
Bridge the gap between strategy and daily operations. Case Example:
If Tesla’s strategic goal is sustainability, then a tactical goal might be:
“Reduce battery production costs by 20% in two years.”
This goal is assigned to the engineering and manufacturing divisions, which then design projects to meet the target.
C. Operational Goals
Set by lower-level managers or supervisors.
Short-term (less than one year).
Focus on daily performance and efficiency.
Often stated in measurable terms (quantity, cost, time). Case Example:
In Tesla’s battery factory, an operational goal could be:
“Produce 5,000 battery packs per week while maintaining less than 1% defect rate.”
This goal directly supports tactical and strategic objectives by focusing on daily execution.
4. Levels of Planning and Time Horizons
Level of Management Type of Plan Time Horizon Example Top-Level Managers Strategic Plan 3–5 years Expanding to Asian markets
Middle-Level Managers Tactical Plan 1–3 years
Increasing production efficiency
Lower-Level Managers Operational Plan 1 year or less Weekly inventory control
5. Effective Goal Setting (SMART Criteria)
To make planning successful, goals should follow the SMART framework: Criteria Meaning Example
“Increase customer satisfaction” is vague; “Improve S – Specific
Clearly state what is to customer satisfaction score from 80% to 90%” is be achieved specific. M – Include quantifiable
indicators Sales should rise by 10%, not “increase a lot.” Measurable A – Goals must be realistic, not impossible
A startup cannot aim to surpass Apple in one year. Achievable
R – Relevant Aligned with
Environmental goals should match sustainability organizational mission values. T – Time- bound Have a clear deadline
“Within 6 months,” not “someday.” Case Example:
When Nike launched its “Move to Zero” campaign (aiming for zero waste and zero carbon), it used SMART goals such as:
Reducing carbon emissions by 70% by 2025,
Using 100% renewable energy in owned facilities by 2025.
These specific and measurable goals allowed Nike to track and report progress transparently.
6. Common Barriers to Planning
Even though planning is essential, many organizations face difficulties in applying it effectively. Common barriers include:
1. Lack of Information:
Managers cannot make good plans without accurate data about markets, costs, or competitors.
→ Example: Nokia’s decline occurred partly because it underestimated the smartphone
revolution due to poor market analysis.
2. Resistance to Change:
Employees may be afraid of new strategies that alter established routines.
→ Example: When IBM shifted from hardware to software services, many long-time
engineers resisted retraining, slowing transformation. 3. Poor Communication:
Plans fail if goals are not communicated clearly or understood by all levels.
→ Example: A company-wide cost reduction plan may fail if employees don’t know how
their roles contribute to savings. 4. Inflexibility:
Rigid plans prevent organizations from responding quickly to unexpected events.
→ Example: Traditional travel agencies struggled during the pandemic, while digital
platforms like Booking.com adapted through flexible online models. Managerial Insight:
Good planning combines structure with flexibility. Managers should plan in detail but remain
ready to adjust when conditions change.
⚙ Part 2 – The Nature of Strategic Management
1. Definition and Concept
Strategic management is the continuous process through which managers analyze the
organization’s environment, set long-term objectives, develop strategies, and implement
decisions that ensure survival and growth in a competitive environment. It involves two main elements:
1. Formulating strategy – deciding what to do, and
2. Implementing strategy – deciding how to do it effectively.
In simple terms, strategy provides the direction and purpose for the organization, while
strategic management ensures that direction is maintained, adjusted, and executed successfully.
2. Importance of Strategic Management
Strategic management is essential because it:
Helps organizations adapt to change in their external environment.
Provides a sense of purpose and long-term direction.
Aligns all departments and employees toward common goals.
Builds competitive advantage, allowing firms to outperform rivals.
Supports proactive decision-making instead of reactive crisis management.
Real Case Example: Netflix’s Transformation
Netflix is a classic example of effective strategic management.
Originally a DVD rental company, Netflix’s leaders recognized the technological shift toward
digital streaming early on. Instead of waiting for competitors to act first, they changed their entire business model.
Strategy Formulation: Reed Hastings (CEO) saw the opportunity in streaming and
decided to move the company toward an online subscription platform.
Implementation: The company invested billions in content rights, developed a global
streaming infrastructure, and began producing original content like House of Cards and Stranger Things.
This strategic shift transformed Netflix into the world’s leading entertainment platform —
demonstrating how well-timed, forward-looking strategies ensure long-term survival.
3. The Strategic Management Process
Strategic management is not a single step but a cycle of activities that interact continuously.
It generally includes the following key stages:
Step 1: Environmental Analysis
Managers begin by scanning both the internal and external environments to identify strengths,
weaknesses, opportunities, and threats.
This step ensures that strategy is based on accurate information rather than assumptions.
Internal analysis examines resources, culture, and capabilities.
External analysis studies market trends, competitors, customer needs, and regulations. Case Example:
Before entering India, Amazon conducted deep environmental analysis. It discovered
opportunities in a growing online market but also challenges such as complex tax laws and underdeveloped logistics.
To adapt, Amazon built its own delivery network in India — a direct response to the country’s infrastructural limitations.
Step 2: Strategy Formulation
In this stage, managers decide what direction the organization should take and which strategies will achieve its goals.
Strategy formulation involves defining:
The company’s mission (why it exists),
Objectives (what it wants to achieve), and Plans (how to get there). Example:
Apple’s strategy formulation centers around innovation, design excellence, and brand loyalty.
Its mission is to “create the best products on earth and leave the world better than we found it.”
Every new product — from the iPhone to the Apple Watch — aligns with this core strategy.
Step 3: Strategy Implementation
Even the best strategy is useless without effective execution.
Implementation involves converting strategic plans into actions by allocating resources, setting
timelines, and assigning responsibilities. Case Example:
When McDonald’s decided to adopt a global “Experience of the Future” strategy, it didn’t just plan — it implemented.
Installed digital ordering kiosks, Modernized store interiors, Added table service, and Improved food quality.
This consistent global implementation turned its strategy into measurable customer satisfaction improvements. Managerial Insight:
Implementation is often the most difficult part of strategic management because it requires
changing people’s behavior, restructuring departments, and managing resistance. Managers must
communicate the strategy clearly and align all incentives to support it.
Step 4: Strategy Evaluation and Control
After implementing a strategy, managers must evaluate its effectiveness.
Evaluation involves comparing actual results with planned objectives, identifying gaps, and making necessary adjustments. Example:
Toyota’s strategic evaluation process is rooted in continuous improvement (“Kaizen”). After
every project, Toyota analyzes performance and feedback to refine future strategies. This
approach ensures constant progress and long-term competitiveness.
4. Key Components of a Strategy
A complete strategy includes three essential elements that define its structure and effectiveness:
1. Distinctive Competence
This refers to the unique strengths or capabilities that give the organization an edge over competitors.
It can come from innovation, superior customer service, efficient production, or brand reputation. Example:
Disney’s distinctive competence lies in storytelling and creative brand experiences.
Its powerful intellectual properties (Marvel, Pixar, Star Wars) and emotional storytelling
distinguish Disney from competitors in the global entertainment industry. Managerial Insight:
Managers must identify what their company does best and focus resources on strengthening that
area. Competence is what customers recognize as the company’s “signature advantage.” 2. Scope
Scope defines the boundaries of operations — the industries, markets, or regions where the company competes. It answers questions like:
“What products do we offer?”
“Which customers do we serve?”
“Where do we operate geographically?” Example:
Samsung’s scope covers smartphones, home appliances, semiconductors, and digital displays.
This diversification allows Samsung to spread risk and capture multiple market opportunities. Managerial Insight:
A company’s scope must match its resources and expertise. Expanding too broadly (over-
diversification) can stretch resources thin and reduce efficiency.
3. Resource Deployment
This element focuses on how resources (money, talent, time, technology) are allocated to achieve goals efficiently. Example:
Amazon reinvests a large portion of its profits into R&D, logistics, and new technology —
especially in artificial intelligence and cloud computing (AWS).
This disciplined resource allocation sustains its leadership in innovation and market dominance. Managerial Insight:
Managers must prioritize investments that support the company’s core strategy. Misallocation of
resources — such as funding low-impact projects — can weaken performance and slow growth.
5. Levels of Strategy in an Organization
Strategic management occurs at multiple levels within a company, each serving a different purpose: Level Focus Example Key Decision- Makers
Corporate-Level What industries or markets Alphabet Inc. managing Top executives and Level Focus Example Key Decision- Makers Strategy to compete in Google, YouTube, and Waymo board members Starbucks differentiating
Business-Level How to compete in a Division heads and through experience and Strategy specific industry general managers quality How to support business- Department Functional-Level Starbucks’ HR department level strategy through managers and Strategy improving employee training operations supervisors
6. Strategic Fit and Competitive Advantage
A good strategy ensures strategic fit — the alignment between:
Internal strengths (resources, culture, capabilities), and
External environment (market opportunities and threats).
When fit is achieved, the organization gains a competitive advantage — a position that allows it
to perform better than rivals over time.
Case Example: Southwest Airlines
Strengths: Low-cost operations and efficient turnaround times.
Environment: Growing demand for affordable domestic air travel.
Fit: Southwest aligned its operations (no-frills service, point-to-point routes) perfectly with market demand.
As a result, it became one of the most consistently profitable airlines in history. Managerial Insight:
Managers must continuously adjust strategies to maintain fit as the environment changes. What
works today may fail tomorrow if technology, customer expectations, or competitors evolve.
7. Common Strategic Management Mistakes
1. Lack of Clear Objectives:
Vague goals make it hard to measure progress.
→ Example: Yahoo’s downfall stemmed from unclear direction and frequent leadership changes.
2. Ignoring External Changes:
Companies that fail to adapt to new technologies or trends risk extinction.
→ Example: Blockbuster ignored the rise of streaming services and lost to Netflix.
3. Overconfidence and Poor Execution:
Even good strategies fail without proper implementation.
→ Example: Nokia had a strong brand but executed poorly when adapting to smartphone competition. Managerial Insight:
Successful strategic management requires humility, flexibility, and constant learning. Managers
must monitor both successes and failures as feedback to refine future strategies.
⚡ Part 3 – SWOT Analysis and Strategy Formulation
1 What is SWOT Analysis?
SWOT analysis is a strategic tool used by managers to evaluate the organization’s internal
capabilities and external . environment It helps identify:
S – Strengths (what the company does well)
W – Weaknesses (what it lacks or does poorly)
O – Opportunities (favorable external trends)
T – Threats (external risks or challenges)
By analyzing these four factors, managers can design strategies that use strengths to take
advantage of opportunities, while minimizing weaknesses and avoiding threats.
🔹 In short: SWOT helps managers understand where the company stands and how it can compete better.
2 The Two Dimensions of SWOT Internal Environment External Environment Strengths and Weaknesses Opportunities and Threats Internal Environment External Environment
Controllable factors inside the firm Uncontrollable factors outside the firm
A. Internal Analysis (Strengths & Weaknesses)
This involves evaluating the company’s resources, structure, culture, and capabilities.
1. Strengths are the internal assets that give a company competitive advantage. Examples: Skilled workforce Strong brand image Patented technology Efficient supply chain Case Example:
Apple’s strength lies in its strong brand loyalty, cutting-edge design, and ecosystem of
interconnected products (iPhone, MacBook, Apple Watch). These elements make it extremely
difficult for competitors to copy or replace.
2. Weaknesses are internal factors that reduce efficiency or limit growth potential. Examples: High production costs Limited market presence Poor management structure Case Example:
Airbnb’s weakness during its early years was a lack of control over property standards and
safety. This affected customer trust and led to legal disputes in some cities.
By improving verification systems and customer support, Airbnb turned a weakness into a strength. Managerial Insight:
Managers must conduct honest self-assessments. Many organizations fail not because they lack
strengths, but because they refuse to recognize weaknesses.
B. External Analysis (Opportunities & Threats)
This step examines outside factors that affect performance — such as competitors, markets,
government policies, and technology trends.
1. Opportunities are external conditions that the company can exploit to grow or improve performance. Examples: Emerging markets Technological advancements
Changes in customer preferences Case Example:
Tesla identified a major opportunity: the global shift toward renewable energy and electric vehicles.
By investing early in EV technology and battery research, Tesla became a leader in sustainable
transport before traditional automakers could catch up.
2. Threats are external forces that could harm the organization’s success. Examples: Economic recession New competitors Government regulations Changing consumer behaviors Case Example:
Coca-Cola faces increasing threats from health-conscious consumers reducing sugary drink consumption.
To adapt, Coca-Cola diversified into bottled water, sugar-free beverages, and energy drinks —
showing how to turn a threat into an innovation opportunity. Managerial Insight:
Managers should continuously monitor environmental changes (through market research,
competitor analysis, and forecasting) to identify opportunities early and prepare for threats before they escalate.
3 Using SWOT for Strategy Formulation
Once SWOT elements are identified, managers can combine them to design strategies.
This is often called the TOWS Matrix, which links internal and external factors: Strategy Type Combination Description Example Use strengths to Leverage internal Tesla using innovation (S) SO (Strength– capitalize on advantages to exploit to capture the EV market Opportunity) opportunities favorable conditions (O)
Improve internal issues byAirbnb improving quality
WO (Weakness– Use opportunities to taking advantage of (W) using global tourism Opportunity)
overcome weaknesses external trends boom (O) Use strengths to Protect business from Apple using brand loyalty ST (Strength– minimize external risks using competitive (S) to face Android Threat) threats capabilities competition (T) Nokia cutting costs (W)
WT (Weakness– Minimize weaknesses Defensive strategy to and exiting weak markets Threat) and avoid threats
survive difficult situations (T) Managerial Insight:
SWOT isn’t only about listing factors — it’s about strategic matching. Managers must ask:
“How can our strengths help us seize opportunities?”
“How can we minimize weaknesses to avoid threats?”
4 Example: SWOT Analysis of Amazon Strengths Weaknesses Opportunities Threats
Global brand reputation Dependence on third- Expansion into Antitrust regulations and and customer trust party sellers healthcare and AI data privacy laws Strategic Implication:
Amazon uses its brand strength and technology expertise to enter new industries like
healthcare (Amazon Clinic) and AI (Alexa).
At the same time, it invests in compliance and logistics innovation to reduce risks from
regulations and supply chain disruptions.
5 The Role of SWOT in Strategic Decision-Making SWOT helps managers to:
Prioritize resources effectively.
Choose markets or products with high potential.
Identify risks early and design prevention measures.
Communicate strategy clearly to all employees. Case Example:
Before entering Vietnam, Coca-Cola conducted a detailed SWOT analysis:
Strength: Strong brand recognition.
Weakness: Limited local knowledge.
Opportunity: Rising middle-class consumption.
Threat: Competition from local brands (Tân Hiệp Phát).
Based on this, Coca-Cola adopted a localized strategy, adjusting flavors, packaging, and
marketing to suit Vietnamese consumers — a great example of data-driven strategic planning.
6 Common Mistakes in SWOT Analysis
1. Being too general:
Listing vague points like “good management” or “competition” without evidence makes SWOT useless.
2. Ignoring internal reality:
Overestimating strengths leads to unrealistic strategies.
3. Not updating SWOT regularly:
The environment changes fast — last year’s opportunities might not exist today.
4. Failing to link SWOT with strategy:
SWOT is valuable only when it leads to actionable decisions. Managerial Insight:
A good SWOT analysis must be specific, evidence-based, and dynamic.
Managers should revisit SWOT periodically to ensure strategies stay relevant.
🏢 Part 4 – Corporate-Level Strategy
1 Definition and Purpose
A corporate-level strategy is the highest level of strategic decision-making in an organization.
It is developed by top management (like the CEO, board of directors, or corporate executives) to determine:
What types of businesses or industries the company should be involved in,
How resources are allocated across these businesses, and
How to create value for the entire corporation. 💡 In simple terms:
Corporate-level strategy answers the question — “What business are we in, and how do we
grow or compete across multiple businesses?”
This strategy focuses on the big picture — the overall direction of the company, long-term
growth, and synergy among its different units.
2 The Main Types of Corporate-Level Strategies
Corporate strategies can be divided into five major types:
1. Growth (Expansion) Strategy 2. Stability Strategy
3. Retrenchment (Defensive) Strategy
4. Diversification Strategy 5. Combination Strategy
Each type serves different purposes depending on the organization’s current situation, resources, and market conditions.
🟩 A. Growth (Expansion) Strategy
Growth strategies aim to increase the company’s size, market share, or profitability.
This is often the most common choice because organizations want to expand into new products, markets, or technologies.
Forms of Growth Strategy:
1. Concentration Strategy
→ Focuses on improving performance in one single business area.
Example: Starbucks expanding coffee stores worldwide and innovating within the coffee category. 2. Vertical Integration
→ The company expands its operations along the supply chain — either backward
(toward suppliers) or forward (toward distributors/customers).
oBackward Integration: The company produces its own raw materials or inputs. 🟢
Example: Tesla produces its own batteries and chips to reduce dependency on suppliers.
oForward Integration: The company controls distribution or retail. 🟢
Example: Apple opened Apple Stores to directly sell products to customers
instead of relying solely on third-party retailers.
3. Horizontal Integration
→ The company acquires or merges with competitors in the same industry to increase market power. 🟢
Example: Disney acquired Pixar, Marvel, and 21st Century Fox to strengthen its
entertainment portfolio and dominate the content industry. Managerial Insight:
Growth requires investment and risk-taking, but it brings opportunities for scale economies and brand dominance.
However, managers must ensure that expansion aligns with the company’s capabilities —
growing too fast without structure can lead to chaos or financial strain.
🟨 B. Stability Strategy
Sometimes, maintaining the current situation is the best decision. A stability
strategy focuses on sustaining existing performance, rather than aggressively growing or cutting operations.
Organizations choose this strategy when:
The environment is uncertain or risky,
The company is already performing well,
Or it needs time to consolidate after rapid growth.