chapter  4
26 Pages

7 Introduction

Today’s firms are continually confronted with the need to develop and effectively implement strategies to achieve success in the world’s competitive markets. Corporate strategy is the organization’s field of endeavor and how it chooses the business in which to compete. It answers the question, “What business areas should we be in to maximize the long-run profit of the organization?” For many organizations, competing successfully often involves vertical integration. Vertical integration refers to the expansion of the company in its related businesses either to acquire the source of raw materials (backward integration) or to acquire the retailers to be closer to the consumer (forward integration). It could also involve diversification into new business areas. Strategic alliances are an alternative to vertical integration and diversification. More specifically, corporate strategy answers these questions:

• Does the organization have a specific interest or a definite strategic advantage in some business?