About Integrations and Strategies

1. GROUP MEMBER NAMES
Muhammad Asad Siddiqui
Zafar Rabbani 59686
Noureen Mirza 59208
SUBJECT : “STRATEGIC
MANAGEMENT”
PRESENTATION TOPIC
“INTERGRATION AND MATRICES”

2. STRATEGY:
 a plan of action designed to achieve a long-term or overall aim
 the art of planning and directing overall military operations and
movements in a war or battle.
Strategic Management:
Strategic management involves the formulation and
implementation of the major goals and initiatives taken
by a company's top management on behalf of owners,
based on consideration of resources and an assessment
of the internal and external environments in which the
organization competes.

3. TYPES OF
STRATEGIES
Integration
Vertical Horizontal
Intensive
Market
Penetration
Market
Development
Product
Development
Diversification
Related Unrelated
Defensive
Joint
Ventures
Divestiture
/Liquidation

4. WHAT IS INTEGRATION?
Integration is the act of bringing together smaller components
into a single system that functions as one.

5. Vertical Integration
Forward
Backward
Horizontal Integration
Acquisition
Merger
Strategic Alliance

6. FORWARD INTEGRATION
Forward integration is a business strategy that involves a
form of vertical integration whereby business activities are
expanded to include control of the direct distribution or
supply of a company's products.
Example:
• If Intel acquires Dell, it is a forward integration because
it is an acquisition of a manufacturer by a supplier.
• If Dell acquires a distributor of computers such as
BestBuy, it will again be a forward integration since it is
an acquisition of a distributor by a manufacturer.

7. BACKWARD INTEGRATION:
Backward integration is a form of vertical integration that
involves the purchase of suppliers. Companies will pursue
backward integration when it will result in improved efficiency
and cost savings. Backward integration might cut transportation
costs, improve profit margins and make the firm more
competitive.
Examples of Backward Integration:
• A clothing manufacturer may purchase one of its suppliers of
fabrics to lessen the cost of raw materials.
• A bank which sells insurance buys an insurance company.

8. GUIDELINES FOR FORWARD
INTEGRATION
• Present distributors are expensive, unreliable,
or incapable of meeting firm's needs
• Availability of quality distributors is limited
• When firm competes in
an industry that is expected to grow markedly
• Organization has both capital and human resources needed
to manage new business of distribution
• Advantages of stable production are high
• Present distributors have high profit margins

10. GUIDELINES FOR BACKWARD
INTEGRATION
• When present suppliers are expensive, unreliable,
or incapable of meeting needs.
• Number of suppliers is small and number of
competitors large.
• High growth in industry sector.
• Firm has both capital and human resources to manage
new business.
• Advantages of stable prices are important.
• Present supplies have high profit margins.

11. HORIZONTAL INTEGRATION
Horizontal integration is the process of a company
increasing production of goods or services at the same part
of the supply chain. A company may do this via internal
expansion, acquisition or merger. The process can lead to
monopoly if a company captures the vast majority of the
market for that good or service.
Example of Horizontal Integration:
• The Standard Oil Company's acquisition of 40
refineries.
• An automobile manufacturer's acquisition of a sport
utility vehicle manufacturer.
• A media company's ownership of radio, television,
newspapers, books, and magazines.

12. GUIDELINES FOR HORIZONTAL INTEGRATION
• When an organization can gain monopolistic characteristics in a
particular area or region without being challenged by
the federal government for "tending substantially"
to reduce competition
• When an organization competes in a growing industry
• When increased economies of scale provide major competitive ad
vantages
• When organization has both the capital and human talent needed
to successfully manage expanded organization
• When competitors are faltering due to lack of managerial
expertise or a need for particular resources that an
organization possesses; note that horizontal integration would not
be appropriate if competitors
are doing poorly because overall industry sales are declining

13. THE EXTERNAL ASSESSMENT

14. THE EXTERNAL FACTOR EVALUATION
(EFE) MATRIX
 External Factor Evaluation (EFE) matrix method is a
strategic-management tool often used for assessment of
current business conditions.
 The EFE matrix is a good tool to visualize and prioritize
the opportunities and threats that a business is facing.

15. EFE MATRIX
KEY EXTERNAL FACTORS WEIGHT RATING WEIGHTED SCORES
OPPORTUNITIES:
(1)- ROWAN COUNTRY IS GROWING 8% ANNUALLY IN POPULATION 0.05 4 0.2
(2)- TDB UNIVERSITY IS EXPANDING 6% ANNUALLY 0.08 3 0.24
3)- MAJOR COMPETITOR ACROSS TOWN RECENTLY CEASED OPERATIONS 0.08 2 0.16
(4)-DEMAND FOR GOING TO CINEMA GROWING 10 5 ANNUALLY 0.07 3 0.21
(5)- TWO NEW NEIGHBORHOODS BEING DEVELOPED WITH IN 3 MILES 0.09 4 0.36
(6)- DISPOSABLE INCOME AMONG CITIZEN GRE 5% IN PRIOR YEAR 0.06 1 0.06
(7)- UNEMPLOYMENT RATE IN COUNTRY DECLINED TO 3.1% 0.03 3 0.09
THREATS:
(8)- TREND TOWARS HEALLTHY EATING ERODING CONCESSION SALES 0.12 2 0.24
(9)- DEMAND FOR ONLINE MOVIES AND DVDS GROWING 10% ANNUALLY 0.06 3 0.18
(10)- COMMERCIAL PROPERTY ADJACENT TO CINEMAS FOR SALE 0.06 4 0.24
(11)- TDB UNIVERSITY INSTALLING AN ON CAMPUS MOVIE THEATER 0.04 2 0.08
(12)- COUNTRY ABD CITY PROPERTY TAXES INCREASING 25% THIS YEAR 0.08 2 0.16
(13)- LOCAL RELIGIOUS GROUPS OBJECT TO RATED MOVIES BEING SHOWN 0.04 3 0.12
(14)-MOVIES RENTED FROM LOCAL BLOCKBUSTER STORE UP12% 0.08 0 0
(15)-MOVIES RENTED LAST QAURTER FROM TIME WARNER 15% 0.06 4 0.24
TOTAL 1.00 2.58

16. Developing an EFE matrix:
• List factors: The first step is to gather a list of external factors.
Divide factors into two groups: opportunities and threats.
• Assign weights: Assign a weight to each factor. The value of each
weight should be between 0 and 1 (or alternatively between 10 and
100 if you use the 10 to 100 scale). Zero means the factor is not
important. One or hundred means that the factor is the most
influential and critical one. The total value of all weights together
should equal 1 or 100.
• Rate factors: Assign a rating to each factor. Rating should be
between 1 and 4. Rating indicates how effective the firm’s current
strategies respond to the factor. 1 = the response is poor. 2 = the
response is below average. 3 = above average. 4 = superior.
Weights are industry-specific. Ratings are company-specific.
• Multiply weights by ratings: Multiply each factor weight with its
rating. This will calculate the weighted score for each factor.
• Total all weighted scores: Add all weighted scores for each factor.
This will calculate the total weighted score for the company.

17. THE COMPETITIVE PROFILE MATRIX (CPM)
 Competitive profile matrix is an essential strategic
management tool to compare the firm with the major players
of the industry.
 CPM shows the clear picture to the firm about its strong
points and weak points relative to its competitors.
 The CPM score is measured on basis of critical success
factors, each factor is measured in same scale mean the
weight remain same for every firm only rating varies. The
best thing about CPM that it includes your firm and also
facilitate to add other competitors make easier the
comparative analysis.

18. COMPETITIVE PROFILE MATRIX
COMPANY A COMPANY B COMPANY C
CRITICAL SUCCESS FACTORS WEIGHT RATING SCORE RATING SCORE RATING SCORE
ADVERTISING 0.20 1 0.2 4 0.8 3 0.6
PRODUCT QUALTITY 0.10 4 0.4 3 0.3 2 0.2
PRICE COMPETITIVENESS 0.10 3 0.3 2 0.2 1 0.1
MANAGEMENT 0.10 4 0.4 3 0.3 1 0.1
FINANACIAL POSITION 0.15 4 0.6 2 0.3 3 0.45
CUSTOMER LOYALTY 0.10 4 0.4 3 0.3 2 0.2
GLOBAL EXPANSION 0.20 4 0.8 1 0.2 2 0.4
MARKET SHARE 0.05 4 0.2 4 0.2 3 0.15
TOTAL 1.00 1 3.3 2.6 2.2

19. Creating a CPM:
• In the first column list down all the key success factors of industry
(usually from 6 to 10).
• In the second column, assign weights to each factor ranging from
0.0 (not important) to 1.0 (most important). Greater weights should
be given to those factors which have greater influence on the
organizational performance. The sum of all weights must be equal to
1.
• Now rate each factor from 1 to 4 for all the firms in the analysis,
Here rating 1 represents major weakness, rating 2 shows minor
weakness. Similarly rating 3 shows minor strength while rating 4
represents major strength.
• Calculate weighted score by multiplying each factor’s score by its
rating.
• Find the total weighted score of all the firms by adding the
weighted score for each variables.

20. THE INTERNAL ASSESSMENT

21. THE INTERNAL FACTOR EVALUATION
(IFE) MATRIX
 Internal Factor Evaluation Matrix is a popular
strategic management tool for auditing or evaluating
major internal strengths and internal weaknesses in
functional areas of an organization or a business.
 IFE matrix also provides a basis for identifying or
evaluating relationships among those areas.

22. IFE MATRIX
WEIGHT RATING WEIGHTED SCORES
INTERNAL STRENGHTS
(1)- LARGEST MANUFATURER IN THE MARKET 0.10 4 0.4
(2)-SUPPLIER MAJOR AIRLINES 0.12 4 0.48
(3)- GOOD REPUTATION AND IMAGE 0.04 3 0.12
(4)-CLOSE PROXIMITY TO THE AIRPORT 0.08 4 0.32
(5)-STRONG MANAGEMENT TEAM 0.04 3 0.12
(6)-INCREASING CASH FLOW 0.05 3 0.15
(7)-LOYAL EMPLOYEES 0.04 3 0.12
(8)-ACCESS TO CHEEP AND RELIABLE FINANCING 0.03 4
0.12
(9)-HISTORY OF MINMAL SERVICE COMPLAINTS 0.04 3 0.12
(10)-FINANCIAL RATIOS. 0.04 4 0.16
INTERNAL WEAKNESSES
(1) SATURATED MARKET 0.10 1 0.1
(2) SENSITIVE TO OIL PRICES 0.15 2 0.3
(3) LITTLE DIVERSIFICATION 0.08 2 0.16
(4) ABSENCE OF STRATEGIC PARTNER 0.04 1 0.04
(5) LIMITED ACCESS TO INTERNATIONAL MARKETS 0.05 1 0.05
TOTAL 1.00 2.76

23. Creating an IFE Matrix:
• List key internal factors (10-20)
o Strengths & weaknesses
• Assign weight to each (0 to 1.0)
o Sum of all weights = 1.0
• Assign 1-4 rating to each factor
o Firm's current strategies response to the factor
• Multiply each factor's weight by its rating
o Produces a weighted score
• Sum the weighted scores for each
o Determines the total weighted score for the organization
• Highest possible weighted score for the organization
is 4.0; the lowest, 1.0. Average = 2.5