EXAM QUESTION 15

1.Production Organization: create Strategy, good/service and value

A business strategy, according to Rapid Business Intelligence Success, is a business plan that takes place long-term in order to help achieve a specific goal or objective. The aim of a business strategy is to strengthen a particular business so that its performance increases and, in turn, the business becomes more profitable. Without a business strategy, a business has no guide to follow and has an increased risk of not succeeding.. A business strategy is necessary to maintain a business' performance. Business strategies are motivating, informational and change-stimulating. If you aren't motivated to form or complete the business strategy to see an end result, your business will most likely fail. A business strategy is also a wonderful tool to use when monitoring how well your business is doing over time and deciding the next step to take in your business in order to be successful. "Strategy is the direction and scope of an organization over the long-term: which achieves advantage for the organization through its configuration of resources within a challenging environment, to meet the needs of markets and to fulfil stakeholder expectations".

There are 3 main corporate strategies: Growth, Stability, Renewal. Growth – is a corporate strategy that seeks to increase the organization’s business by expanding the number of products offered or markets served (услуги). How can organization grow?-Concentration, -- -Vertical integration, -Horizontal integration, -Diversification. Growth through concentration is achieved when an organization concentrates on its primary line of business and increases the number of products offered or markets served in this primary business. A concentrated growth strategy involves focusing on increasing market share in existing markets. This strategy is also sometimes called a concentration or market dominance strategy. In a stable environment where demand is growing, concentrated growth is a low risk strategy. Concentration may involve increasing the rate of use of a product by current customers; attracting competitor's customers; and/or attracting nonusers/ new customers.Vertical integration. When a company expands its business into areas that are at different points of the same production path. Example. Ford company began construction of the world's largest industrial complex along the banks of the Rouge River in Dearborn, Michigan, during the late 1910s and early 1920s. The massive Rouge Plant included all the elements needed for automobile production: a steel mill, glass factory, and automobile assembly line. Iron ore and coal were brought in on Great Lakes steamers and by railroad, and were used to produce both iron and steel. Rolling mills, forges, and assembly shops transformed the steel into springs, axles, and car bodies. Foundries converted iron into engine blocks and cylinder heads that were assembled with other components into engines.Horizontal integration. Many countries have restrictions: When all producersof a good orservicein amarketmerge, it is the creation of amonopoly. If only afewcompetitors remain, it is termed anoligopoly. Also calledlateral integration.Themergerofcompaniesat thesamestageofproductionin the same or differentindustries. When theproductsof both companies are similar, it is a merger ofcompetitors.Diversification: - Related Diversification – growth by merging with or acquiring firms in different but related industries, - unrelated Diversification- growth by merging with or acquiring firms in different and unrelated industries