Friday, August 9, 2019

Grand Met case, on horizontal integration Essay

Grand Met case, on horizontal integration - Essay Example So it is becoming more important for the business managers to redefine the strategies based on the situations in the market and direct the company to attain great success. GrandMet integrated horizontally and also diversified their business by merging with several companies that are either related or not related to the business. That was done in order to acquire the strategic resources that were important for the smooth operation of GrandMet. In this study the strategic choices of Max Joseph and his team would be analysed from the inception of GrandMet, so that the approaches applied for making the strategic decisions can be understood. Apart from this the reasons for choosing the strategies would also be evaluated and scrutinised so that the feasibility of the strategies can be discussed and decisions can be taken regarding the capabilities of Max Joseph and his decision making abilities. External Environment and Internal Strategic Capabilities In order to make strategic choices in the increasingly competitive environment, the firms have analysed the threats and opportunities according to the strategic management process. An analysis of the economic environment which includes the direction and the characteristics of the economy in which the firm is operating or competing has to be analysed. As far as the macro environmental aspects are concerned, GrandMet engaged themselves into the business of fast moving consumer durables (FMCG), which customers required everyday and the rate of repurchase in such cases are also high. So it can be said the choosing the FMCG market was due to the huge potential in this sector (Hitt, Ireland, and Hoskisson, 2012, p. 13-15). However, the fact remains that the FMCG market is dominated by few major players, who are considered to the best brands and they have also got well established distribution channels or supply chain, corporate system, are financially stable and have a sustainable position both economically and strategically. These features of the major players, such as Pepsi Co., or Bread Inc., in the FMCG industry were a major threat for GrandMet. Moreover, the FMCG market is extremely competitive and the customers have various choices, substitute products, and complementary products, which also gives the customers high bargaining power. This also leads to the increase in competitiveness and reduction of the profit margin of the companies or marketers. Customers are also afraid or reluctant to change or try out new products, which are an aspect of psychology or consumer behaviour, so it is also difficult to make the customers switch to a different brand. Only when the company can make sure, as to how the preferences or the taste of the customers’ changes and how it can be changed, the objective of offering new products or services would be successful (Bamford, and West, 2010, p. XVI). The market share of GrandMet was high and the sales figures of the company were higher among the global operati ons in the industry. In the year 1991, the sales of the company were around $14.771 billion, while the asset value was $17.648 billion. There were around 13.8 million employees in the company. On the basis of the sales report of 1991, GrandMet was in the 5th position among the British companies and 78th among the large corporations in the world. Apart from this, the CEO of the company Max Joseph

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