Compared

Save transaction costs with upstream and downstream

control scarce resources

Ensure the quality of key inputs

Get new customers

Risks associated with unfamiliarity with new business areas

In particular, backward integration involves a large amount of investment and strong asset specificity, which increases exit costs.

Competition in the industry is fierce

The industry has significant economies of scale

Under the premise of complying with anti-monopoly laws, certain monopoly advantages can be obtained in local areas.

The industry has great growth potential

Have the human, material and financial resources required for implementation

When the overall market grows or is likely to grow

Be limited to existing products or markets and do not allow sales to decline even if the entire market declines

Other businesses leave

Strong market position and leveraging experience and capabilities to gain competitive advantage

Lower risk, higher senior management involvement, and less investment required

Unexplored or undersaturated markets

Access to new, reliable, economical and high-quality sales channels

Existing business areas are very successful

Have the capital and human resources required to expand operations

There is excess production capacity

The main business belongs to an enterprise that is rapidly globalizing

Products have high market credibility and customer satisfaction

The industry is a high-tech industry that is suitable for innovation and rapid development.

The industry is in a stage of rapid growth

Have strong research and development capabilities

Major competitors offer higher quality products at similar prices

Continued operations in existing products or markets cannot achieve corporate goals.

Financially balance cash flow

Diversification means higher profits than expanding into existing areas

spread risk

Easier access to capital markets

Find new growth points when the original industry cannot grow

Leveraging underutilized resources

Use surplus funds

Receive funds or other financial benefits

Use the image and reputation in one industry or market to enter another industry or market, To succeed in another industry or market, corporate image and reputation are crucial

Risks of the original business industry

overall market risk

Industry entry risk

Industry exit risk

Internal business integration risks

Mechanism reform, including adjustment of management leadership structure Develop new policies and management control systems to improve incentive and restraint mechanisms

Adjust financial strategies, such as establishing an effective financial control system and strictly controlling cash flow Optimize capital structure

cost reduction strategy

summary

Reposition or adapt existing products and services

Adjust marketing strategy

Need to seize the opportunity

Major changes have occurred in the macroeconomic situation, industrial cycles, technology, policies, social values, fashion, etc. The market reaches saturation, competitive behavior intensifies or changes, etc. leading to deterioration or even crisis in the external environment on which survival depends.

Internal operating mechanism is not smooth, decision-making errors, poor management, etc. The enterprise or a certain business operation is in trouble and loses its competitive advantage.

industry

manner

identity

Sources of funds

Avoid entry barriers, enter quickly, seize market opportunities, and avoid various risks

Get synergy

Overcome negative externalities of enterprises, reduce competition, and enhance control over the market

poor decision making

Inability to integrate well after mergers and acquisitions

Paying exorbitant M&A premiums

Cross-border mergers and acquisitions face political risks

Gain a deeper understanding of markets and products

No suitable acquisition target exists

Maintain a unified management style and corporate culture

Motivating internal managers

lower cost

Avoid M&A Pitfalls

Accumulate learning ability

Easy access to internal resource support

The risk is relatively small

Cost growth is slow

Compared with mergers and acquisitions, competitors are added, which will intensify competition in a certain market.

Not having access to other companies’ knowledge and systems may be more risky

Lack of economies of scale or experience curve effects in the first place

It is a very slow process and may miss market opportunities.

Entering new markets can be very risky

Can get in

Can withstand it

Great benefits

Demonstrated ability to overcome barriers to entry

An intermediary organization between enterprises and the market

From the perspective of corporate relationships, an equal partnership is formed through an agreement based on resource sharing, mutual advantage, mutual trust, and mutual independence.

From the perspective of corporate behavior, it is a strategic cooperative behavior

Promote technological innovation

Avoid business risks

Avoid or reduce competition

complementary resources

Open up new markets

Reduce coordination costs

equity type

Contractual

Features

Control

The basis for centralization disappears

Low barriers to entry/existence of barriers to exit

Diverse market demands lead to high product differentiation

Non-existent/difficult to achieve economies of scale

Government policies and local regulations restricting the concentration of certain industries

No company occupies a significant market share, and no company can have a significant impact on the development of the entire industry.

Franchise or franchise

Technological innovation to create economies of scale

Discover industry trends early

Increase the added value of products and enhance consumers’ recognition of product value Help strengthen consumers’ purchasing intention Reduce bargaining power on price Possibility of high profits

Specialization by product type or product segment

Customer Type Specialization

Geographic area specialization

Respond quickly to the market

Demand is diverse and changeable. New products must be analyzed carefully to avoid blindly following trends and overreacting.

learning curve

Difficulties in selecting, acquiring and applying proprietary technology

Inadequacy of raw materials, parts, capital and other supplies

Customer confusion and wait-and-see

Reactions to substituted products

Lack of courage and ability to take risks

barriers to entry

Competition among existing companies within the industry

Situations suitable for early entry

Not suitable for early entry

basic rules

Developed countries® Similar developed countries® Developing countries

Developing countries ® Similar developing countries ® Developed countries

Developed/Developing Countries® Developed Countries® Developing Countries

Market segments typically differ in number, size, and characteristics

Full control: Full control of daily operating activities to ensure that valuable technology, processes and other intangible assets are retained in the subsidiary

Get rid of conflicts: avoid conflicts in interests and goals of joint ventures, and integrate the business strategies of foreign subsidiaries with the overall strategy of the enterprise

More expensive: It may cost a lot of money and must be raised internally or in the financial market to obtain funds.

Lack of supporters: Without the cooperation and participation of enterprises in the host country, it is difficult for wholly-owned subsidiaries to obtain support from local policies and various operating resources, and their ability to avoid political risks is also significantly smaller than that of joint ventures.

Reduce capital investment in national operations

Helps make up for the shortcomings of lack of experience in cross-border operations Conducive to attracting and utilizing the resources of host country joint venture partners

Coordination costs may be too large (goals, culture, etc.)

Different business formats

between upstream, middle and downstream

Product production is separated into different value chains

Leading companies flexibly use the three main methods of international business operations - trade, direct investment, and non-equity forms to obtain their most advantageous position and maximum value addition in the global value chain.

Gain a relatively high status and added value in the global value chain through its non-core technological innovation and comparative advantages in production costs.

OEM

ODM

Craftsmanship

product

Function

Value Chain

In a bureaucratic value chain, the county assets of leading enterprises can be obtained quickly and lowly through internal technology expansion and knowledge transfer, and process and product upgrades can occur quickly. Upgrading functionality and value is difficult.

In the market-oriented value chain, independent research and development realizes process and product upgrades, In the early days, it was difficult to obtain ready-made assets from leading companies. In a fully competitive market environment, process and product upgrades were relatively slow. Once a supply relationship with leading companies is formed, technology spillovers and independent core capabilities can be combined to achieve functional and value chain upgrades.

In the captured value chain, process and product upgrades can be achieved through knowledge sharing that improves efficiency and improves some products. However, under the high degree of supervision and control of leading enterprises and locked in specific production links of the value chain, it is difficult for functional and value chain upgrades to occur.

In the modular value chain, independent research and development is required to establish a supply and demand relationship with leading companies. In the early stage, it is difficult to obtain ready-made assets from leading companies, and process and product upgrades are relatively slow. Once a supply relationship with leading companies is formed, technology spillover can be achieved; independent core capabilities can be developed, functions and value chains can be upgraded, and eventually one can become a leader in the new value chain.

In a relational value chain, leading companies choose suppliers with whom they can establish long-term supply relationships. In a relatively stable division of labor, the process and product upgrades of following companies can be completed in a short time with the assistance of leading companies. It only has the production capacity for specific links required by leading companies. Leading companies have no support for upgrading functions and value chains (which is not easy), and may even control and intervene.

Focus on customers who like domestic products and do not consider customers who advocate international brands.

Frequently adapt products and services to meet the special or even unique needs of customers

Strengthen the construction and management of distribution networks to alleviate competitive pressure from foreign competitors

Don’t be limited to low-level cost competition. You should use leading companies in the industry as benchmarks to improve your strength in all aspects. Continuously catching up with competitors in developed countries in terms of production efficiency, product quality and service levels

Find a market that is well positioned and easy to defend Accurately position our position in the global industrial chain, actively participate in the international division of labor, give full play to our comparative advantages, improve the efficiency of resource allocation, expand overseas markets, and improve competitiveness.

Find a suitable breakthrough in a global industry In the face of industrial transformation and upgrading in the context of globalization, we must use advanced foreign technologies or innovate on the basis of foreign products and technologies to establish and develop high-tech industries and achieve leapfrog economic development.

Be good at learning to obtain resources from developed countries and overcome their own shortcomings of insufficient skills and lack of capital.

Geographical location (urban and rural areas, terrain and climate, transportation)

Demographic variables (age, gender, income, occupation, education level, family size, family life cycle stage, religion, race, nationality)

lifestyle, personality

Timing of purchase or use, benefits pursued by consumers, user profile, usage rate, loyalty, purchase stage and attitude

Different end users often have different requirements

Large, medium, small

Helps to select the target market in areas where users are concentrated

Benefits pursued by users, frequency of use, brand loyalty, user status (key, general, frequently used, temporary users) and purchasing methods

Wong Lo Kat

UFIDA Kingdee

Tylenol

Product portfolio width (product categories), length (product items), depth (colors, varieties, specifications) and relevance (degree of close correlation)

Strategy type

single brand name

Multiple brands

private label

Development reasons

cost oriented pricing

demand-based pricing

competitive price pricing

psychological pricing strategies

Product portfolio pricing strategy

Discounts and discount strategies

Geographical Spread Strategy

penetration pricing

skimming pricing

satisfaction pricing method

direct distribution

indirect distribution

exclusive distribution

selective distribution

intensive distribution

Compare

online channels

Offline channels

advertising promotion

Business promotion

public relations

personal selling

push strategy

pull strategy

push-pull strategy

Differentiation

cost leadership

Differentiation

Stable demand - high capacity utilization - low costs

Low visibility – low requirements on employee communication skills – low cost

Order - Resources - Production

Resources - Orders - Production

Resources - Production - Orders

The technical content of the supplies is low or the production technology is relatively mature.

Supplies are not important in production and sales

No need for suppliers to provide after-sales service

The market where the supplier is located is relatively mature

Large number of suppliers

Competition is fierce

Products often face rapidly changing market opportunities and flexible customer needs.

The supply of supplies has high adaptability

Some supplies have high technical content and have an important impact on product design, production and sales.

Supplies play an important role in production operations

The demand for supplies is relatively high

The production technology of the supplies is mature and highly substitutable.

Suppliers have strong production capabilities and the ability to achieve economies of scale

Information communication between the two parties is not sufficient and effective. Sometimes both parties even deliberately conceal some information in order to gain a favorable position in negotiations.

There is only a simple supply and demand relationship between the two parties, and there is a lack of cooperation in other aspects.

For the purpose of replenishing inventory, there is a lack of consideration of production needs and market changes. Often causing inventory backlog or supply exceeding demand, affecting normal production and operations.

Management is simple and extensive, and procurement costs remain high

The production plan and procurement plan are very detailed. From products to raw materials, from required quantity to required time, from production progress to purchase sequence, everything is clearly defined.

The calculation and preparation of procurement plans are very complicated. When there are many types and complex product structures, the amount of calculation of required raw materials and purchase time is very huge, which requires the help of computer technology.

Few suppliers or even a single supplier

Establish long-term and stable cooperative relationships with suppliers

Small purchase quantities and high delivery frequency

Both partners care about the improvement and innovation of each other's products, and actively coordinate and cooperate with each other. Information sharing is fast and reliable

共享当前库存和实际耗用情况

Established long-term, stable and in-depth cooperative relationships with suppliers

Break the siled procurement and warehouse management model, share information, minimize the waste caused by the uncertainty of independent forecasts, and greatly save supply costs.

The principle of benefit sharing and risk sharing with suppliers, negotiation and determination of the sharing ratio of management expenses and unexpected losses, as well as the sharing ratio of new profits from inventory improvement, has laid a solid foundation for the cooperation between the two parties.

Based on the digital platform, a new cooperative relationship with automatic identification, mutual recognition, direct transactions, and high degree of fit has been established.

Automation technology has eliminated a large number of manual operations, innovated and optimized the procurement process and even the entire business process of the enterprise.

Procurement management has become more scientific, convenient, precise and accurate than ever before, and "cost reduction and efficiency increase" are extremely significant. Adapting to the development trend of new technologies, the promotion prospects are very broad

On-the-job training, corporate university or regular training

Deliver external novel information, purchase needed skills, or utilize external training providers

On-the-job training or external training, self-development or purchased skills

Organization, department and employee levels

Work ability, attitude, performance

Five categories: superior, colleague, subordinate, myself, and customer

Comparative method, scale method, descriptive method

basic salary

variable pay

indirect compensation

external fairness

internal fairness

individual fairness

Different strategies for different positions

Specific business strategies determine business risks Capital structure determines financial risk

Shortage of value-added cash

value-added cash surplus

Impaired cash surplus

Impairment cash shortage