Description  discussion question What are three types of opportunities for sharing a sound basis for diversification (think in terms of ways companies diversify) or vertical integration? Give an example of each from companies you have read and or researched. POST Student one:The first things I thought about in terms of diversification opportunity is the three tests for diversification discussed in our readings this week. In chapter eight, the three tests discussed are how attractive is the industry the firm is considering entering, how much will entry to the industry cost, and will the firm be better off (2016)? Through these three tests, I think we can develop three sound reasons for diversification. For starters, is the industry attractive? Well, if the market is expanding, has low switching cost for consumers, and there is room for more competition, then I believe this can make the new industry attractive for the firm. Second, will diversification into a new industry be cost effective? Diversification can be cost effective if new cost are low and can be directed towards marketing strategies and setting up new channels of distribution. If on the other hand, entering the new market will require a complete overhaul of the manufacturing process, and the opening of costly new offices and warehouses, then a firm may be less optimistic to diversify into the new industry. Lastly, will the firm be better off? Diversification can seem like a necessary solution for a struggling firm, but they must be honest with their position and evaluate the opportunity properly to ensure it doesn’t further hurt the company.One example of the need to properly evaluate a diversification is the Quaker Oats acquisition of Snapple. In 1993 Quaker Oats purchased Snapple for a big price at $1.7 billion and in just four years was forced to sell for $300 million. That’s a loss of over $1 billion dollars inside half of a decade. Quaker misread the ease of which they could diversify with Snapple and a series of issues including being unable to secure the same distribution channels they used with Gatorade, dumping popular radio host advertisements, and misreading a willingness for consumers to purchase the product in larger quantities doomed the attempted diversification (Deighton, 2002).Vertical integration is like diversification as it entails a firm venturing beyond their current business model. Vertical integration is a firm expanding within the value chain to increase profits and decrease the leverage of other members within that value chain (2016).  The age of the internet seems to have made it easier for companies to successfully go through vertical integration as online stores give them a direct route to the consumer. For example, when I was growing up near the beach everyone wanted a pair of Oakley sunglasses. To find a pair of these sunglasses, consumers would walk along the boardwalk and find surf shops that would sell the pair they were looking for. Now, I can simply go to the Oakley online store and place an order. This allows Oakley to cut out the third-party retailer. This is an example of forward vertical integration, but there is also reverse vertical integration which works in the other direction. This occurs when a retailer takes on the role of supplier to limit the leverage of the supplier and increase its own profit (2016).I think “big box” grocery retailers such as Walmart, Target, and Wegman’s provide a good example of this. While these stores typically sell products produced by other suppliers, they can also produce products to sell on their own. For example, Wegman’s is a large grocery store that sells various grocery items from different suppliers, but after achieving success doing this, they began to produce some of their own products such as sushi, paper towels, water, butter, bread and more (Sile, 2019).References [Author removed at request of original publisher]. (2016, March 22). 8.1 Selecting Corporate-Level                                     Strategies. Retrieved February 2, 2020,        from                     https://open.lib.umn.edu/strategicmanagement/chapter/8-1-selecting-corporate-level-     strategies/[Author removed at request of original publisher]. (2016, March 22). 8.3 Vertical Integration Strategies.                 Retrieved February 2, 2020, from  https://open.lib.umn.edu/strategicmanagement/chapter/8-3-vertical- integration-strategies/Deighton, J. (2014, August 1). How Snapple Got Its Juice Back. Retrieved February 2, 2020,                 from https://hbr.org/2002/01/how-snapple-got-its-juice-backSile, E. (2019, August 2). I’ve Shopped at Wegmans for Three Decades-These Are the 11 Best Products.                 Retrieved February 2, 2020, from https://www.realsimple.com/food-recipes/shopping-    storing/food/best-wegmans-food-productsStudent two:Diversification is the process in which a company invests its capital in multiple areas in order to not only make money, but protect their investments by having multiple assets to make money from and reducing their potential for loss by avoiding having “all their eggs in one basket”. A company can also diversify their assets by engaging in multiple avenues of profit generation. A company that produces a good for example, can expand to start producing other goods, thereby increasing their profit margins while also protecting themselves if one of the products they produce suddenly becomes less profitable. A great example of diversification is the company Apple. Which was once only a computer producer for consumers, Apple expanded into mobile media with the iPod, a huge success. They followed this diversification by expanding into the emerging smart phone market with the iPhone, the tablet market with the iPad and now are in the accessory market as well with the Apple Watch and Air Pod headphones. Apple has most recently made the leap into content creation with the launch of Apple TV, a streaming service with exclusive content. While Apple’s biggest profit generator remains the iPhone, recent years have shown that with the increased cost of smart phones, people are holding on to their existing phones for longer and not upgrading as often which costs Apple profits. By diversifying their company on what they produce, they have many more avenues for profit generation, that can help absorb losses in profit in other areas. A company that started as just a computer manufacturer has expanded into a juggernaut of a company that produces a great deal of goods, making the company extremely profitable in the process.Student three:Backward vertical integration, forward vertical integration, and related diversification are three types of opportunities for sharing a sound basis for diversification. Backward vertical integration is when companies enter into a market that a supplier will normally do (Mastering Strategic Management, 2015). McDonald’s is an example of this, as they began processing their own meat, and growing their own potatoes for their company (Box Around the World, 2019). Forward vertical integration is when a company enters a buyer’s market (Mastering Strategic Management, 2015). Amazon acquiring Whole Foods is a good example of forward vertical integration. This gave Amazon the ability to enter the grocery market in a more direct way (Decker, 2019). They are not major competitors in the grocery industry after the acquisition of this company. Another example of forward vertical integration would be flagship stores. Companies that would generally use stores that sell many brands such as Dick’s Sporting Goods, will have flagship stores in addition to selling at these stores. Brands like Under Armour will sell their products in their own stand alone store in order to cut out the middleman for some of their sales. This can allow for lower prices in the flagship store than the larger distributors. Related diversification is when a company enters an industry that has similarities to its current industry (Mastering Strategic Management, 2015). An example for this, would be the new video streaming industry. Disney had entered the streaming market after realizing the successes of the market. Since Disney is already a tv and movie conglomerate, they did not have to do too much to enter into this market. NBC is also making their own streaming platform which will have all of their shows that are currently only shown on their cable television networks, or other streaming networks such as Netflix and Hulu.  (2015). Mastering strategic management. Minneapolis, Minnesota Minneapolis: University of Minnesota Libraries Publishing,Open Textbook Library.Box Around the World. (2019, March 14). McDonald’s Supply Chain Management is The Secret to Their Success. Retrieved February 4, 2020, from https://boxaroundtheworld.com/McDonalds-supply-chain-management/Decker, F. (2019, January 29). Example of a Company’s Forward Integration. Retrieved February 4, 2020, from https://smallbusiness.chron.com/example-companys-f…Student four:This week we are looking at diversification and how business do this to grow their business. There are multiple ways a company can diversify their business.  Whether this be by buying up other companies or expanding your company to include the manufacturing of parts that you would normally buy from a different company or expanding into a completely different market. A good example of a company that has truly expanded their business into many markets is General Electric which started as a merger between two electric companies in 1892.  Since then the company has expanded into transportation, oil and gas, aviation, healthcare, and even more on a global scale (Craig, 2015). Another example would be Amazon.com who started as an online retailer selling a variety of products online but then diversified into books creating one of the biggest bookstores in the world to include the Kindle e-reader that allows people to read digital books like a traditional book. From there they have moved in to streaming music and video services to include making their own movies and TV shows.  Another huge aspect of Amazon.com’s diversification is AWS which is amazon web services providing a very large cloud computing service for the world. While these examples show companies expanding into different markets a great example of vertical integration is Tesla. Tesla is a great example of vertical integration because while they are the leading all electric vehicle manufacture, they have also expanded their business into the battery industry.  By jumping into the battery industry, they are able to cut their cost of having to buy batteries from a third-party company by creating their own batteries inhouse.   Along with this they can put the money into researching new battery concepts and be able to manufacture this new battery technology on their own.   While diversification is great is not required to be a successful company.  You have many companies that are focused on specific product or services and are successful without trying to diversify or vertically integrate. A good example of this would be Crocs’ which has stuck to their guns with their flagship shoe design and been very successful.References:Craig, W. (2015, April 24). Business Diversification: The Risk And The Reward. Retrieved February 5, 2020, from https://www.forbes.com/sites/williamcraig/2015/04/…Page, V. (2019, June 25). Is Amazon Too Diversified? Retrieved February 5, 2020, from https://www.investopedia.com/articles/personal-finance/111615/amazon-too-diversified.asp

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