customer’s domain. Objective of the strategy is to have end to end control on all the activities that influences an organization purview. Vertical integration completely eliminates the bargaining power of the suppliers and reduces the dependency on the external vendor. On the other side, vertical integration with the customer domain it helps to better align with changing preferences and trends in the market. It also reduces dependency on the distribution channels which lead to better cost efficiency. The limitations of vertical integration are that it requires for huge capital investment and it deviate the organizations focus from its core expertise in to other unfamiliar areas. It also increases the risk of the firm as the dependency on …show more content…
It involves segregating the activities in the value chain as core and non-core activities. All the non core activities are outsources to an expert who specializes in doing the task. This helps the organization to focus on the core activities and thus helps in specialization. The current global environment is also very favorable for outsourcing as organizations can find specialized firms in countries like India, China and Philippines, which gives a cost advantage as well. It reduces the risk of the company, gives more scope for innovation and also reduces the management bandwidth on the non-core activities. The business process is more streamlined as it is handled by a specialist. It also gives access to various kinds of expertise which increases the efficiency. Specialization is the major advantage that a company gains by outsourcing. It helps to focus on the core competencies and further build on it to a gain a competitive advantage. The Limitation in outsourcing is that company can end up in managing the activities of multiple firms and may lose base on the specific activity in the value …show more content…
Mobility barriers are more specific to movement from one strategic group to another within an industry – Intra Industry movement. Strategic group is group of companies in an industry with similar business models and strategies. Not all firms in an industry are same. They differ in various aspects like business model, competitive scope, organisation structure and culture. Therefore, moving from one strategic group to the other can have significant barriers. Understanding mobility barriers is important because there are studies stating that there is a significant difference in the performance of firms in various strategic groups. (Porter, 1979). Mobility barrier is also a key factor that affects the firm’s performance. (Mascarenhas and Aaker, 1989). Mobility barrier also plays a key role in sustaining a firm’s competitive advantage and makes it difficult for the firms to imitate the strategy. Mobility barriers may originate from various factors and their