Identify and briefly explain what is meant by each of the following terms:a. outsourcing strategyb. vertical integration strategyc. first-mover advantaged. first-mover disadvantagee. horizontal and vertical scope

Question

What will be an ideal response?

Answer 1

Outsourcing forgoes attempts to perform certain value chain activities internally and instead farms them out to outside specialists and strategic allies. A vertical integration strategy extends a firm's competitive and operating scope within the same industry, expanding the firm's range of value chain activities backward into sources of supply and/or forward toward end users. A first-mover advantage helps (1) build a firm's image and reputation with buyers; (2) requires commitments to new technologies, new-style components, new or emerging distribution channels, and so on; (3) can produce an absolute cost advantage over rivals; (4) builds customer loyalty to pioneering firms in making repeat purchases; and (5) constitutes a preemptive strike, making imitation difficult or unlikely. First-mover disadvantages include vulnerability to fast-moving technology or rapid growth in customer demand, resulting in quickly appearing next-generation technology or products; and markets are sometimes slow to adopt the innovative product offering of a first mover, in which case a fast follower with substantial resources and marketing muscle can leapfrog the challenger. A company's horizontal scope, i.e. the range of product and service segments it serves, can be expanded through new-business development or mergers and acquisitions of other companies in the marketplace, while vertical scope describes the extent to which a company engages in the various activities that make up the industry's entire value chain system-from raw-material or component production all the way to retailing and after-sales service.