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Corporate Integration
International Business (Liberty
University)
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DB 1: Corporate Integration
CORPORATE INTEGRATION
BRIAN D. SMITH
LIBERTY UNIVERSTIY
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Key Term and Why You Are Interested in
It
When I think of corporate integration, only two types come to mind, vertical and horizontal, not
diversified. After reading the textbook, it piqued my personal interest as well as academic
curiosity to find out which companies have successfully incorporated diversified integration, and
which have failed and why. While I have always knew of the term diversified integration, I never
really put it in the category with the other two or I either merged with horizontal integration.
This method of corporate integration interests me considering that, after I retire, I want to be
part of an organization that is well-diversified with its products, companies and development.
Explanation of the Key Term
Corporate Integration involves three aspects: vertical, horizontal and diversified. “A company is
able to create a competitive advantage by integrating different stages of its production process
and supply chain into their business”[ CITATION Ama20 \l 1033 ]. A good example of vertical
integration is The Target Corporation. Target owns, manufactures, and sells several of their own
brands. They are integrated vertically by being a part of the production and the selling of their
own brands. “When a firm wants to expand their business footprint in a certain industry, they
can do this by acquiring or merging with one of their rivals”[ CITATION Joh19 \l 1033 ]. This is
a calculated move better known as horizontal integration. Think of Disney’s purchase of
Miramax and Pixar in 2006. Before the acquisition, Disney’s deal with Pixar was to only
distribute Pixar movies. However, as that deal was set to expire, Disney realized that they were
struggling in the computer-generated animation movie segment. Think of the movie Chicken
Little, which was produced by Disney and now compare that to Monsters, Inc. which was
produced by Pixar.
Disney’s horizontal integration placed them on the top in the CG-animated movie world.
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Diversification involves entry into fields where both products and markets are significantly
different than those of a firm’s initial base[ CITATION Cit11 \l 1033 ]. “Since Google is in the
information business, in 2014 it purchased Titan Aerospace, a maker of solar-powered drones, an
example of related diversification”[ CITATION Jan14 \l 1033 ]. This is a good example of
diversified integration.
Major Article Summary
In the article that I chose, it focuses on corporate identity, brands and reputation. These three
aspects must be taken into consideration when attempting to integrate. When attempting to
integrate, whether it be vertical, horizontal, the identity, brand and reputation of the business are
on the line. In order to successfully integrate and gain a competitive advantage, there are four
attributes that must be meet but I want to focus on, in my opinion, the most important two
attributes: it must be valuable, in the sense that it can exploit opportunities and/or neutralize
threats in a firm's environment [ CITATION Abr12 \l 1033 ]. In my example of the definition of
horizontal integration, I referenced the Disney acquisition of Pixar. Upon further research of the
Disney situation, it displays the attributes to gain a competitive advantage. A bigger learning
organization emerges if there are diverse learning teams embedded throughout the
organization led by a team of leaders sharing a strategic vision that creates a sustainable
competitive advantage[ CITATION Hal20 \l 1033 ]. At the time, Disney was struggling in a
particular genre of movies, while Pixar was excelling. While not considered a rival at the time,
Disney had the foresight to understand that if Pixar were acquired by another company, Pixar
would then become a rival and threaten Disney’s position in the movie world. Disney’s move
was considered strategic.
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Integration of a corporate strategy is defined as the way a company creates the
organizational structures, procedures and activities that permit the organization to
engage in activities that are directly related to a set of goals derived from a
company’s strategy[ CITATION Wit \l 1033 ].
As the article explained the importance of identity, brand and reputation, Disney was
able to increase every aspect through integration. Organizational leaders must make to
determine the corporate expression include the conceptualization and communication of
the visual identity, the brand promise and the brand personality[ CITATION Abr12 \l
1033 ]. A dissenting argument can be made that the merger did nothing for Disney’s
identity being that Disney was at top of the food chain when discussing children’s
movies. However, corporate identity consists of an organization’s strategic choices and
how it elects to express these[ CITATION Abr12 \l 1033 ]. This choice bolstered the
notion that Disney was committed to their brand supremacy. This was done through
strategic corporate integration.
Discussion
The cited work relates to my explanation by focusing on the major reasons to attempt integration.
While the I used a horizontal integration example, the article goes into deep discussion how
integration is used to strengthen the brand, identity and reputation, regardless of whether its
vertical, horizontal or diversified. Anytime a firm wants to integrate it must decide not only
whether to centralize or decentralize its internal decision‐making processes, but also whether to
integrate or outsource its activities[ CITATION Bra15 \l 1033 ]. The integration must be
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executed with the intent to further develop the corporate brand, which can be seen through its
corporate expression and influence of brand image[ CITATION Abr12 \l 1033 ]. “And if you
make a sale to your neighbor or buy from your neighbor, you shall not wrong one another”
(Leviticus 25:14, ESV). This week module was an introduction of global business decisions and
the impacts those decisions can have on societies, economies and the industry, itself. This
article and integration are important aspects in globalization. Globalization has melted national
borders, free trade has enhanced economic integration and the information and communications
revolution has made geography and time irrelevant [ CITATION Pas06 \l 1033 ]. As more
corporations become multinational corporations, understanding impacts a corporate decision to
expand can have on whole economies and societies becomes extremely important.
When I began researching the term, integration, I wanted to build upon the notion that the
decision to integrate had to be one that encompasses more than just money. I wanted to see how
the world is affected when companies decide to integrate. Each cited worked allowed me to pull
examples of integration and allowed me to see the impact those decisions. As I read the other
works, I learned that not all decisions to integrate focused on absorbing rivals and creating
dominance in a particular field, but rather providing a better product or environment by allowing
other business manager to be included in decision-making process. Integrating innovation has
become a constant objective for economic efficiency and the development of a successful
business strategy[ CITATION Pas06 \l 1033 ]. A lot of the cited works came from the strategic
management world. Strategic decision-making is so important when deciding to integrate.
Other cited works focused on the implementations of integrating.
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Works Cited
Abratt, R., & Kleyn, N. (2012). Corporate identity, corporate branding and corporate reputations:
Reconciliation and integration. European Journal of Marketing, 46(7/8), 1048-1063. Retrieved
from https://www-emerald-
com.ezproxy.liberty.edu/insight/content/doi/10.1108/03090561211230197/full/html
Amadeo, K. (2020, May 28). Vertical Integration: Pros, Cons, and Examples. Retrieved 2021, from The
Balance: https://www.thebalance.com/what-is-vertical-integration-3305807
Brahm, F., & Tarzijan, J. (2015). Toward an integrated theory of the firm: The interplay between
internal organization and vertical integration. Strategic Management Jornal, 37(12). Retrieved
from https://doi-org.ezproxy.liberty.edu/10.1002/smj.2446
Citeman. (2011, MAy 15). Diversificaiton and Vertical Integration. Retrieved from Citeman:
https://www.citeman.com/16132-diversification-and-vertical-
integration.html#:~:text=Diversification%20involves%20entry%20into%20fields,at%20least
%20one%20major%20function.
Edwards, J. (2014). Mastering Strategic Management – 1st Canadian Edition. Victoria, B.C: BCcampus.
Retrieved 2021, from https://opentextbc.ca/strategicmana
Haley, J. M., & Sidky, M. H. (n.d.). How Ethical Leadership Made Disney Into A Sustainable Organiztion.
Retrieved January 2020, from file:///C:/Users/brian/Downloads/silo.tips_how-ethical-leadership-
made-disney-pixar-into-a-sustainable-learning-organization-.pdf
Monica, P. R. (2006, January 25). Disney buys Pixar. Retrieved from CNN Money:
https://money.cnn.com/2006/01/24/news/companies/disney_pixar_deal/
Morris, J. (2019). Strategic Management. Oregon: Open Educational Resources: Oregon State University.
Passaris, C. E. (2006). The business of globalization and the globalization of business. Journal of
Comparative International Management, 9(1). Retrieved from
http://bi.gale.com.ezproxy.liberty.edu/global/article/GALE%7CA153359782?u=vic_liberty
Witjes, S., Vermeulen, W. J., & Cramer, J. M. (2017). Assessing Corportate Sustainability integration for
corporate self-reflection. Rescources, Conservation and Recycling, 127, 132-147. Retrieved from
https://www-sciencedirect-com.ezproxy.liberty.edu/science/article/pii/S0921344917302744?via
%3Dihub
