ASIC Acknowledges Conflicts in Vertical Integration

Question: Explain how it ties into the strategic management concept discussed. Answer: The article, ASIC acknowledges conflicts in vertical integration is an interesting read. In this article, author explained that there has been an increase in the amount of vertical integration for organizations. Today, firms want to have an integrated supply chain so that they can have a better control over suppliers, vendors and customers. Author argued that it might not be easy for organizations to implement vertical integration due to high cost of operations. For example, Walmart is one of the best examples that have used effective compensation policies to implement vertical integration. Walmart has used vertical integration to take cost advantage, as the company wants to procure the goods and raw materials at minimum possible costs. The compensation policies and the HR strategies of the firm have a direct impact on the vertical integration of the companies. It has been observed that the firms overall compensation structure would face a hit if the vertical integration of the firm were not successful. Therefore, it is important that the management of the company should develop efficient strategies for vertical integration and this strategy should be based on the overall compensation policy of the organization. The vertical integration and the compensation policy or compensation structure are two important aspects of strategic management. The strategic management approach suggests that the organizations should develop the strategies and polices based on their internal capabilities and external environment. The compensation structure and policies are internal to the organization the vertical integration also includes focus on external environment as vertical integration includes the integration with other firms and organizations in the supply chain. Therefore, it can be said that the concept of vertical integration and compensation policies is an important aspect of strategic management. References Taylor M. (2014). ASIC acknowledges conflicts in vertical integration. Money Management. Retrieved from: https://www.moneymanagement.com.au/news/financial-planning/asic-acknowledges-conflicts-vertical-integration