Explain the 5 sources of leader power Essay Example for Free

formulate the 5 sources of leader power EssayIf the manufacturing order engages in sales or after-sales industries it pursues forward consolidation strategy. This strategy is implemented when the company wants to achieve higher economies of scale and larger market share. Forward integrating strategy became very popular with increasing internet appearance. Many manufacturing companies have built their online stores and started selling their products instantaneously to consumers, bypassing retailers. Forward integration strategy is effective when Few quality distributors are available in the industry. Distributors or retailers have high profit margins. Distributors are very expensive, unreliable or unable to meet smasheds distribution needs. The industry is expected to grow significantly. There are benefits of changeless production and distribution.The company has enough resources and capabilities to manage the new business. When the same manufacturing company starts making intermediate goods for itself or takes over its introductory suppliers, it pursues backward integration strategy. Firms implement backward integration strategy in order to secure stable input of resources and become more efficient. Backward integration strategy is most beneficial when Firms current suppliers are unreliable, expensive or cannot supply the unavoidable inputs. There are only a couple of(prenominal) small suppliers but many competitors in the industry. The industry is expanding rapidly.The prices of inputs are unstable.Suppliers earn high profit margins.A company has necessary resources and capabilities to manage the new business. AdvantagesAdvantages of VILower costs due to eliminated market exercise costsImproved quality of suppliesCritical resources can be acquired through VIImproved coordination in supply chainGreater market shareSecured distribution channelsFacilitates investment in narrow assets (site, physical-assets andhuman-assets) New competenciesDisadva ntagesDisadvantages of VIHigher costs if the company is incapable to manage new activities efficiently The self-possession of supply and distribution channels may lead to lower quality products and reduced efficiency because of the want of competition Increased bureaucracy and higher investments leads to reduced flexibility Higher potential for legal replication due to size (An organization may become a monopoly) New competencies may clash with hoar ones and lead to competitive disadvantage Alternatives to VIVI may not always be the better choice for an organization due to a lack of sufficient resources that are needed to venture into a new industry. Sometimes the alternatives to VI offer more benefits. The available choices differ in the amount of investments required and the integration level. For example, short-term contracts require little integration and much less investments than joint ventures.