The filling station that I have planned to open is set to face much competition from the local market in my hometown. The filling station might be engaged in a horizontal integration to ensure that there is the growth of the company. One of the methods of doing so would be an acquisition of the competitors. I would decide to acquire Exxon. After setting up my filling station, Exxon would be one of my direct local competitors. Exxon has a strong brand in the United States of America's petroleum industry. The superiority of its bran and especially in my area makes the customers prefer it to the less known petroleum brands in the area. Exxon is also involved in the manufacture of the petroleum products so that means that it can quickly lead to the control of the oil prices in my locality as compared to the other brands.
In my opinion, horizontal integration will be the best long-term plan for my filling station if it becomes prosperous and stable in the petroleum industry. Horizontal integration will enable my filling station to have a more significant market share. The broad market share will allow the business to invest in more fueling stations across the cities and towns in the state of Texas, and later on advance to the other neighboring states such as Oklahoma and Louisiana. Horizontal integration will also enable my company to reduce the costs it needs to produce the petroleum products. That will translate to lower-priced products in the American market. That will have a competitive gain to my station since the Americans are always in search of lower priced services, especially in my hometown in Texas. Horizontal integration will also reduce the effects of the competitors on my company. That is because the increasing market share will have a competitive advantage for my company (BBC NEWS, 2012).
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Apart from the horizontal integration of my business, there are also opportunities of vertically integrating to increase the avenues of growth of the company. The filling station, apart from dealing in only the petroleum products, there will be space for a coffee place and a snack bar. They will be instrumental in providing more cash to the venture, which can be used in the various projects that the company may wish to undertake. That will make the station a one-stop place where you can find many services at once. With time, the filling station will also have the refining of petroleum for sale just like the other companies such as Exxon. That will also increase the opportunities for growth in the company since it will also have invested in the horizontal integration, which may be bringing in more returns for the organization. With time, the filling station will rise to the class of the largest oil and gas companies by revenue in the United States of America and the rest of the world (Amadeo, 2018).
The filling station business will have the capability of engaging in both forward and backward integration. In the case of manufacturing its petroleum products in the market, the filling station will be performing a backward integration. The backward integration in the market will ensure that the company will be making more profits per year than before when it used to depend on only one source of income. Forward integration in the vertical integration of the filling station will take place where the filling station plans to sell the fuel to the local consumers in my hometown rather than the firms in the United States that will regulate the prices of the products. The provision of the services and repair of the cars that have broken down will also have a forward integrative impact on my filling station in Texas.
My filling station has the opportunities to be involved in more than one independent industry. That will make the company diverse and offer the platform for the application of the conglomerate strategy in the business. The company will be involved in its primary industry, the petroleum industry of the United States of America. Additionally, I have a plan to have a coffee shop and a snack bar on the premises of the filling station. That means that I will be investing in the restaurant industry too alongside with the primary sector of my business. The services such as wheel alignment and car maintenance will enable me to invest in the car maintenance industry in the country (Stadler, 2015).
Diversifying the business will have many advantages to the venture. The primary merit is the increase in the avenues of financial growth for the company. The company will have increased opportunities for financial investments with the rise in the activities that the company will be engaged in within the state of Texas. The other advantage of diversifying the business will be to improve the corporate image of my filling station business. If the business is involved in many industries in the company, it will be well known among the American consumers in the various sectors of finance. That will make way for the company's investment into the various markets in the different states within the United States of America (Leinwand & Mainardi, 2012).
Unrelated diversification is the case where business gets involved in separate industries while investing. A good example is my filling station having a restaurant for coffee and snacks. The filling station is in the petroleum industry while the restaurant is in the hospitality sector of the country. Related diversification is the case where a company is involved in one or more industries that are related to the main one. An example is my company selling petroleum products and offering car repair and maintenance services. Both strategies will be critical to my business since the company needs to be present in more than one industry to stabilize and have a desirable financial journey (Leinwand & Mainardi, 2012).
References
Amadeo, K. (2018, May 23). Vertical integration, its pros and cons with Examples. The Balance . Retrieved from https://www.thebalance.com/what-is-vertical-integration-3305807
BBC NEWS. (2012, April 10). Facebook buys Instagram photo sharing network for $1bn. BBC NEWS . Retrieved from https://www.bbc.com/news/technology-17658264
Leinwand, P., & Mainardi, C. (2012, June 12). The coherent conglomerate. Harvard Business Review . Retrieved from https://hbr.org/2012/06/the-coherent-conglomerate
Stadler, C. (2015, November 5). 3 Reasons why conglomerates are back in fashion. Forbes .
Retrieved from https://www.forbes.com/sites/christianstadler/2015/11/05/three-reasons-why-conglomerates-are-back-in-fashion/#196c714f3be6
