How should your company respond to the complex competitive challenge of declining demand? The model described here can increase your prospects of success.

Vertical integration is often one of the first diversification strategies that firms consider. To choose the right strategy, companies must assess the four different types of possible integration and weigh the merits of each.

The factory was five years old and was already a strategic misfit. It had become ill‐suited for processing the raw materials the company could hope to buy. Although the factory operated efficiently enough, it could only process those particular grades of crude materials that were becoming...