What is a horizontal integration strategy?
Horizontal integration is an expansion strategy adopted by a company that involves the acquisition of another company in the same business line. Vertical integration refers to an expansion strategy where one company takes control over one or more stages in the production or distribution of a product.
What is horizontal integration for dummies?
Horizontal integration is when a business grows by acquiring a similar company in their industry at the same point of the supply chain. Vertical integration is when a business expands by acquiring another company that operates before or after them in the supply chain.
What happens horizontal integration?
Horizontal integration happens when one firm acquires another firm operating in the same industry or producing the same line of products. Companies that engage in horizontal integration may realize economies of scale, reduced production costs, synergy in marketing, increased revenue, among others.
What is an example of horizontal integration in history?
Forms of Industrial Organization. Horizontal Integration occurs when a business expands its control over other similar or closely related businesses. For example, an oil refining business would be horizontally integrated if it owned or controlled other oil refineries.
What is horizontal consolidation?
Consolidating firms that sell a similar product to increase the product line. It saves money and makes production more efficient.
Why is it called horizontal integration?
Horizontal integration is the merger of two or more companies that occupy similar levels in the production supply chain. The process is also known as lateral integration and is the opposite of vertical integration whereby companies that are at different stages in the production supply chain merge.
What is the importance of horizontal strategy?
Undergoing horizontal integration can benefit companies and typically takes place when they are competing in the same industry. The advantages include increasing market share, reducing competition, and creating economies of scale.
What is horizontal integration quizlet?
Horizontal: Horizontal integration (also known as lateral integration) simply means a strategy to increase your market share by taking over a similar company. This take over / merger / buyout can be done in the same geography or probably in other countries to increase your reach.
What is a horizontal consolidation in history?
Horizontal integration is an act of joining or consolidating with ones competitors to create a monopoly. Rockefeller was excellent with using this technique to monopolize certain markets. It was pioneered by men such as Andrew Carnegie of the steel industry and John Rockefeller of the oil industry.
What is horizontal consolidation in history?
What are disadvantages of horizontal integration?
Disadvantages of Horizontal Integration. Horizontal integration is great but it can be detrimental to a certain extent; There will be a very tough transition change since two companies with unique policies are forced to work uniformly. Mergers often lead to a lack of competition since there is a reduced number of companies in the industry.
What are examples of horizontal integration?
Horizontal integration is aimed at increasing market share and eliminating competition. An example of horizontal integration would be the flour producer acquiring or merging with a number of flour producers within the area or producers that are dispersed geographically.
How did horizontal integration help business?
Horizontal integration is a competitive strategy that can create economies of scale, increase market power over distributors and suppliers, increase product differentiation and help businesses expand their market or enter new markets.
What does horizontal integration mean?
What is Horizontal Integration. Horizontal integration is the acquisition of a business operating at the same level of the value chain in a similar or different industry. This is in contrast to vertical integration, where firms expand into upstream or downstream activities, which are at different stages of production.