Horizontal and Vertical Integration

• What are the two main types of integration related to external growth?

  Horizontal and vertical integration
• Why do firms engage in external growth?

  To pursue takeovers and mergers
• What is forward integration?

  Moving up the supply chain
• What is backward integration?

  Moving down the supply chain
• What does horizontal integration involve?

  Buying a business at the same supply chain stage
• What is a supply chain?

  • Sequence of processes involved in production
  • Includes raw materials, manufacturing, distribution, and retail
  • Moves from suppliers to final consumers
• If a manufacturer buys a distributor, what type of integration is this?

  Forward integration
• What are the four directions of integration discussed?

  1. Forward integration
  2. Backward integration
  3. Horizontal integration
  4. Diversification (not covered in detail)
• What significant acquisition did the Booker Group make in 2016?

  Acquired Londis and Budgens convenience stores
• What did IKEA purchase in 2016 for backward integration?

  Forests and wood-cutting equipment
• Which hotel chain did Marriott acquire in 2016?

  Starwood Hotels
• What was the result of Marriott's acquisition of Starwood Hotels?

  Marriott became the world's largest hotel chain
• What is the difference between vertical and horizontal integration?

  • Vertical integration: Moving up or down the supply chain
  • Horizontal integration: Buying competitors at the same supply chain stage