Horizontal Integration

• What is meant by horizontal integration?

  The acquisition of a business producing the same or similar goods and services.

  Occurs when a company acquires or merges with another company in the same industry that is operating at the same level in the value chain.
• Waht does value chain mean?

  A business model that describes the full range of activities needed to create a product or service.
• Why may companies persue horizontal integration?

  To grow their existing business or prevent a competitor from gaining market share.
• What are the benefits of horizontal integration?

  • Reduced competition
  • Increased market share
  • Expanded customer base
  • Revenue growth
  • Improved efficiencies
  • Greater product and service differentiation
  • Access to new markets
  • Increased market power
• What are the drawbacks of horizontal integration?

  • Operational integration challenges. Combining two companies - particularly two large companies is no easy task.
  • Leadership or culture clashes
  • Reduced flexibility
  • Regulatory and legal issues
  • Failed expectations