Horizontal Integration

SUBMITTED BY
Arundhathi V K
18382007
Aswin T R
18382008
Integration:
• Strategic integration consists of incorporating the strategies of a
corporation’s various business units to share resources and provide
greater return on investment for the organization as a whole.
• Business integration strategies are used to cross-train management and
employees, reduce ineffective communication and cut supplier costs.
• Integration helps to streamline operations and can reduce overhead as
well as personnel costs by reducing the need for additional staff and
the resources they use.
Integration Strategies:
• Integration strategy also called Management Control Strategy.
• Integration strategy allow a firm to gain control over distributors,
suppliers, competitors.
• Types:
• Horizontal
• Vertical
• Forward
• Backward
Horizontal Integration
• HI is a strategy where a company acquires, mergers or take over
another company in the same industry value chain.
• The purpose of HI is to grow the company in size, increase product
differentiation, achieve economies of scale, reduce competition or
access new markets.
• When many firms pursue this strategy in the same industry, it leads to
industry consolidation.
• Examples: Facebook and Instagram, Disney and Pixar, Vodafone-Idea
When we can go for HI?
A company can think of acquisitions and mergers for horizontal
integration when:
• the industry is growing
• rivals lack the expertise that the company has already achieved
• economies of scale can be achieved
• the company can manage the operations of the bigger organization
efficiently, after the integration.
Advantages:
• Lower costs
• Increased differentiation
• Increased market power
• Reduced competition
• Access to new markets
Disadvantages:
• Destroyed value
• Legal repercussions
• Reduced flexibility
References:
• Today’s best horizontally integrated companies- Harvard Business
review.
• Ovidijus Jurevicius-24Mar15 Strategic management insight.
• https://www.mbacrystalball.com/blog/strategy/vertical-horizontal-
integration-strategy/
• Integrative strategies, By: Amanda L. Webster Sep26, 2017
• Business integration strategies by George N