Potential benefits of horizontal integration include a stronger competitive position, increased revenues, greater economies of scale, access to new markets and customers, and diversification of products and services.Companies may pursue horizontal integration to grow their existing business or prevent a competitor from gaining market share.Horizontal integration 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.The combination of the two businesses typically results in a single company that sells more products and/or services than either organization could individually and thus has a more dominant role in the marketplace. In contrast, a horizontal integration involves a company acquiring or merging with another company in the same industry that operates at the same point in the value chain. This type of integration differs from vertical integration, in which a company expands either upstream or downstream by acquiring firms in an earlier or later phase of the value chain, such as a manufacturer taking over a distributor or merging with a retailer.
In a horizontal integration, a business combines forces with another company that offers similar products or services. Horizontal integration is a business-growth strategy that companies pursue to expand their footprint in the marketplace. While horizontal integration comes with its share of challenges, the strategy can offer a number of benefits for businesses when the integration is carried out successfully. For example, a big-box electronics retailer may embark on a horizontal integration by acquiring a complementary chain of stores selling similar products, or an auto manufacturer might merge with another carmaker. Horizontal integration is one such approach, in which one company combines with another that operates at the same level in the value chain in a particular industry. Alternatively, business leaders can also grow by acquiring, merging with or otherwise aligning with another company. Most businesses seek growth, which they often pursue by investing significant resources in entering new markets, enlarging their customer base or introducing new products and services. East, Nordics and Other Regions (opens in new tab)
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