The term horizontal integration can be defined as a business strategy of acquiring or manufacturing production units for the complimentary or competitive outputs.
Horizontal integration is typically the reverse policy of vertical integration, where a firm or business organization co-ordinates with numerous tiny production units. The major benefits of horizontal integration include, monopoly pricing, with a strong market presence, alongside economies of scale and scope. The business strategy thus, enables a business owner to consolidate his position in the market by replacing the competitors, and this inevitably increases the productivity of the company.
Some of the basic textbooks on horizontal integration are as follows:
Example 1:
In the case, the company occupies the competitors within the same industry, at the same production stage, in order to create a monopoly in the market, and it is referred as horizontal integration.
Example 2:
Another common example is managing the company products, which are of similar type, but different in terms of quality, price rates, etc. This strategy can significantly decrease the competition, by raising the market share consistently. This is exactly what the car manufacturer does mostly.
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