Horizontal Integration : A Great Tool For Acquiring Similar Production Units In Marketing

What is horizontal integration in marketing?

Horizontal integration in marketing, is considered to be the acquisition or the obtainment of business operations at the same level of the value chain in the same industry. It is considered to make similar goods and services and this is in contrast to the vertical integration strategy as the forms required to expand certain upstream and downstream activities at different stages of production. Thus, it can be stated that horizontal integration is a type of   business strategy in which one corporation merges along with acquires another that operates in the same level of industry. However, the horizontal integration strategy in marketing is considered to help the companies grow in size as well as revenue as it expands the new markets by diversifying product offerings by reducing competition.

The disadvantages, however, is considered to be regarding the regulatory scrutiny, as there are deductions of choices for consumers and there is internal flexibility that are less, that creates a potential to destroy value rather than creating it. Horizontal integration strategy in marketing is considered to be a contrasting and contradicting approach to that of vertical integration as the company order form is supposed to operate similarly in an industry where there are different stages of the production process. This strategy is considered to be competitive as it creates economies of scale and it also increases the market power by distributing the suppliers about the improvement of the product differentiation, which helps the business grow in the market by entering other new markets. This creates a position of revenue as it merges 2 business together and it makes them work independently with each other. Nevertheless, horizontal mergers are considered to be successful in nature as it often helps in the expense of consumers as the merger reduces the competition, this creates heavily scrutinized regulations, as it violates the antitrust laws.

What are examples of horizontal integration?

One most definite example regarding the horizontal integration marketing strategy is the acquisition of Instagram by Facebook. In the year 2012 as it was supposed to create horizontal integration because it was from the similar field of social media platforms which merged together to gain a competitive advantage. In addition to this, another example that can be provided regarding the example of horizontal integration marketing strategy is the merging of Walt Disney companies. With Pixar Animation studios in the year 2006.

How do you implement horizontal integration?

In order to implement horizontal integration strategy, and the company needs to adapt. To seek and offer its products and services in several other markets, which are similar to that of this industry, in order to gain and strengthen the position of the industry. This can be done through merger or acquisition of another company as it provides similar services to each other therefore, horizontal integration strategy can lead to a certain amount of business monopoly as the strategy is possible to create, capture and cover of the provision of services which violates the antitrust laws as it reduces competition and it achieves and accomplishes high economic profitability by accessing several other new markets.

The execution or implementation is considered to be Beneficial for the companies as it covers several distinct markets, and these companies help in gaining an advantage of the knowledge as well as experience to establish themselves in several other distinct centers where they would have wider opportunities that are providing portfolio of offerings. The companies are considered to engage in integration to benefit from the synergies as they might have cost and scale synergies in marketing, which would be helping them in developing through production and distribution. However, in spite of that, it can be understood that like any other merger, horizontal integration is not considered to help in yielding the synergies as it adds value than that is expected. It can also result in certain negative synergies, which would decrease the overall value of the business and if a larger firm is considered to be unyielding and it would be taking into consideration, inflexibility in order to manage the most firms through their experiences as a problem should cause several leadership styles violations through company cultures.

How can horizontal integration increase product differentiation?

The horizontal integration strategy might be able to create product differentiation through the combined company structure as they might offer more product and service features which would increase market power and they would also create power over suppliers, distributors and consumers. Therefore. Horizontal integration strategy might benefit the companies as they would be having increased market share, which would reduce the competition and create economies of scale. The growth in horizontal integration strategy can be used in order to achieve and expand the operations of the organizations as it would be able to sponsor geographic locations, which would increase the range of products and services available to the consumers. Horizontal growth can also be achieved in order to create product differentiation by merging and acquiring the competitors of the same industry. As this would allow them to create an expansion plan through the presence of the industry without relying on their own efforts. It would create a degree in which a firm operates through the different geographic locations by providing a similar value chain.

What are the benefits for media companies of horizontal integration?

The horizontal integration marketing strategy is considered to provide certain advantages to the media companies as they would not be able to exploit the internal economies of scale and they would be able to create technical economies as well as financial economies, these would also create options for cost savings as it would be rationalizing the business. It can also be helping in securing revenue synergies as these can be created and sold through an extensive range of products through diversification as it creates opportunities for very large businesses to maintain and benefit the economies of scale. It is also supposed to help in reducing competition which would also remove the key rivals and increase the market share by lifting the pricing power of the farm. And that is the sole reason why the buying an existing of well-known brands can be cheaper in future as it would be used for organically growing a brand by making them enter barriers that are higher for potential rivals as they lead to higher, longer monopoly run profits.

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