What is Horizontal Integration?
Horizontal integration is a strategy used by a company to gain control of its competitors, either by buying their assets or forming a joint venture. This type of integration allows a company to increase its market share and expand its product offerings. It also gives the company more control over the production, distribution, and pricing of its products or services.
Benefits of Horizontal Integration
Horizontal integration can provide many benefits to a company, including:
- Increased market share
- Increased efficiency and cost savings
- Increased control over production, distribution, and pricing
- Better access to resources, technology, and talent
- Reduced competition in the market
Examples of Horizontal Integration
Horizontal integration is a common strategy in many industries. Here are some examples of companies that have employed it:
- Apple – In 2014, Apple acquired Beats Electronics, a company that makes headphones and other audio products, for $3 billion. This acquisition allowed Apple to expand its product offerings and gain access to Beats’ resources, talent, and technology.
- Amazon – In 2017, Amazon acquired Whole Foods, a chain of grocery stores, for $13.7 billion. This acquisition allowed Amazon to expand its product offerings and gain access to new customers.
- Disney – In 2019, Disney acquired 21st Century Fox for $71 billion. This acquisition gave Disney access to Fox’s movie and TV assets, including the rights to the X-Men, Avatar, and Simpsons franchises.
Conclusion
Horizontal integration is a common strategy used by companies to expand their product offerings, increase their market share, and gain control over the production, distribution, and pricing of their products or services. It can offer many benefits, such as increased efficiency and cost savings, better access to resources, technology, and talent, and reduced competition in the market. There are many examples of companies that have employed horizontal integration, such as Apple, Amazon, and Disney.
References
- https://en.wikipedia.org/wiki/Horizontal_integration
- https://www.investopedia.com/terms/h/horizontalintegration.asp
- https://www.inc.com/encyclopedia/horizontal-integration.html