Andrew Barnett has a vast extensive entrepreneurial background in multiple industries. While working at Apple as an RMA Engineer, he created and implemented tamper-proof stickers. Andrew Barnett has also been the vice president of LaserDisc systems.
There he created the main parts for the first Compact Disc Standards that included holographic printing techniques. Presently, Andrew Barnett owns as well as manages Andrew Barnett Mergers and Acquisitions in Fort Lauderdale. To know more about him and his business, check out his Tumblr.
About Horizontal Integration
Horizontal integration is a competitive strategy that firms use for the consolidation of their position among their competitors. This business strategy helps companies to lower competition, expand in size, spread product offerings, as well as expand itself into new markets.
About Vertical Integration
Vertical integration comprises acquiring business operations in the same production vertical. This method boosts profit and enables firms to get more instant access to consumers. Vertical integration happens when a business possesses all areas of the industrial process.
What Companies Opt for Horizontal Integration?
Horizontal integration comprises the acquisition of a linked business. Companies that choose this method take over another firm that works at the same level of the supply value chain in the industry.
- Companies that wish to grow via horizontal integration works with the main objective to gain a similar firm that operates in the same industry and has synergistic cultures. It could have objectives such as
- increase in size,
- creation of economies of scale,
- increase market potential over suppliers, and distributors,
- increase in service/product differentiation,
- expansion of the market of the company,
- lowering competition and
- Entering a new market.
This type of integration may not work when there are issues at the time of combining two different company cultures.
Companies that wish to strengthen their market and improve their distribution/ production stage use horizontal integration. It happens when a business expands by buying its competitors.
What Companies Opt for Vertical Integration?
Vertical integration is the procedure to gain business operations in a similar production vertical. It is for those companies that take full control over single or multiple stages in the product distribution or production.
Here are a few reasons why a firm chooses to integrate vertically:
- Strengthening the supply chain,
- Lowering the cost of production, capturing downstream or upstream profits,
- Or accessing new channels of distribution.
Conclusion
Through vertical integration and horizontal integration are ways in which firms grow, they have dissimilarities in them. Understanding the difference between vertical integration, and horizontal integration will help the business decide the right strategy for a business.
