{"id":13565,"date":"2023-10-27T09:57:03","date_gmt":"2023-10-27T09:57:03","guid":{"rendered":"https:\/\/tbilisiexpertise.ge\/?p=13565"},"modified":"2024-12-11T23:16:01","modified_gmt":"2024-12-11T23:16:01","slug":"horizontal-integration-benefits-and-drawbacks","status":"publish","type":"post","link":"https:\/\/tbilisiexpertise.ge\/en\/2023\/10\/27\/horizontal-integration-benefits-and-drawbacks\/","title":{"rendered":"Horizontal Integration: Benefits and Drawbacks"},"content":{"rendered":"

\"examples<\/p>\n

This business strategy enables the acquiring company to expand its reach in a sector it already serves without forming an entirely new entity from the ground up. For instance, a wine and spirits maker might merge with a brewery producing hard seltzers. There may be economies of scale or cost synergies in marketing; research and development (R&D); production; and distribution. Or there may be economies of scale, which make the simultaneous manufacturing of different products more cost-effective than manufacturing them on their own. Horizontal integration is the merger of two or more companies that occupy similar levels in the production supply chain.<\/p>\n<\/p>\n

Horizontal Acquisition vs. Vertical Acquisition<\/h2>\n<\/p>\n

A vertical acquisition is another kind of business transaction that results in the consolidation of two or more companies. Such horizontal mergers or acquisitions reduce competition from new potential rivals or from already established rivals that wish to acquire the company. The government and financial regulators of certain countries frown examples of horizontal integration<\/a> upon horizontal integration for several reasons. Horizontal integration is often used to eliminate competitors from the market. This puts production and pricing power in the hands of a few\u2014or even one\u2014players, which can be harmful to consumers. Government agencies often put antitrust laws in place to prevent this from happening.<\/p>\n<\/p>\n

Disney-Pixar<\/h2>\n<\/p>\n

The main advantage of horizontal integration is the strategically focused decision to penetrate a specific section of a supply chain. Horizontal integration allows a company to potentially acquire a competitor, gain greater insight into the market, expand its product line, or create economies of scale. Horizontal integration is a way for a company to simply do better at what it was doing before. Horizontal and vertical acquisitions both occur between companies that operate in the same industry. A horizontal acquisition happens between two companies that are in the same production stage while a vertical acquisition takes place between two companies that are in different stages of the production process. It allows the acquiring company to access equipment that is either closer to or further away from the end client.<\/p>\n<\/p>\n

This can reduce competition, potentially leading to higher prices and less choice for consumers. Because of these concerns, such strategies often require approval from regulatory authorities to ensure they don\u2019t violate antitrust laws designed to maintain market competition. Contrasting horizontal alliance with vertical integration, where a company takes control of multiple stages of its supply chain, horizontal integration strictly involves companies at the same level of operation. This distinction is vital for companies looking to expand internationally or consolidate their position within an existing market. A horizontal monopoly involves horizontal integration to the point that the combined businesses entirely or nearly completely control a specific step in the supply chain. The company will likely fall under regulatory scrutiny in these cases, as creating a horizontal or vertical monopoly is usually considered an illegal business transaction.<\/p>\n<\/p>\n

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Merger<\/h2>\n<\/p>\n

Merging operations through horizontal integration allows companies to achieve economies of scale. Combining production facilities, distribution networks, and administrative functions enables integrated companies to spread fixed costs over larger outputs. Horizontal integration happens when similar companies amalgamate in the supply chain similar stage. Compared to vertical integration, which helps a company move earlier or later in the supply chain, horizontal integration strengthens a company’s present position along a manufacturing process. If horizontal mergers within the same industry concentrate market share among a small number of companies, it creates an oligopoly.<\/p>\n<\/p>\n

\ud83d\udd5b Time: 10:00-11:00 am EST\ud83d\udcc5 Date: 12th December\ud83d\udcbb Venue: Online\ud83c\udfc3\u200d\u2642\ufe0f Seats : Limited<\/h2>\n<\/p>\n