Horizontal Integration

MBABrief

Horizontal Integration is the strategy of seeking ownership or increased control over a firm’s competitors. Like its counterpart, vertical integration, HI is a potential strategic move which a firm may consider, but HI means to acquire business activities at the same level of the value chain, while vertical integration focuses on acquiring business activities at other levels of the value chain. HI typically involves acquiring activities which are dealing with similar or complementary products, substitutes or competitors. Also called: lateral integration.

 

 

StrategicCFO

Horizontal integration means that a company contains control over one part of the production process by controlling the majority or all of the resources at that particular junction of production. Horizontal integration’s control over one process during production means that a company has established a dominance in the manufacturing, selling and distribution, or even the production of raw materials. If a company owns every bit of a production process then it is known as a horizontal monopoly. Although this is much more difficult to achieve than a vertical monopoly. Horizontal Integration was made famous by John D. Rockefeller’s Standard Oil company.

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