Horizontal Integration
Type of monopoly where a company buys out all of its competition. Ex. Rockefeller
Horizontal integration refers to a business strategy where a company expands its operations by acquiring or merging with other companies in the same industry or market. This strategy enables the company to increase its market share, gain access to new markets, reduce competition, and achieve economies of scale.
For example, a company that produces soft drinks may acquire or merge with other companies that produce similar beverages, such as energy drinks or sports drinks. By doing so, the company can broaden its product line and reach a larger customer base, as well as achieve cost savings through efficiencies in production and distribution.
Horizontal integration can be a risky strategy, as it potentially reduces competition and may raise issues related to anti-trust laws. Additionally, integration may face challenges related to cultural differences, structural integration, and conflicting business practices between the merging companies. Therefore, thorough due diligence and careful planning are critical to ensure the successful implementation of horizontal integration.
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