What is a horizontal marketing system elaborate two 2 examples where companies join together for a horizontal marketing system?
Horizontal Integration vs. Vertical Integration: An OverviewHorizontal integration and vertical integration are competitive strategies that companies use to consolidate their positions and set themselves apart from their competitors. Both are corporate growth strategies that involve the acquisition of other businesses. While they can help companies expand, there are important differences between these two strategies. Horizontal integration occurs when a business grows by purchasing related businesses—namely, its competitors. Vertical integration, on the other hand, occurs when a business takes control of one or more stages in production or distribution, thereby owning all of the parts of the industrial process. Show
Key Takeaways
Horizontal IntegrationHorizontal IntegrationHorizontal integration is a growth strategy that many companies use to boost their position within their industries and to get an edge on their competition. They do this by taking over another company that operates at the same level of the value chain. This means both companies offer similar (if not the same) goods and services, and deal with the same customer base. The primary goal of horizontal integration is to grow through the acquisition of one or more competitors that function within the same industry. Other goals include:
If a department store wants to enter a new market, merging with a similar company in another country can help it to start operating overseas. Doing so would allow the company to generate more revenue and reach a wider market. Ideally, the newly-formed company would make more money as a single unit compared to when they operated independently. Horizontal integration allows companies to cut down on their costs by sharing technology, marketing efforts, research and development (R&D), production, and distribution. Horizontal integration usually works best when two companies have synergistic cultures. The process may fail if there are problems when the two cultures merge. Vertical IntegrationVertical integration is a corporate strategy that involves growth through streamlining operations. This occurs when one company acquires a producer, vendor, supplier, distributor, or other related company within the same industry. Companies that choose to integrate vertically do so to strengthen their supply chains, reduce their production costs, capture upstream or downstream profits, or access new distribution channels. Not only does vertical integration increase profits from the newly acquired operations by selling its products directly to consumers, but it also guarantees efficiencies in the production process and cuts down on delays in delivery and transportation. Companies can integrate vertically by moving backward or forward:
Companies may achieve vertical integration through internal expansion, an acquisition, or a merger. Advantages and Disadvantages of Horizontal Integration vs. Vertical IntegrationHorizontal IntegrationWhile there can be many benefits to horizontal integration, the most obvious benefit is an increased market share for the company. When two companies combine, they also combine their products, technology, and the services that they provide to the market. And when one company multiplies its products, it can also increase its consumer foothold. Here are some of the other benefits associated with horizontal integration:
Even though a horizontal integration may make sense from a business standpoint, there are downsides to horizontal integration for the market, especially when they succeed. This kind of strategy faces a high level of scrutiny from government agencies, which is why antitrust laws are in place. Additionally:
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Vertical IntegrationVertical integration helps a company:
The drawbacks of vertical integration include:
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Horizontal Integration vs. Vertical Integration ExamplesHorizontal Integration Examples
Vertical Integration Examples
What Is Horizontal and Vertical Integration?Horizontal integration is an expansion strategy adopted by a company that involves the acquisition of another company in the same business line. Vertical integration refers to an expansion strategy where one company takes control over one or more stages in the production or distribution of a product. Both of these strategies are undertaken by a company in order to consolidate its position among competitors. What Is an Example of Horizontal Integration?Horizontal integration is one of the most common types of mergers. As a result of horizontal integration, competitors in the same market combine their operations and assets. An example of horizontal integration would be if two consulting firms merge. One of the firms offers software development services in the defense industry; the other firm also provides software development but in the oil and gas industry. Who Uses Horizontal Integration?Companies that seek to strengthen their positions in the market and enhance their production or distribution stage use horizontal integration. Why Is Horizontal Integration Important?Horizontal integration can greatly benefit companies. It is important because it can grow the company in size, increase product differentiation, achieve economies of scale, reduce competition, or help the company access new markets. The Bottom Line Horizontal integration and vertical integration are two different growth strategies that can help companies expand their operations. Although the ultimate goals may be the same, there are important
differences between the two strategies. Horizontal integration involves acquiring or merging with competitors while vertical integration occurs when a firm expands into another production stage like acquiring a supplier or distributor. As such, vertical integration is the process of acquiring business operations within the same production vertical. A company that opts for vertical integration, though, takes complete control over one or more stages in the production or distribution of a
product. What is horizontal marketing system with examples?A horizontal marketing system is all about connecting to a broad audience. This could mean that two or more organizations join together to capitalize on new opportunities. For instance, a supermarket and a bank could agree to have a bank's ATMs situated at their supermarket locations.
Can you think of an example where two companies join for a horizontal marketing system?of goods and services. area. Examples of Horizontal Marketing: Johnson & Johnson, a health care company, have joined hands with Google, with an objective of having a robotic-assisted surgical platform.
What do you mean by horizontal marketing?A horizontal market is one in which the output good or service is widely used and in wide demand, and so the producers bear little risk in demand for their output. Producers do, however, typically face a great amount of competition within the industry.
What is a horizontal marketing system quizlet?Horizontal marketing system. A channel arrangement in which two or more companies at one level join together to follow a new marketing opportunity.
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