Strategy - Strategic choices - Joining forces: horizontal and vertical integration
7 important questions on Strategy - Strategic choices - Joining forces: horizontal and vertical integration
What are the two forms of co-operation in a business column?
- Horizontal integration: the degree of owning and controlling similar activities in a certain business column
- Vertical integration: the degree to which a firm owns or controls its upstream suppliers or downstream buyers
What is the reason for horizontal integration for a company?
In which 2 ways can horizontal integration be achieved?
- Horizontal merger: merger between firms that produce/sell similar products in a similar market
- Scale alliance: cooperation agreement without an equity transaction with firms that sell similar products in similar markets
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What is the reason for a horizontal merger?
- Insufficient organic growth
- Weak strategic position
How can vertical integration be achieved?
- Aquiring companies
- Cooperating via link alliances
What are the 2 types of vertical integration?
- Backward integration: more stable supply of inputs
- Forward integration: securing more stable market
What is a vertical merger?
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