What is vertical and horizontal 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.
What is a horizontal integration in business?
Horizontal integration is a business strategy in which one company acquires or merges with another that operates at the same level in an industry. Horizontal integrations help companies grow in size and revenue, expand into new markets, diversify product offerings, and reduce competition.
What do you mean by vertical integration?
vertical integration, form of business organization in which all stages of production of a good, from the acquisition of raw materials to the retailing of the final product, are controlled by one company.
Why is it called vertical integration?
A company is able to create a competitive advantage by integrating different stages of its production process and supply chain into their business. This kind of structure is called “vertical integration.”
What is a business vertical?
Definition: Vertical markets, or “verticals,” are business niches where vendors serve a specific audience and their set of needs. Each department within such a company, such as Youth and Adult, can also be considered narrower vertical market.
What are the three types of vertical integration?
There are three varieties of vertical integration: backward (upstream) vertical integration, forward (downstream) vertical integration, and balanced (both upstream and downstream) vertical integration.
What is market related diversification?
Related diversification occurs when a firm moves into a new industry that has important similarities with the firm’s existing industry or industries (Figure 8.1). Because films and television are both aspects of entertainment, Disney’s purchase of ABC is an example of related diversification.
What is diversification and types of diversification?
There are three types of diversification: concentric, horizontal, and conglomerate.
What is related diversification?
Related diversification occurs when a firm moves into a new industry that has important similarities with the firm’s existing industry or business lines (Figure 8.11 “The Sweet Fragrance of Success: The Brands That “Make Up” the Lauder Empire”).
Related Diversification. Related diversification refers to the movement of a firm into a new industry that has similar characteristics to the current industry (Ketchon & Short, 2012) . Apple Inc., originally named Apple Computers Inc., was in the computing industry. Over the the iPhone, which has since taken over as their anchor product.
What are the different types of diversification strategies?
Types of diversification strategies. 1 1. Horizontal Diversification. To diversify your company horizontally means introducing brand new products or services to your current offering in 2 2. Vertical Diversification. 3 3. Concentric Diversification. 4 4. Conglomerate Diversification. 5 5. Defensive Diversification.
What is vertical diversification?
Vertical Diversification Vertical diversification also referred to as vertical integration, entails a growth strategy where the company expands its product line through a forward or backward integration of products within its existing supply chain.
Is diversification the key to business growth?
If you’re a business owner, whether your business is doing well or not so well, you’re likely seeking growth. While there are many ways to grow business, a common way that companies achieve growth that you may want to consider is diversification.