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Horizontal integration

 

 
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Horizontal integration
 
 
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In microeconomics
Microeconomics

Microeconomics is a branch of economics that studies how individuals, households and firms and some states make decisions to allocate limited resources, typically in markets where goods or services are being bought and sold....
 and strategic management
Strategic management

Strategic management is the art, science and craft of formulating, implementing and evaluating cross-functional decisions that will enable an organization to achieve its long-term objectives....
, the term horizontal integration describes a type of ownership and control. It is a strategy used by a business
Business

A business is a legally recognized organization designed to provide good s and/or Service to consumers. Businesses are predominant in capitalism economies, most being privately owned and formed to earn profit that will increase the wealth of its owners....
 or corporation
Corporation

A corporation is a legal entity separate from the persons that form it. It is a legal entity owned by individual stockholders. In British tradition it is the term designating a body corporate, where it can be either a corporation sole or a corporation aggregate ....
 that seeks to sell a type of product
Product (business)

The noun product is defined as a "thing produced by labor or effort" or the "result of an act or a process", and stems from the verb produce from the Latin produce, lead or bring forth....
 in numerous market
Market

A market is any one of a variety of different systems, institutions, procedures, social relations and infrastructures whereby persons trade, and goods and services are exchanged, forming part of the economy....
s. Horizontal integration in marketing is much more common than vertical integration
Vertical integration

In microeconomics and management, the term vertical integration describes a style of management control. Vertically integrated companies are united through a hierarchy with a common owner....
 is in production. Horizontal integration occurs when a firm is being taken over by, or merged with, another firm which is in the same industry and in the same stage of production as the merged firm, e.g.






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In microeconomics
Microeconomics

Microeconomics is a branch of economics that studies how individuals, households and firms and some states make decisions to allocate limited resources, typically in markets where goods or services are being bought and sold....
 and strategic management
Strategic management

Strategic management is the art, science and craft of formulating, implementing and evaluating cross-functional decisions that will enable an organization to achieve its long-term objectives....
, the term horizontal integration describes a type of ownership and control. It is a strategy used by a business
Business

A business is a legally recognized organization designed to provide good s and/or Service to consumers. Businesses are predominant in capitalism economies, most being privately owned and formed to earn profit that will increase the wealth of its owners....
 or corporation
Corporation

A corporation is a legal entity separate from the persons that form it. It is a legal entity owned by individual stockholders. In British tradition it is the term designating a body corporate, where it can be either a corporation sole or a corporation aggregate ....
 that seeks to sell a type of product
Product (business)

The noun product is defined as a "thing produced by labor or effort" or the "result of an act or a process", and stems from the verb produce from the Latin produce, lead or bring forth....
 in numerous market
Market

A market is any one of a variety of different systems, institutions, procedures, social relations and infrastructures whereby persons trade, and goods and services are exchanged, forming part of the economy....
s. Horizontal integration in marketing is much more common than vertical integration
Vertical integration

In microeconomics and management, the term vertical integration describes a style of management control. Vertically integrated companies are united through a hierarchy with a common owner....
 is in production. Horizontal integration occurs when a firm is being taken over by, or merged with, another firm which is in the same industry and in the same stage of production as the merged firm, e.g. a car manufacturer merging with another car manufacturer. In this case both the companies are in the same stage of production and also in the same industry.

A monopoly
Monopoly

In economics, a monopoly exists when a specific individual or enterprise has sufficient control over a particular product or service to determine significantly the terms on which other individuals shall have access to it....
 created through horizontal integration is called a horizontal monopoly.

A term that is closely related with horizontal integration is horizontal expansion. This is the expansion of a firm within an industry in which it is already active for the purpose of increasing its share of the market for a particular product or service.

Benefits of horizontal integration


Horizontal integration allows:
  • Economies of scale
    Economies of scale

    Economies of scale, in microeconomics, are the cost advantages that a business obtains due to expansion. They are factors that cause a producer?s average cost per unit to fall as output rises....
  • Economies of scope
    Economies of scope

    Economies of scope are conceptually similar to economies of scale. Whereas economies of scale primarily refer to efficiencies associated with supply-side changes, such as increasing or decreasing the scale of production, of a single product type, economies of scope refer to efficiencies primarily associated with demand-side changes, such...
  • Economies of stocks
Strong presence in the reference market

Media terms

Media critics, such as Robert McChesney, have noted that the current trend within the entertainment industry has been toward the increased concentration of media ownership into the hands of a smaller number of transmedia and transnational conglomerates. Media nowadays tend to be in the hands of those who are rich enough to buy the media such as Rupert Murdoch
Rupert Murdoch

Keith Rupert Murdoch, Order of Australia, Order of St. Gregory the Great , usually known as Rupert Murdoch, is an Australian-born International Mass media business magnate....
.

Horizontal integration, that is the consolidation of holdings across multiple industries, has displaced the old vertical integration of the Hollywood studios. The idea of owning many media outlets, which run almost the same content, is considered to be very productive, since it requires only minor changes of format and information to use in multiple media forms. For example, within a conglomerate, the content used in broadcasting television would be used in broadcasting radio as well, or the content used in hard copy of the newspaper would also be used in online newspaper website.

What emerged are new strategies of content development and distribution designed to increase the “synergy’ between the different divisions of the same company. Studios seek content that can move fluidly across media channels.

See also


  • Horizontal market
    Horizontal market

    A horizontal market is a market which meets a given need of a wide variety of industries, rather than a specific one....
  • Vertical integration
    Vertical integration

    In microeconomics and management, the term vertical integration describes a style of management control. Vertically integrated companies are united through a hierarchy with a common owner....
  • Economies of scale
    Economies of scale

    Economies of scale, in microeconomics, are the cost advantages that a business obtains due to expansion. They are factors that cause a producer?s average cost per unit to fall as output rises....
  • List of management topics
    List of management topics

    This is a list of articles on general management and strategic management topics. For articles on specific areas of management, such as marketing management, production management, human resource management, information technology management, and international trade, see the list of related topics at the bottom of this page....
  • List of marketing topics
    List of marketing topics

    This is a list of marketing topics....
  • List of economics topics
    List of economics topics

    This aims to be a complete article list of economics topics:...
  • Monopoly
    Monopoly

    In economics, a monopoly exists when a specific individual or enterprise has sufficient control over a particular product or service to determine significantly the terms on which other individuals shall have access to it....
  • Strategic management
    Strategic management

    Strategic management is the art, science and craft of formulating, implementing and evaluating cross-functional decisions that will enable an organization to achieve its long-term objectives....
  • Target market
    Target market

    Market specialization is a business term meaning the market segment to which a particular good or service is marketed. It is mainly defined by age, gender, geography, socio-economic grouping, technographic, or any other combination of demographics....


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