Call/WhatsApp/Text: +44 20 3289 5183

Question: Compare and contrast vertical and horizontal integration. What are some of the variables make each of these integrations valuable?

04 Oct 2022,3:36 PM

 

Compare and contrast vertical and horizontal integration. What are some of the variables make each of these integrations valuable?
Provide an example of a vertical and a horizontal integration that has happened recently.
In what circumstances should an organization consider diversification as a viable strategy?
What benefit does a global strategy provide an organization? Describe a situation when a global strategy would not be a viable solution for an organization.

Expert answer

 

There are two primary ways that companies can choose to grow their businesses: vertical integration and horizontal integration. Vertical integration occurs when a company expands its operations to include different aspects of the production process, while horizontal integration happens when a company expands by acquiring other companies in the same industry.

 

Each type of growth has its own advantages and disadvantages, and the best choice for a particular company depends on a number of factors. In general, vertical integration can be more beneficial for companies that produce unique products or that have a strong competitive advantage in their existing markets. Horizontal integration is often more advantageous for companies that operate in highly competitive industries or that are looking to expand into new markets.

 

One of the key advantages of vertical integration is that it can help a company to control its costs. By expanding its operations to include different stages of production, a company can avoid the need to purchase raw materials or finished products from other companies. This can lead to significant cost savings, which can be passed on to consumers in the form of lower prices.

 

 

Vertical integration can also give a company more control over the quality of its products. By overseeing all aspects of production, a company can ensure that its products meet the highest standards. This can be especially important for companies that produce consumer goods, as customers are likely to be very concerned about the quality of what they purchase.

 

There are some disadvantages to vertical integration as well. One is that it can make a company less flexible, as it becomes more difficult to change the way that it does business. Another is that vertical integration can lead to conflicts of interest between different parts of the company, which can make it less efficient. Finally, vertical integration can make a company more vulnerable to economic downturns, as it becomes more reliant on a single industry or market.

 

Horizontal integration, on the other hand, typically involves the acquisition of other companies in the same industry. This can give a company a broader range of products and services to offer its customers. It can also help a company to expand into new markets, as it gains access to new customer bases.

 

There are some disadvantages to horizontal integration as well. One is that it can create an overly competitive environment, as there

Stuck Looking For A Model Original Answer To This Or Any Other
Question?


Related Questions

What Clients Say About Us

WhatsApp us