What is horizontal integration?

Horizontal integration refers to the strategy where a company acquires or merges with another company that operates at the same level within the supply chain, often in the same industry. This practice is used to increase market share, reduce competition, achieve economies of scale, and enhance overall efficiency.

When a company engages in horizontal integration, it can consolidate its position in the market, leverage additional resources, and often gain access to a larger customer base. This can be particularly beneficial in industries where competition is fierce, as it enables businesses to strengthen their market power and influence.

For example, if a car manufacturer acquires another car manufacturer, it is engaging in horizontal integration because both companies are at the same level in the supply chain (producing finished vehicles). This helps the acquiring company expand its range of offerings, improve its economies of scale, and potentially increase its pricing power in the market.

The other options represent different concepts in strategic management. Acquiring suppliers reflects vertical integration, which focuses on different levels of the supply chain. Diversifying product offerings pertains to related or unrelated diversification strategies aimed at entering new markets or segments. Mergers across different industries are characterized by conglomerate mergers, which also do not fall under the definition of horizontal integration.