Horizontal integration
From Wikipedia, the free encyclopedia
In microeconomics and strategic management, the term horizontal integration describes a type of ownership and control. It is a strategy used by a business or corporation that seeks to sell a type of product in numerous markets. To get this market coverage, several small subsidiary companies are created. Each markets the product to a different market segment or to a different geographical area. This is sometimes referred to as the horizontal integration of marketing. The horizontal integration of production exists when a firm has plants in several locations producing similar products. Horizontal integration in marketing is much more common than horizontal integration in production. It is contrasted with vertical integration.
A monopoly created through horizontal integration is called a horizontal monopoly.
The situation in which a company takes over another in the same business, thus eliminating a competitor (competition) and achieving both a broader market, and greater economies of scale.
A term that is closely related with horizontal intergration is horizonal expansion. This is the expansion of a firm within an industry which it is already active, the purpose is to increase its share of the market for a particular product or service.
In media, horizontal integration is the structure through which a media institution owns companies in only one sector of the industry (production, distribution or exhibition). An example is Disney, which owns companies mainly in the exhibition sector with TV channels such as Disney Channel and ABC.