Vertical integration | Horizontal integration |
Vertical integration is that type of grand strategy in which a firm acquire another firm of same supply chain. Vertical integration occurs when a firm acquire either its supplier (called backward integration) or its distributor (called forward integration). Vertical integration is done to be self-dependent, to increase a company’s power and position in the marketplace and to dominate the entire supply chain from the required raw materials stage to the end users or consumer. A monopoly produced through vertical integration is called a vertical monopoly. E.g. Textile manufacturer | Clothing manufacturer | Clothing Store | Horizontal integration is that type of grand strategy in which a firm acquire another firm which are in the same stage of 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 Horizontal integration is done to increase the market share, to be strong in the market and to consolidate like companies and monopolize an industry. A monopoly created through horizontal integration is called a horizontal monopoly. E.g. Textile manufacturer <------------> Textile manufacturer Clothing manufacturer <------------> Clothing manufacturer |Clothing store <------------> Clothing store |