Horizontal Integration

Definition of ‘Horizontal Integration’

Horizontal integration is the process of two businesses which are involved in similar activities, at the same stage of production, in the same industry joining together either by a merger or takeover.

Because the two businesses are operating in the same area of activity, they can share resources and create economies of scale.

For example, two businesses involved in car manufacturing might merge their production activities to create a much large car production business, this would be classified as horizontal integration. If however, the car manufacturing business expanded into garage forecourt retailing of cars, a completely different activity, this would be classified as vertical integration.

For further information see the Wikipedia horizontal integration definition.

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