Question

What is the difference between vertical and horizontal integration? Which one is good for supply chain management strategy? Give example. Which one do you think will cause a company to become a monopoly and why?

Answer 1

1. Here is the difference between vertical and horizontal integration:

• Horizontal Integration happens between two firms whose item and creation level are same. Vertical Integration is an integration of two firms that works in various phases of the assembling procedure.
• Horizontal Integration targets expanding the size of business and size of the generation, while Vertical Integration centers around reinforcing and smoothening its creation dissemination process.
• The best-preferred position of horizontal integration is that it wipes out challenge between firms, which at last broadens the market share of the organization. Then again, Vertical Integration brings about bringing down the expense of creation and wastage.
• Horizontal Integration just brings cooperative energy, yet not independence while Vertical Integration enables the organization to pick up collaboration with independence.
• Horizontal Integration obtains power over the market, however, Vertical Integration is a system utilized for dealing with the entire business.

2. For a supply chain management strategy, Horizontal Integration is a good option.

Organizations may experience horizontal integration to build their size, enhance item or administrations contributions, accomplish economies of scale, or diminish rivalry. They may likewise wish to access new clients or markets, including abroad. For instance, a retail establishment may converge with a comparative one in another nation to begin activities abroad.

The consequence of horizontal integration, when fruitful, is the capacity to create more income together contrasted with if they somehow happened to contend freely. Also, a recently blended organization can eliminate costs by sharing innovation, marketing, innovative work (R&D), generation, and circulation.

3. I think horizontal integration will cause a company to become a monopoly because horizontal integration diminishes rivalry between firms in the market, as though the makers of the item get consolidated they can make a monopoly.