Integration

content/sixth/Business/Units/nd/Integration.md

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+---
+title: Integration
+tags:
+  - business
+---
+![[sixth/Business/Units/nd/img/Pasted image 20231205134030.png]]
+
+### Horizontal
+
+- Buying a company in the same industry and stage of the supply change
+
+- Economies of scale
+- Diversification
+- Synergy benefit
+
+### Vertical
+
+- Buying a company in the same industry but at a different stage
+
+
+**Forward and vertical** - Acquiring a business further up in the supply chain
+**Backward and vertical** - Acquiring a business operating earlier in the supply chain
+**Horizontal** - Acquiring a business at the same stage of the supply chain
+**Conglomerate** - Where the acquisition has no clear connection to the business buying it
+
+
+### Potential benefits of Horizontal Integration
+
+- Achieve economies of scale
+- Cost synergies (savings) from the rationalisation of the business
+- Potential to secure revenue synergies
+- Wider range of products (diversification)
+- Reduces competition by removing key rivals - this increases market share and long-run pricing power
+- Buying an existing and well-known brand can be cheaper than organically growing a brand - this can then make the entry barriers higher for potential rivals
+
+### Potential benefits of Vertical Integration
+
+- Enables a business to capture a greater share of the profit on each sale
+- Secures important sources of supply or distribution
+- Creates a barrier to entry to potential new competitors
+- Gain greater insights into customer needs and wants at each stage of the supply chain
+
+
+