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Horizontal Integration
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Definition
1. It is the process of acquiring or merging with competitors, leading to industry consolidation. 2. Horizontal integration is a strategy where a company acquires, mergers or takes over another company in the same industry value chain.
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Apple BP
AuthenTec Amoco
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1. Vassoughi, S. at Harvard Business Review (2012). Today's Best Companies are Horizontally Integrated. Available at: http://blogs.hbr.org/cs/2012/12/todays_best_companies_are_hori.html
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Competitive Profile Matrix
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Vision Statement
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Google has certainly taken full advantage of horizontal integration through the acquisitions of several small to giant online entities. It's also done well to eliminate competitors and as well as strengthen its position in its market. Nowadays business is more about gobbling everything with capital, rather than to build something from ground up. Still, I have to admit horizontal integration can be very profitable.
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Horizontal integration is not so much about profitability as for growing market share and eliminating competition. But you're right about saying that big businesses are more keen to use their cash to buy out new entrants rather than to develop products inside the company, because it's cheaper and less risky. One more reason favoring acquisitions of new start ups is that they usually come to the market with innovative products that disrupt the market, including the market leaders, who see horizontal integration as a way out of loosing their market share.
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