HORIZONTAL INTEGRATION

Question 1

What is HORIZONTAL INTEGRATION

Answer 1

When an organisation grows through buying another business that operates at the same stage of the production process.

Question 2

This is a selection of the companies in the VW group

Answer 2

https://docs.google.com/document/d/1f-hLdDSJEBzSfI-z5HOon4MA9s2molc8v7yRVCqA58U/edit

Question 3

What are the advantages of horizontal integration

Answer 3

General internal economies of scale: purchasing, managerial, risk bearing etc. Benefit from economies of scale, from the managers being in the same industry.

Generate synergies - 1 manufacturer may bring out an electric car to see how that performs, and the other brand will benefit from that, so that can learn from each other

Reduce costs through rationalisation - maybe have one marketing team instead of 10 for 10 different companies

Economies of scope

Increased market share/ access - new market segments

Purchase an established brand

Question 4

What are the disadvantages of vertical intergration

Answer 4

Diseconomies of scale - communication, coordination and motivation

Difficulties integrating management systems and cultures

Employee resistance

Government intervention and competition concerns