Horizontal, vertical and conglomerate Flashcards
When does horizontal integration occur?
When a firm combines with another, in the SAME INDUSTRY, at the SAME stage of production process. (two suppliers)
What does horizontal integration reduce?
Competition in a market
When does vertical integration occur?
When a firm combines with another in the SAME industry, but at a DIFFERENT stage in production process. (retailer and manufacturer)
What can vertical integration be?
Forward or backwards
What is Forward vertical integration?
When a biz combines with another biz that is further ON in the production process. (manufacturer –> retailer)
What is Backwards vertical integration
biz combines with another biz that is at an earlier stage in the production process. (retailer —> wholesaler)
What are conglomerate mergers between?
Between unrelated firms
