Horizontal Acquisition

Posted in Marketing and Strategy Terms, Total Reads: 1240

Definition: Horizontal Acquisition

Horizontal Acquisition is a strategy where an organization takes over or merges with another organization which:

-          Is in the same stage of production

-          Is in the same Industry

Horizontal Acquisition or Integration is basically done among competitors to create a single-firm rule (Monopoly), or few-firm rule (Oligopoly)

When two firms in the market merge to create a monopoly, it is called Horizontal Monopoly


Benefits of Horizontal Acquisition:

-          Greater market share: The market power is greatly enhanced as the companies within the same industry are combined

-          Reduced Competition: Horizontal Acquisitions are generally referred as Anticompetitive

-          Expansion in Capacity: Economies of Scale are promoted

-          Increased value than standalone companies: The value of synergy in such a case

-          Reduced operating costs

-          Higher Efficiency


-          Acquisition of 40 refineries by Standard Oil Company

-          Automobile Manufacturer acquires Sports Utility Vehicle (SUV) Manufacturer

-          Acquisition of Compaq by HP

-          Yahoo! Acquisition by Microsoft


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