Horizontal Acquisition

Posted in Marketing and Strategy Terms, Total Reads: 1296
Advertisements

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


Examples:

-          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

 

Hence, this concludes the definition of Horizontal Acquisition along with its overview.

Advertisements

Browse the definition and meaning of more terms similar to Horizontal Acquisition. The Management Dictionary covers over 7000 business concepts from 6 categories.

Search & Explore : Management Dictionary



Share this Page on: