Editing Horizontal integration (section)

== Aspects ==
Benefits of horizontal integration to both the firm and society may include [[economies of scale]] and [[economies of scope]]. For the firm, horizontal integration may provide a strengthened presence in the reference market.<ref>{{Cite web |title=What Is Horizontal Integration? Definition and Examples |url=https://www.investopedia.com/terms/h/horizontalintegration.asp |access-date=2023-04-24 |website=Investopedia |language=en}}</ref> This means that with the merger, two firms would then be able to produce more revenue than one firm alone. It may also allow the horizontally integrated firm to engage in [[monopoly pricing]], which is disadvantageous to society as a whole and which may cause regulators to ban or constrain horizontal integration.<ref>{{Cite web|title = Horizontal Integration - What It Really Means For Marketing - Ardor Media Factory|url = https://www.ardormediafactory.com/horizontal-integration-marketing/|website = Ardor Media Factory|date = 19 February 2016|access-date = 2016-02-19|language = en-US}}</ref> Strategies around horizontal mergers often relate to revenue production, reducing market entrants or expanding into new markets.<ref>{{Cite web |title=What Is Horizontal Integration? Definition and Examples |url=https://www.investopedia.com/terms/h/horizontalintegration.asp |access-date=2023-04-24 |website=Investopedia |language=en}}</ref> The three forms of horizontal integration are mergers, acquisitions and internal expansion. <ref>{{Cite web |date=2023-01-23 |title=Physics-integrated Segmented Gaussian Process (SegGP) learning for cost-efficient training of die... |url=http://dx.doi.org/10.2514/6.2023-1283.vid |access-date=2023-04-24 |doi=10.2514/6.2023-1283.vid }}</ref>

'''[[Mergers and acquisitions|Mergers:]]'''

Mergers and acquisitions (M&A) refer to the consolidation of companies or assets through various financial transactions, such as mergers, acquisitions, and consolidations.<ref>{{Cite web |title=Mergers and Acquisitions: What's the Difference? |url=https://www.investopedia.com/ask/answers/021815/what-difference-between-merger-and-acquisition.asp |access-date=2023-04-24 |website=Investopedia |language=en}}</ref> M&A activities can be an effective way for companies to expand their operations, diversify their product or service offerings, and increase their market share.<ref>{{Cite web |title=Mergers and Acquisitions: What's the Difference? |url=https://www.investopedia.com/ask/answers/021815/what-difference-between-merger-and-acquisition.asp |access-date=2023-04-24 |website=Investopedia |language=en}}</ref> These activities can also lead to cost savings, increased efficiencies, and access to new technologies or markets.<ref>{{Cite web |title=Mergers & Acquisitions (M&A) |url=https://corporatefinanceinstitute.com/resources/valuation/mergers-acquisitions-ma/ |access-date=2023-04-24 |website=Corporate Finance Institute |language=en-US}}</ref>

Mergers involve the combination of two or more companies to form a new entity. This can occur through a stock-for-stock transaction, where shareholders of both companies receive shares in the new entity based on a predetermined exchange ratio.<ref>{{Cite web |title=What are mergers and acquisitions (M&A) |url=https://www.bdc.ca/en/articles-tools/entrepreneur-toolkit/templates-business-guides/glossary/mergers-and-acquisitions |access-date=2023-04-24 |website=BDC.ca |language=en}}</ref> Alternatively, a cash merger can occur, where one company purchases another using cash or other financial instruments.<ref>{{Cite web |title=What are mergers and acquisitions (M&A) |url=https://www.bdc.ca/en/articles-tools/entrepreneur-toolkit/templates-business-guides/glossary/mergers-and-acquisitions |access-date=2023-04-24 |website=BDC.ca |language=en}}</ref>

'''[[Mergers and acquisitions|Acquisitions:]]'''

Acquisitions, on the other hand, involve the purchase of one company by another. This can occur through a friendly acquisition, where the target company agrees to the acquisition and its shareholders receive compensation for their shares.<ref>{{Cite web |title=What are Mergers & Acquisitions (M&A): The Only Guide you Need |url=https://dealroom.net/faq/mergers-and-acquisitions-m-a-meaning |access-date=2023-04-24 |website=dealroom.net |language=en}}</ref> Alternatively, a hostile takeover can occur, where the acquiring company purchases a controlling stake in the target company without its approval.<ref>{{Cite web |title=What are Mergers & Acquisitions (M&A): The Only Guide you Need |url=https://dealroom.net/faq/mergers-and-acquisitions-m-a-meaning |access-date=2023-04-24 |website=dealroom.net |language=en}}</ref>

Consolidations refer to the combination of two or more companies to form a single entity without the creation of a new entity. This can occur through the merger of equals, where two companies of equal size and strength combine forces, or through the acquisition of a smaller company by a larger one.<ref>{{Cite web |title=Mergers and Acquisitions - M&A Types, Examples, Process |url=https://www.ansarada.com/mergers-acquisitions |access-date=2023-04-24 |website=ansarada}}</ref>

M&A activities can have a significant impact on various stakeholders, including shareholders, employees, customers, and suppliers. Shareholders can benefit from increased stock prices and dividends, while employees may face job losses or changes to their employment terms. Customers and suppliers may also be affected by changes to product or service offerings and supplier relationships.<ref>{{Cite web |title=Mergers and Acquisitions - M&A Types, Examples, Process |url=https://www.ansarada.com/mergers-acquisitions |access-date=2023-04-24 |website=ansarada}}</ref>

Regulatory bodies play an important role in overseeing M&A activities to ensure they do not violate antitrust laws and do not harm competition in the marketplace.<ref>{{Cite web |title=Mergers and Acquisitions - M&A Types, Examples, Process |url=https://www.ansarada.com/mergers-acquisitions |access-date=2023-04-24 |website=ansarada}}</ref> The approval of mergers and acquisitions may also require approval from government agencies or industry regulators.

Overall, mergers and acquisitions can be an effective strategy for companies to achieve growth and gain a competitive advantage. However, careful consideration of the potential benefits and drawbacks, as well as regulatory compliance, is essential to ensure a successful outcome for all stakeholders involved.<ref>{{Cite web |title=Mergers & Acquisitions {{!}} Financial Times |url=https://www.ft.com/mergers-acquisitions |access-date=2023-04-24 |website=www.ft.com |language=en-GB}}</ref>

'''Internal Expansion:'''

In addition to [[mergers and acquisitions]], companies can also pursue internal expansion through horizontal integration.<ref>{{Cite web |title=Internal growth - Business growth - Eduqas - GCSE Business Revision - Eduqas |url=https://www.bbc.co.uk/bitesize/guides/zkgqqp3/revision/2 |access-date=2023-04-24 |website=BBC Bitesize |language=en-GB}}</ref> This involves expanding their operations and product or service offerings within their existing industry by acquiring or developing new capabilities.

Horizontal integration can take various forms, including expanding through new product development, expanding geographically, or acquiring competitors or suppliers.<ref>{{Cite web |last=Nasrudin |first=Ahmad |date=2020-08-17 |title=Internal Growth: Methods, Advantages & Disadvantages |url=https://penpoin.com/internal-growth/ |access-date=2023-04-24 |website=Penpoin |language=en-US}}</ref> This strategy can enable companies to increase their market share and achieve economies of scale by leveraging existing resources and capabilities.<ref>{{Cite web |title=Internal Growth Rate (IGR): Definition, Uses, Formula and Example |url=https://www.investopedia.com/terms/i/internalgrowthrate.asp |access-date=2023-04-24 |website=Investopedia |language=en}}</ref>

Internal expansion through horizontal integration can also involve the integration of different business functions, such as production, marketing, and sales, to streamline operations and increase efficiency.<ref>{{Cite web |title=Internal Growth Rate (IGR): Definition, Uses, Formula and Example |url=https://www.investopedia.com/terms/i/internalgrowthrate.asp |access-date=2023-04-24 |website=Investopedia |language=en}}</ref> This can result in cost savings and improved profitability.<ref>{{Cite web |title=Internal Growth – Evaluation — Super Business Manager |url=https://www.superbusinessmanager.com/internal-growth-evaluation/ |access-date=2023-04-24 |language=en-US}}</ref>

However, there are potential drawbacks to internal expansion through horizontal integration.<ref>{{Cite web |title=Internal Growth – Evaluation — Super Business Manager |url=https://www.superbusinessmanager.com/internal-growth-evaluation/ |access-date=2023-04-24 |language=en-US}}</ref> It can be costly and time-consuming to develop new capabilities or expand into new markets, and there is a risk that these efforts may not be successful. Additionally, companies may face increased competition and regulatory scrutiny as they expand their operations.<ref>{{Cite web |title=How firms grow in size |url=https://www.economicshelp.org/blog/glossary/how-firms-grow-in-size/ |access-date=2023-04-24 |website=Economics Help |language=en-GB}}</ref>

Overall, internal expansion through horizontal integration can be a viable strategy for companies looking to achieve growth and gain a competitive advantage.<ref>{{Cite web |title=How firms grow in size |url=https://www.economicshelp.org/blog/glossary/how-firms-grow-in-size/ |access-date=2023-04-24 |website=Economics Help |language=en-GB}}</ref> However, it requires careful planning, execution, and management to ensure success and mitigate potential risks. Companies should also consider the potential benefits and drawbacks of this strategy compared to other growth strategies, such as mergers and acquisitions.<ref>{{Cite web |title=How firms grow in size |url=https://www.economicshelp.org/blog/glossary/how-firms-grow-in-size/ |access-date=2023-04-24 |website=Economics Help |language=en-GB}}</ref>