What does "horizontal integration" refer to?

Horizontal integration refers to the process of a company acquiring or merging with another firm that operates at the same level of the supply chain, typically a competitor. This strategy aims to increase market share, eliminate competition, achieve economies of scale, and enhance bargaining power. By consolidating similar firms, the acquiring company can streamline operations and enhance its market position.

Merging with or acquiring a competitor allows the company to leverage similar resources, capabilities, and customer bases, thus creating a more robust market presence. This tactic can also facilitate the sharing of best practices and innovations between the companies, further increasing efficiency and effectiveness.

On the other hand, other choices highlight different strategic maneuvers. Acquiring a supplier signifies vertical integration, which focuses on controlling supply chain levels. Merging firms at differing supply chain levels would also reflect vertical integration. Collaboration between unrelated firms represents a strategic alliance rather than a direct acquisition or merger at the same level.