What does "horizontal integration" refer to?

Horizontal integration refers to the strategy of acquiring or merging with a competing company that operates at the same level in the supply chain. This approach allows firms to increase their market share, enhance economies of scale, reduce competition, and strengthen their overall position in the industry. By combining resources, capabilities, and customer bases, firms can achieve greater efficiency and profitability.

When a company engages in horizontal integration, it seeks to consolidate its market power and expand its reach within the same industry segment, providing an opportunity to create synergies related to operations, marketing, and distribution. This strategy can be particularly effective in industries where there are numerous competitors with similar offerings, enabling the integrated entity to leverage shared technology, reduce redundant costs, and capitalize on expanded distribution networks.

In contrast, the other options represent different strategic approaches that do not align with the concept of horizontal integration. Acquiring a supplier refers to vertical integration, which focuses on gaining control over different levels of the supply chain, while merging with companies at varying supply chain levels or collaborating with unrelated firms indicates alternative strategies such as vertical integration or strategic alliances, respectively. Understanding these distinctions is crucial for effectively analyzing strategic management practices.