Vertical and horizontal integration

  • Vertical integration: Through vertical integration, companies enter into activities related to the production cycle of a product or service.  It is a growth strategy within the strategic direction of companies and is common in all types of markets. By engaging in vertical integration, the company in question covers a larger number of utilities. Thus, from an initial phase in the development and production of a product to the supply of customers, there are different processes that can be exploited by the same firm.
  • Horizontal Integration: Horizontal integration can be carried out through the purchase of companies or mergers in the same sector, allowing companies to take advantage of their technological, human and complementary resources, since the benefit obtained from horizontal integration processes will depend to a large extent on how complementary the parties or subsidiaries are.

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