Question

Horizontal growth can be the merger of two companies at similar levels in the production supply chain.

As mentioned, Delta Airlines acquired Northwest Airlines in 2008 to obtain access to Northwest's Asian markets and those American markets that Delta was not then serving.

Another example is Facebook and Instagram, in which both operate in the same industry. They share similar services. Facebook sought to strengthen it's position by using Instagram as an opportunity to grow it's market share, reduce competition, and gain access to new people. Although, both platforms operate independently, Instagram is owned by Facebook.

Give an example of horizontal growth or vertical growth.

Answer 1

Horizontal growth is the growth strategy in which the products or services are expanded to new markets. It can be through penetration of existing market or developing a new market altogether. An example of it can be Uber. It started at one location San Francisco, and slowly expanded its business all over the world. Under has taxi services in almost every country making it grow effectively. The company has also launched the service of UberEats with its existing model.

Vertical growth is upgrading the features and capabilities of an existing product or service for growth in the market. These companies also change their distribution model by not depending on suppliers and distributors for supply chain but taking up all the functions by themselves. An example of vertical growth can be Zara company that manufactures its clothes by themselves and not outsource it from suppliers. They also have their independent stores to sell these clothes. WIth this they can grow as they have more control over their quality and other staretgic decisions.