Question

List and define the three types of integration discussed in Topic 5. Give an example of each. (Be specific)

Answer 1

There are three types of integration that can be defined as:

1. Horizontal Integration

In horizontal integration, we see that 2 companies that sell a similar product at a similar level of implementation integrate with each other or one company acquires their direct competition.

Eg. Disney’s acquisition of Pixar can be considered as a horizontal integration

2. Vertical Integration

In vertical integration, we see that a company acquires another which is either up or down their supply chain in order to maximize their control process.

Eg. A shoe company buying a leather manufacturer, since they are not in a direct competition. We would consider it a vertical integration

3. Conglomerate integration

This is where 2 companies that work in a separate industry in a completely different environment or product type merge together.

Eg. Amazon’s acquisition of whole foods can be considered as a conglomerate integration since these two firms do not directly compete with each other and were not even in the same market.