horizontal expansion is the characteristics of: Horizontal Expansion in Business: Definition & Examples

horizontal expansion is the characteristics of: Horizontal Expansion in Business: Definition & Examples


Although both are viable, each method depends entirely upon your goals and resources. Add horizontal expansion to one of your lists below, or create a new one. Horizontal expansion in Cura expands each point of the object by a value in mm. Shrinkage compensation scales the object by a percentage value. The end result is therefore fundamentally different and suitable for different applications. For illustration I have sliced a calibration cube with a horizontal expansion of 0 mm, 1 mm and -1 mm.


The suppliers will eagerly seek to fill up their truck, and may give lower average prices on the products to do that. You’ve noticed that your customers want a dessert option after their pizza, and a survey reveals that most people would like to have ice cream. You’ll need to research the costs and storage requirements of ice cream to see if you can deliver it at a reasonable cost, but this seems like a ‘doable’ way to horizontally integrate. You are a little wary of this option, however, because you have no experience with the ice cream suppliers.

Horizontal integration usually works best when two companies have synergistic cultures. The process may fail if there are problems when the two cultures merge. Vertical integrations can help boost profit and allow companies more immediate access to consumers.

The https://1investing.in/ will be able to use its greater size to dictate better terms. Distributors are predominately low-margin, high-turnover businesses. They desperately need new volume, and would ‘trip over themselves’ to service a large, horizontally integrated company. The acquisition of additional business, that operates in the same line, increases market dominance and also reduce the intensity of competition.

The holes grow or shrink, but the centers of the holes do not change their position by the setting. A conglomerate merger involves the merger of two firms making different products. For example, an electricity company may merge with a travel company and an insurance company may merge with a chocolate producer. On the other end of the spectrum, conglomerate diversification is for companies that strive for growth. Notwithstanding this rule, some companies may use only the selected competencies of horizontal integration.

Horizontal Integration Examples

Or there may be economies of scale, which make the simultaneous manufacturing of different products more cost-effective than manufacturing them on their own. Vertical Integration is between two firms that are carrying on business for the same product but at different levels of the production process. The firm opts to continue the business, on the same product line as it was done before integration.

economies of scale

On the other hand, Horizontal development consists more of a growth done through expanding current sections. For example, you may want to expand manufacturing in other locations or create more distribution outlets. You may also want to expand territory by adding more stores or geographically expanding. Perhaps you may opt to expand internally by creating a greater and more diverse capacity and capability through more machines, more locations, more warehousing, and more products. Conversely, Vertical Integration is used to rule over the entire industry by covering the supply chain.

What is Horizontal Expansion?

For example, a restaurant can expand to offer catering companies, or a beverage manufacturer may branch off to make food products. Horizontal integration is an expansion strategy adopted by a company that involves the acquisition of another company in the same business line. Vertical integration refers to an expansion strategy where one company takes control over one or more stages in the production or distribution of a product. Both of these strategies are undertaken by a company in order to consolidate its position among competitors. You learned that horizontal integration is when a company increases the number of products or services sold in one part of the supply chain.

  • Moreover, the company can also diversify its products and services.
  • As such, vertical integration is the process of acquiring business operations within the same production vertical.
  • Horizontal expansion forces the organisation to focus on its core competence, and hopefully making it a master in its field.
  • By merging, two businesses may be able to produce more revenue than they would have been able to do independently.
  • Different processes, equipment, and/or technology are installed.
  • Distributors are predominately low-margin, high-turnover businesses.

This is in contrast to vertical integration, where firms expand into upstream or downstream activities, which are at different stages of production. Horizontal integration is one of the most common types of mergers. As a result of horizontal integration, competitors in the same market combine their operations and assets. An example of horizontal integration would be if two consulting firms merge. One of the firms offers software development services in the defense industry; the other firm also provides software development but in the oil and gas industry.

Horizontal Expansion vs. Shrinkage Compensation

You like this option because you could use the same suppliers you have been using for your pizzas. The additional cost to carry a few more supplies is minimal because the main cost for them is the truck and fuel. As long as they have the space, a bigger order will mean they can ‘spread’ the fixed costs of the truck over more goods, decreasing the cost per good and increasing the profit margin on each good sold.


Couple your RDBMS with a robust caching strategy that uses memcached or a CDN and you’ll have a system that can scale pretty cheaply. In this model, when the database runs out of capacity, putting more pieces of data in the cache helps offset the burden of reads. When there’s no more items left to cache, upgrading your database hardware with faster disks or more processors will usually buy you the necessary runway.

Instead, it can be the precursor to dismal performance, devaluation, inefficiency, stunted economic growth, and reduced competitiveness. Horizontal growth means expanding products/services to new markets. This can be done by developing a new market or penetrating an existing market.

Vertical And Horizontal Integration

With a horizontal expansion of 1 mm, the “Z” on the top is no longer visible, only two small holes were formed. The negative effect of horizontal expansion is that details and holes are either enhanced or swallowed. The three settings for the horizontal expansion are each specified in millimeters. As already described above, however, you must note that the specification is applied in both directions of the respective axes. For example, if the horizontal expansion is 0.2 mm, the object will be 0.4 mm wider. If you set a horizontal expansion of 5 mm, a cube with an original edge length of 20 mm will then have a width of 30 mm in the X and Y directions.

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horizontal expansion is the characteristics of integration, on the other hand, occurs when a business takes control of one or more stages in production or distribution, thereby owning all of the parts of the industrial process. It is a tactic used by most of the companies to expand its size and achieve economies of scale due to increased production level. This will help the company to approach new customers and market. Moreover, the company can also diversify its products and services.

Backward integration occurs when a company decides to buy another business that makes an input product for the acquiring company’s product. For example, a car manufacturer pursues backward integration when it acquires a tire manufacturer. It’s a matter of preference, strategy, opportunity, market dynamics and availability of capital to support the growth requirements. Another successful strategy is situating you in a discount mall. Although it can be an expensive overhead, the substantial amounts of traffic create significant revenue potential for your location. In the end, factory outlets bring factory cost to retail pricing which is an opportunity for deep discounts and sizable profits.

Even though a horizontal integration may make sense from a business standpoint, there are downsides to horizontal integration for the market, especially when they succeed. This kind of strategy faces a high level of scrutiny from government agencies, which is why antitrust laws are in place. A horizontal acquisition is a business strategy where one company takes over another that operates at the same level in an industry. Like the increased power it can gain over the supplier, a horizontally integrated company can exert more pressure on its distributors if the new goods it produces can go through the same distributors.

In order to achieve such a position the company will have to consider other forms of expansion and switch between them according to the changing market environment. In today’s business world the company will have to expand and contract its operations in all three ways. The business need to keep a sharp eye on its own and its competitors performances and strategies, as well as be aware or how other industry sectors are performing. This is also the reason why Japanese cars have a reputation for reliability and quality.

Content: Horizontal Integration Vs Vertical Integration

The company often wants to enhance its existing product or get a larger share of the market. One major deciding factor on growth strategy will be the organisations long term strategy and the behaviour of the Markets, and its competitors. This can be in the same market or in markets in other countries for example the takeover of O2 by a Spanish company called Telephonica. Horizontal integration of companies within the same industry attracts businesses that target to reach a broader market or offer more products/services.

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Supporting expansion plans can also depend on other important and limiting factors such as the amount of available capital and other necessary resources. Vertical expansion can be very successful if each layer of the vertical development is operating independently and separately from each other. In vertical expansion situations, clear distinctions between the stages are sometimes necessary because as you expand vertically, competing with your customers and suppliers can become very tricky. The difference between the flow rate and the horizontal expansion is that the dimensions of the object do not change when the flow rate is changed in the slicer. Changing the flow rate does not compensate well for inaccuracies.

As a result, all workers perform a wide variety of tasks, which presumably reduces the level of job dissatisfaction. Is an alternative to job specialization that involves extending a job’s range so that the number and variety of different activities an employee perform is increased. Horizontal expansion can in some cases be just the right tool to achieve perfect dimensional accuracy in the printed object. Even if you have calibrated your Cura profile for your 3D printer very well, there may still be certain effects that you cannot fix beforehand. Shrinkage compensation, as the name suggests, is used for materials that shrink during cooling. You can also enter negative values here, which will make the object smaller, but this makes little sense in most cases.

Economies of scale, competitive edge, increased market share, and business expansion. Businesses in strategic alliances target outcomes that provide more resources, market, competence, and efficiency. The two amalgamated entities should be better positioned to realize more revenue than they would have when operating independently. If horizontal mergers within the same industry concentrate market share among a small number of companies, it creates an oligopoly. If one company ends up with a dominant market share, it has a monopoly.

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