What Are Disadvantages of Horizontal Integration?
Quick Answer
Two primary disadvantages to horizontal integration include dealing with government approval of the plan and realizing anticipated benefits. Even if the plan goes through smoothly, the time it takes for the benefits to emerge can be much longer than planned.
Continue ReadingFull Answer
Horizontal integration is the process of merging with or acquiring another company so that the two businesses can combine with one another to increase efficiency and market share or reduce costs. Government interference may be the greatest disadvantage to horizontal integration, stopping the process before it even begins. This is due to monopoly concerns, especially if the merger or acquisition results in too large of a market share.
After the integration is complete, the next disadvantage lies in actually achieving the synergy between the two combined units that makes the merger or acquisition worthwhile. There could be expensive overlap of products or personnel, difficulty in developing a combined corporate culture or the size of the new unit may make it difficult to run the new entity.
Even when successfully integrated, the planned benefits from the merger or acquisition may be slow to materialize. Both during and shortly after horizontal integration, the newly combined unit lacks flexibility, making changes to the original implementation plan difficult and slow.
Learn more about Managing a BusinessRelated Questions
-
Q:
What Is the Difference Between CRM and E-CRM?
A: Whereas customer relationship management is the set of principles, practices and guidelines that an organization follows when interacting with its customer... Full Answer >Filed Under: -
Q:
What Is an Example of Backward Integration?
A: The most common form of backward integration is when a resale business acquires a supplier that it once bought from. A supermarket might acquire a manufact... Full Answer >Filed Under: -
Q:
What Does a Compliance Analyst Do?
A: The duties of a compliance analyst include finding and compiling information about regulations, getting approval for changes, making reports based on the i... Full Answer >Filed Under: -
Q:
What Are the Steps Necessary for Purchasing a Tim Horton's Franchise?
A: Purchasing a Tim Hortons franchise involves submitting a pre-qualification questionnaire, waiting for a company feasibility study, going through partnershi... Full Answer >Filed Under:
You May Also Like
-
Q:
How Do You Find Available Grants for Women Starting a Business?
-
Q:
What Are Some Types of Managerial Reports?
-
Q:
When Should You Call Yourself a CEO?
-
Q:
What Is the Difference Between a Vertical and Horizontal Model for Business?
-
Q:
Where Does a Stylist Get Free Hair Images to Display in the Shop?
-
Q:
What Are Some of the Advantages and Disadvantages of a Gantt Chart?
