An example of horizontal integration is the purchase of Kmart by Sears. Horizontal integration occurs when two companies at the same level in the supply chain merge.
Horizontal integration offers a range of benefits including increased marketing power and a reduction of costs through economies of scale. As a company expands, it is able to achieve economies of scale by having a greater revenue base to spread its overhead costs.
Vertical integration is when a company purchases a company that is in a different level of the supply chain. Kmart purchasing one of the brands it sells is an example of vertical integration.