Question

Horizontal integration occurs when an organization increase the volume of the current production activities or expands to a new but similar kind of production activities. An example of this would be when Facebook acquired Instagram in 2012. This is in the same stage of the value chain because Facebook and Instagram are both social media platforms, although they both serve different purposes to consumers.

Vertical integration occurs when an organization expands and the new activity is in the same value chain but at a different stage. An example of this would be Walmart's brand Great Value. With Great Value, Walmart manufactures, distributes, and sells the product; they are involved in every stage of the product. They not only buy from suppliers but also supply their own products. Vertical integration is often more expensive to execute but can cut out costs in other areas. There are many advantages to this, the main one being the decrease of reliance on suppliers. With that, the organization can also control costs better.

Please respond in 100-150 words

Answer 1

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