Question

What is the difference between a vertical alliance and a horizontal alliance?

Answer 1

Horizontal alliance: It is formed where the two companies are working in a same area or same field. In which the partners are wored together to improve the position in the market. If the two companies are working together then this type of alliance provides some competitive advantages such as raw materials cost, development and maintainence cost, marketing cost, etc.

Vertical alliance: It is formed between a firm and its suppliers or distributors. Some companies used vertical alliance for producing the product and services. It is basically a relationship with its suppliers to exchange the product and services between them. It will helps to companies for generating the good business by providing lowest price to the customers.