Horizontal Integration Rationale

Last Updated: 27 Jul 2020
Pages: 2 Views: 194

Retail chains in Europe are beginning to reap from the benefits of horizontal and vertical mergers and acquisitions (Pilsbury & Meaney, 2009, p. 5). Horizontal mergers are the integration of organizations in the same section of the value chain such as two road freight companies (Pilsbury & Meaney, 2009, p. 5). On the contrary, a vertical integration is a merger between organizations from various sections of the value chain. An example would be road freight and infrastructure (Pilsbury & Meaney, 2009, p. 5). In this regard integration between Wal-Mart and Lianhua Supermarket Holdings Co.

Ltd would be considered as a horizontal integration since both are supermarket chains (Barney & Hesterly, 2008). When examined from the context of service quality, any form of integration whether vertical or horizontal would give Wal-Mart greater control in the way goods and services are distributed (Pilsbury & Meaney, 2009, p. 5). An example of such control can be in the form of an increase of cooperation and communication involved in the value chain upon the vertical integration of some components (Pilsbury & Meaney, 2009, p.

9). For example, a reduction in delays as a result of the integration is likely to allow Wal-Mart to be even more competitive on quality. Wal-Mart can choose from three various merger options; the first option being a horizontal merger (Pilsbury & Meaney, 2009, p. 9). This is a merger between organizations producing and selling competing products. Second is vertical merger which would involve a relationship between a buyer and a seller (Pilsbury & Meaney, 2009, p. 9).

Order custom essay Horizontal Integration Rationale with free plagiarism report

feat icon 450+ experts on 30 subjects feat icon Starting from 3 hours delivery
Get Essay Help

The final option would be the conglomerate merger; which would involve Wal-Mart and another company neither operating in retail business not having a buyer seller relationship with Wal-Mart (Barney & Hesterly, 2008). Irrespective of the kind of integration that Wal-Mart chooses, this rationale also indicates that the company has the required competitive edge thereby capable of profitably purchasing Lianhua Supermarket Holdings Co. Ltd. , China’s #1 grocery retailer.

Cite this Page

Horizontal Integration Rationale. (2018, Mar 31). Retrieved from https://phdessay.com/horizontal-integration-rationale/

Don't let plagiarism ruin your grade

Run a free check or have your essay done for you

plagiarism ruin image

We use cookies to give you the best experience possible. By continuing we’ll assume you’re on board with our cookie policy

Save time and let our verified experts help you.

Hire writer