The Difference
Vertical integration is a move to control more of your supply chain. For example, a manufacturer that opens retail locations. Horizontal integration is a move to offer new products and services at the same level of the supply chain. For example, a manufacturer of bicycles and begins to manufacturer inline skates.The Similarities
Both vertical and horizontal integration can be accomplished by internal expansion, merger or acquisition. It is a common misconception that integration always implies a merger or acquisition. Perhaps this is because this happens much more quickly and is more obvious to investors than an internal expansion that may take years. It should be noted that a firm can pursue both vertical and horizontal expansion at the same time.| Vertical Integration vs Horizontal Integration | ||
Vertical integration | Horizontal Integration | |
Definition | Business expansion to new levels of the supply chain. | Business expansion to offer more products or services at levels of the supply chain served by your existing business. |
