Horizontal combination | Meaning | Advantages | Disadvantages

Horizontal business combination

What is horizontal combination?

It refers to combination of businesses engaged in the production of the same type of product or engaged in the same trade.

Horizontal business combination - Meaning, Advantages, Disadvantages

Image: Horizontal business combination – Meaning, Advantages, Disadvantages

For e.g. Cement companies joining together (acquisition of Gujarat Ambuja Cement by Lafarge of France) or steel manufacturers joining together (Tata Iron and Steel Co., acquiring Natsteel of Singapore) etc. It is also known as parallel or unit or trade combination.

Why are horizontal combination formed?

The following are some of the basic reason for horizontal combination in business:

Horizontal combination are formed to:

1. To reduce competition.

2. To avoid cut-throat competition.

3. To reap the benefits of economies of scale.

4. To restrict output.

5. To fix prices etc.

Advantages of Horizontal combination in business

The following are the advantages of horizontal combinations:

1. Avoidance of wasteful competition.

2. It ensures better control over markets.

3. It helps realize economies of scale.

4. It aids standardization of products.

Disadvantages of horizontal combination in business

The following are the disadvantages of horizontal combinations:

1. It may lead to monopoly situations.

2. It may result in restriction of output, increase in prices and exploitation of consumers.

3. When the business grows beyond a particular size, control becomes difficult.

Leave a Reply

This site uses Akismet to reduce spam. .




Recent Posts


Related pages


purpose of a flexible budgetdisadvantages of epospresent value interest factor calculatorhow to interpret debt to equity ratiowhat is umbrella brandingqualities of an excellent leaderdisadvantages of product layouthow to calculate inventory conversion periodskim the marketreceivable turnover calculatoradvantages and disadvantages of credit ratingprofitability ratios meaningmeaning of mixed economic systembills receivable accountibrd functionsdefinition of demotedsundries accounting definitionconcentrated niche marketingstages of the selling processdistinguish between advertising and sales promotionformat of payroll sheetmercantile definemultistage cluster sampling definitionadvantage of stratified samplingdemerits of e commercequota sample definitionmonopoly firms in indiacharacteristics of a caste systembailee and bailorpercentage of sales forecasting methodexamples of probability sampling methodspreparing master budgetindirect exporting advantages and disadvantagesdisadvantages and advantages of e commercedisadvantage of sales promotionmeaning of exemplary damagespure capitalism definitionqualities of ratan tatawhat are the qualities of a good salesmandebenturadvantages of petty cash bookorigin of caveat emptorprobability and nonprobability sampling exampleswho is the lessee and lessormeaning of dishonourablefactors influencing buying behaviourdefine socialisation processliquidity ratio equationneed and importance of sebidirect labor rate formulawhat is marketing skimmingactivity based costing abctrade receivables formulawhat is a voidable contractdisadvantages of centrally planned economywhat is sundry creditorsexceptions of privity of contractmbo meaningstock exchanges in indiaformula of gearing ratiocharacteristics of salesmanmanagerial accounting and decision makinghow to file alphabetically and numericallydefine seniorityurbanized meaningwhat is the meaning of perilsadvantages of dettolfiling systemscalls in arreardelegating authority and responsibilityfdi merits and demeritsroles and responsibilities of salesmanformula for paybackicici bank establishment datedefine sales forecastingacid test ratio formulaworking capital operating cycle