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Enterprise Growth Strategies — Entrepreneurship STD 12 Commerce — Question

CBSE BoardEnglish MediumSTD 12 CommerceEntrepreneurshipEnterprise Growth Strategies3 Marks
Question
Explain meaning, advantages and limitations of horizontal integration.
✓

Answer

Horizontal integration is a long-term strategy of the firm which is based on growth throughout acquisition or merger of one or more similar business operating at the same stage of production and marketing.Advantages of horizontal integration are as follows:
  1. It eliminates cut throat competition.
  2. Economies of scale reduces the cost per unit.
  3. Larger control over market.
Disadvantages of horizontal integration are as follows:
  1. May lead to monopoly power and exploitation of customers.
  2. Does not control supply of raw material.

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