Horizontal integration primarily aims to achieve increased market share through mergers. This strategy involves companies at the same level of the supply chain combining their operations, which can lead to a broader customer base and reduced competition. By merging with or acquiring other businesses in the same industry, a company can strengthen its market position, enhance its capabilities, and create economies of scale.
This approach allows companies to leverage shared resources and expertise, streamline processes, and possibly even reduce costs through consolidated operations. A significant outcome of horizontal integration is the potential for a larger market footprint, which can ultimately lead to increased revenue and profitability as the combined entity can now serve more customers than either company could individually.
While lowering operational costs, increasing product variety, and enhancing technological advancements are important factors in business strategy, they often result from or are complementary to a strong position in the market achieved through horizontal integration. Thus, the primary focus remains on expanding market share through strategic mergers and acquisitions.