What is the main goal of horizontal integration in supply chains?

The main goal of horizontal integration in supply chains is to acquire competitors and improve market share. This strategy involves a company purchasing or merging with other firms at the same level of the supply chain, which allows it to consolidate resources, eliminate competition, and create a larger entity that can capture more market share. By acquiring competitors, a firm can increase its customer base and operational scale, which can lead to enhanced bargaining power and potential cost savings through economies of scale.

This approach contrasts with other strategies, such as increasing customer loyalty, which typically focuses on enhancing relationships with existing customers rather than expanding market presence. Similarly, enhancing supplier relationships is aimed at improving collaboration and sourcing efficiencies rather than targeting competition directly. Lastly, while reducing production costs is essential for many businesses, it is often an outcome of strategic actions rather than the main objective of horizontal integration itself.