EXPANSION TRHOUGH

INTEGRATION
Presented By: Presented To:
Mr. Bhanu Pratap Singh (MBA/45002/22) Prof. Monika Bisht
Mr. Varun (MBA/45005/22) Prof. Rakesh Singh
Mr. Shakti Kumar Singh (MBA/45009/22)
 INTRODUCTION
• The Expansion through Integration means combining one or more
present operation of the business with no change in the customer
groups. This combination can be done through a value chain.
• The value chain comprises of interlinked activities performed by an
organization right from the procurement of raw materials to the
marketing of finished goods.
 INTEGRATION

VERTICAL HORIZONTAL
INTEGRATION INTEGRATION

FORWARD BACKWARD
MERGER ACQUISITION
INTEGRATION INTEGRATION
BALANCED INTERNAL
INTEGRATION EXPANSTION
 VERTICAL INTEGRATION
• The vertical integration is of two types: forward and backward. When an
organization moves close to the ultimate customers, i.e., facilitate the sale of the
finished goods is said to have made a forward integration.
• If the organization retreats to the source of raw materials, is said to have made a
backward integration.
• A balanced integration is a vertical integration approach in which a company
aims to merge with companies both before it and after it along the supply chain.
 ADVANTAGES OF VERTICAL
INTEGRATION
• Helps gaining greater control over the supply chain and manufacturing process.
• Leads to lower costs, economies of scale, and a lower reliance on external
parties.
• Lead to lower transportation costs, smaller turnaround times, or simpler logistics.
• Results in higher quality products as the company has direct control over the raw
materials.
 DISADVANTAGES OF VERTICAL
INTEGRATION
• Companies can't vertically integrate overnight as it is a long-term process.
• Heavy upfront capital expenditure requirements to acquire the proper company,
integrate new and existing systems, and ensure staff are trained across the entire
manufacturing process.
• Leads to sacrifice of flexibility.
• Lose the opportunity to gain unique knowledge through different external vendors.
• Companies may end up trying to do too much and lose focus of their ultimate goal.
 HORIZONTAL INTEGRATION
• Merger - Two separate entities create a new, joint organization. The brand of one
of those two companies is usually retained, though the composition of operations
and personnel is shared between both of the former individual companies.
• Acquisition - An acquisition occurs when one company outright takes over the
operations of another company. Though the two companies technically join
together, one company remains in control.
• Internal Expansion - Through internal expansion, a company simply chooses to
strategically change course and apply more resources in a different way.
 ADVANTAGES OF HORIZONTAL
INTEGRATION
• Benefits from economies of scale or cost synergies in marketing; research and
development (R&D); production; and distribution.
• Cost-effective in simultaneous manufacturing of different products rather than
manufacturing them on their own.
• Diversifying product offerings, cross-selling opportunities and increase each
business’ market.
DISADVANTAGES OF HORIZONTAL
INTEGRATION
• Does not always yield the synergies and added value that was expected.
• Regulatory issues.
• If one company ends up with a dominant market share, it has a monopoly.
• If horizontal mergers within the same industry concentrate market share among a
small number of companies, it creates an oligopoly.
THANK
YOU