The Integration of Firms Expansion of firms Firms

The Integration of Firms

Expansion of firms Firms may expand by n internal growth n combining with other firms --- integration

Horizontal Integration n firms producing the same product or at the same stage of production combine together

Horizontal Integration n firms producing the same product or at the same stage of production combine together

Horizontal Integration n firms producing the same product or at the same stage of production combine together

Horizontal Integration n firms producing the same product or at the same stage of production combine together

Horizontal Integration n firms producing the same product or at the same stage of production combine together

Horizontal Integration n firms producing the same product or at the same stage of production combine together

Vertical Integration n firms operating at different stages of production for a certain good combine to form a larger firm

Vertical Integration n firms operating at different stages of production for a certain good combine to form a larger firm

Vertical Integration n firms operating at different stages of production for a certain good combine to form a larger firm

Vertical Integration n firms operating at different stages of production for a certain good combine to form a larger firm

Vertical Integration n firms operating at different stages of production for a certain good combine to form a larger firm

Lateral Integration n firms producing related, but not competitive products combine to form a single firm

Lateral Integration n firms producing related, but not competitive products combine to form a single firm

Lateral Integration n firms producing related, but not competitive products combine to form a single firm

Lateral Integration n firms producing related, but not competitive products combine to form a single firm

Lateral Integration n firms producing related, but not competitive products combine to form a single firm

Conglomerate Integration n Firms in entirely different lines of production combine together

Conglomerate Integration n Firms in entirely different lines of production combine together

Conglomerate Integration n Firms in entirely different lines of production combine together

Conglomerate Integration n Firms in entirely different lines of production combine together

Conglomerate Integration n Firms in entirely different lines of production combine together

Conglomerate Integration n Firms in entirely different lines of production combine together

Why do firms combine? n Can you suggest some motives for integration of firms?

Motives for integration n n n To enjoy economies of scale To have more flexibility in the use of resources To build up brand name To ensure supply of materials or market outlets To diversify risks To expand market share v Horizontal integration v Vertical integration v Lateral integration v Conglomerate integration

Motives for integration n n n To enjoy economies of scale To have more flexibility in the use of resources To build up brand name To ensure supply of materials or market outlets To diversify risks To expand market share v Horizontal integration v Vertical integration v Lateral integration v Conglomerate integration

Motives for integration n n n To enjoy economies of scale To have more flexibility in the use of resources To build up brand name To ensure supply of materials or market outlets To diversify risks To expand market share v Horizontal integration v Vertical integration v Lateral integration v Conglomerate integration

Motives for integration n n n To enjoy economies of scale To have more flexibility in the use of resources To build up brand name To ensure supply of materials or market outlets To diversify risks To expand market share v Horizontal integration v Vertical integration v Lateral integration v Conglomerate integration

Motives for integration n n n To enjoy economies of scale To have more flexibility in the use of resources To build up brand name To ensure supply of materials or market outlets To diversify risks To expand market share v Horizontal integration v Vertical integration v Lateral integration v Conglomerate integration

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