This presentation highlights the various types of Business Combination/Integration which can be followed.

1. PRESENTATION ON TYPES OF BUSINESS
COMBINATION
Presented by: Ms. Komal Mahajan
Asst. Prof. in Commerce

2. BUSINESS COMBINATION
According to L.H. Haney, “To combine is
simply to become one of the parts of a
whole, and a combination is merely a union
of persons to make a whole or group for
the prosecution of some common
purpose.”

3. TYPES OF BUSINESS
COMBINATION
Types of
Business
Combination
Horizontal
Combination
Vertical
Combination
Circular
Combination
Lateral or
Allied
Combination
Diagonal
Combination

4. HORIZONTAL COMBINATION
When 2 or more business units which are doing
same type of business merge, it is called
Horizontal Combination.

5. HORIZONTAL COMBINATION
Advantages Disadvantages
End of wasteful competition Hindrance in Industrial Growth
Benefits of Large Scale Business Hindrance in entry of New and
small business firms
Balance between Demand and
Supply
No Internal supplies assured
Advantages of Monopolistic
Control
Increased Risk
Strong Financials

6. VERTICAL COMBINATION
When 2 or more business
units engaged in
production of products
used in sequential
process of an industry
merge, it is called Vertical
Combination.

7. VERTICAL COMBINATION
Advantages Disadvantages
Regular supply of Raw Material No benefits of Large scale
business
Regular Demand of Finished
Product
Competition still exists
Improvement in Product Quality Mutual Dependence of
processes
Reduction in Expenses Limited Utility
Increase in Efficiency No specialisation possible

8. CIRCULAR COMBINATION
When 2 or more
business units engaged
in producing products
related to different
industries merge, it is
called Cicular
Combination.

9. CIRCULAR COMBINATION
Advantages Disadvantages
Efficient Management Concentration of Economic
Power
Diversification of risk Less competition
Benefits of Monopoly More industries with limited
ownership under control

10. LATERAL OR ALLIED COMBINATION
TYPES OF
LATERAL
COMBINATION
CONVERGENT
LATERAL
COMBINATION
DIVERGENT
LATERAL
COMBINATION

11. CONVERGENT LATERAL
COMBINATION
When 2 or more business
units producing products
which are used by a single
business unit as a raw
material are merged into
single business unit, it is
called Convergent Lateral
Combination.
Printing
Press
Co.
Cardboard
Mill
Paper
Mill
Type
Material
Co.
Ink
Factory

12. DIVERGENT LATERAL
COMBINATION
When a single business
unit producing a product
which is used by 2 or
more business units
producing different
finished products are
merged into single
business unit, it is called
Divergent Lateral
Combination.
Leather
Co.
Suitcase
Co.
Belt
Making
Co.
Wallet
Co.
Shoe
Co.

13. DIAGONAL COMBINATION
When 2 or more business units producing
products or providing services, which are
necessary for the product being product by
single main business unit, merge into single
business unit, it is called Diagonal Combination.