This document defines integration as combining two or more things into one. It discusses two types of integration: horizontal and vertical. Horizontal integration involves combining businesses that operate at the same level of the production process, such as when an automobile manufacturer acquires a sport utility vehicle manufacturer. Vertical integration involves controlling upstream or downstream stages of production, such as when a company owns suppliers that provide inputs or subsidiaries involved in marketing. Examples of each type are provided.

1. OVERVIEW OF INTEGRATION
Presented by :
Bharath Somashekar
MBA 1 year
B Section

2. MEANING OF INTEGRATION
“ THE PROCESS OF COMBINING TWO OR MORE
THINGS INTO ONE ” .
TYPES OF INTEGRATION
1 . HORIZONTAL INTEGRATION
2 . VERTICAL INTEGRATION

3. TYPES OF INTEGRATION

4. HORIZONTAL INTEGRATION
• HORIZONTAL INTERGRATION IS THE ADDITION
OF OTHER BUSINESS ACTIVITIES AT THE SAME
LEVEL OF THE VALUE CHAIN .
• TWO COMPANIES OF THE SAME INDUSTRY AND
IN THE SAME STAGE OF PRODUCTION WORK
TOGETHER .
• THESE COMPANIES BELONG TO SUPPLY CHAIN
STAGE AND NORMALLY PRODUCE OR TRADE
THE SAME PRODUCT .
• FIRM ADD THEIR STRENGTH TO GAIN BENEFIT .

5. EXAMPLES:
• THE STANDARD OIL COMPANY BUYING 40
REFINIERIES
• AN AUTOMOBILE MANUFACTURER BUYING A
SPORT UTILITY VECHILE MANUFACTURER
• A RADIO STATION THAT ALSO OWNS A
NEWSPAPER AND MAGAZINE.

6. TWO OPTIONS
1 . ACQUISTION
Acquisition is the purchase of another company.
2 . MERGER
Merger is the joining of two similar sizes, independent
companies to make one joint entity.

8. HORIZONTAL COOPERATION
• EXAMPLE: VW SHARAN AND FORD GALAXY
• SET UP A COMPLETELY NEW COMPANY
• LEGALLY INDEPENDENT
• COMPANIES GIVE THEIR RESOURCES TO
THE NEW FOUNDED JOINT VENTURE
• DEVELOPMENT AND PRODUCTION
IDENTICAL
• THE MAIN AIM IS CUTTING DOWN COSTS

10. VERTICAL INTEGRATION
VERTICAL INTEGRATION IS A COMPETATIVE
STRATEGY BY WHICH A COMPANY TAKES
COMPLETE CONTROL OVER ONE OR MORE
STAGES IN THE PRODUCTION OR
DISTRIBUTION OF A PRODUCT .

11. 3 TYPES OF VERTICAL INTEGRATION
1 . BACKWARD (UPSTREAM) VERTICAL INTEGRATION :
THIS IS WHEN A COMPANY OWNS SOME OF THE SUBSIDIARIES THAT
PRODUCE SOME OF THE USED IN THE PRODUCTION OF IT’S
PRODUCTS .
2 . FORWAR VERTICAL INTEGRATION :
THIS IS WHEN A COMPANY OWNS THE SUBSIDIARIES THAT MARKET
THE PRODUCT .
3 . BALANCED VERTICAL INTEGRATION :
A COMPANY THAT SETS UP SUBSIDIARIES THAT SUPPLY THEM WITH
INPUTS AS WELL AS MARKET THEIR PRODUCT .