Sociology Index

Vertical vs Horizontal Integration

Vertical Integration is the integration of firms engaged in successive stages in production of goods. Horizontal Integration integration is the expansion of a corporation to include other previously competitive enterprises within the same sector of goods or service production.

Vertical vs. Horizontal Integration: Pre-emptive Merging - Giuseppe Colangelo 
Abstract: Pre-emption often plays a crucial role in firms' merger decisions. We study whether and under which circumstances pre-emptive merging occurs in vertically related industries. We find that vertical mergers often pre-empt horizontal mergers and are dominant outcomes. Pre-empting the threat of a detrimental horizontal integration may be the main reason for vertically integrating.

Horizontal Integration in Markets for Complementary Components and Vertical Product Differentiation: A Case-based Analysis in the Semiconductor Industry - BASTIAN WESTBROCK, University of Utrecht - Tjalling C. Koopmans Research Institute - Abstract: Observation of recent mergers and acquisitions in the semiconductor and computer industry indicate that activities concentrate on the technology leaders in this market.

I examine the coherence between technological heterogeneity and concentration of merger activities in a case study about a merger wave between suppliers of two semiconductor component markets. The story is rationalized in a two-stage competitive game with merger decisions in the first stage and product market competition in quantities in the second stage. I also evaluate the social desirability of the equilibrium industry structure. Technological heterogeneity is represented in a vertically differentiated product space in the model.

Vertical and horizontal integration of knowledge and skills - a working model.
Snyman WD, Kroon J., Faculty of Health Sciences, School of Dentistry, University of Pretoria, Pretoria, South Africa.
The new integrated outcomes-based curriculum for dentistry was introduced at the University of Pretoria in 1997. The first participants graduated at the end of 2001. Educational principles that underpin the new innovative dental curriculum include vertical and horizontal integration, problem-oriented learning, student-centred learning, a holistic attitude to patient care and the promotion of oral health. The aim of this research project was to develop and assay a model to facilitate vertical integration of knowledge and skills thereby justifying the above mentioned action. The learning methodology proposed for the specific outcome of the Odontology module, namely the diagnosis of dental caries and the design of a primary preventive programme, included problem-solving as the driving force for the facilitation of vertical and horizontal integration, and an instructional design for the integration of the basic knowledge and clinical skills into a single learning programme. The paper describes the methodology of problem-oriented learning as applied in this study together with the detail of the programme. The consensus of those teachers who represent the basic and clinical sciences and who participate in this learning programme is that this model is practical and can assist vertical as well as horizontal integration of knowledge.

Vertical-integration-vs-horizontal in advertising industry - "An alternate solution for design firms keen on growing would be to take the route of integrating their services vertically. Here, the design studio offers design and creative direction, a manufacturing or prototype or production unit can offer prototyping and production services, and the potential for growing into a strategic consultancy remains. Frogdesign, now part of Flextronics, would an excellent example of the potential of this approach. Flextronics has the OEM and prototyping facilities, with links to mass manufacture, while Frog provides the design and creative direction. Were they to create a planning unit, like a Jump Associates or a StoneYamashita, say, the vertical chain would be complete. The core competency would remain industrial design say, unlike the horizontal spread of the full service model which dilutes the specialization or core competency identification and adds another firm to the pool of undifferentiated design studios."