what is an example of horizontal market integration?
What is an example of horizontal market integration?
Horizontal market integration refers to a strategy in which a company expands its presence in the market by acquiring or merging with competitors that operate in the same stage of the production process or provide similar products or services. An example of horizontal market integration can be seen in the technology industry with the acquisition of Instagram by Facebook.
- Facebook’s Acquisition of Instagram:
- In 2012, Facebook, a leading social media platform, acquired Instagram, a popular photo-sharing app, for approximately $1 billion. This acquisition represented a significant move in the social media and photo-sharing market.
- Instagram was a direct competitor to Facebook in terms of user engagement and the sharing of visual content. By acquiring Instagram, Facebook not only eliminated a major competitor but also gained access to a vast user base and valuable features that complemented its own platform.
- This integration allowed Facebook to strengthen its position in the social media market and expand its reach to a wider audience, particularly among younger users who were more inclined to use Instagram for photo sharing.
In this example, the acquisition of Instagram by Facebook demonstrates horizontal market integration as it involved the consolidation of two companies operating in the same market segment, leading to an expansion of Facebook’s market influence and user base.