Which strategy allows a company to minimize competition by acquiring other firms?

• A. Diagonal integration
• B. Horizontal integration
• C. Vertical integration
• D. Market segmentation

Answer: (B)

Horizontal integration is a strategy that allows a company to reduce competition by acquiring or merging with other firms that operate at the same stage of production within the same industry. This approach enables a company to increase its market share, consolidate resources, and achieve economies of scale. By combining forces with competitors, a firm can eliminate rivalry, increase pricing power, and enhance its overall market presence.

Conversely, diagonal integration refers to a strategy where a company expands into new areas of business within the supply chain but is not limited to horizontal relations. Vertical integration involves a company taking control of its supply chain by either acquiring suppliers (backward integration) or distributors (forward integration). Market segmentation, on the other hand, focuses on dividing a target market into smaller groups with similar needs, rather than acquiring other companies. Thus, horizontal integration is distinct in its focus on minimizing competition through acquisitions among direct competitors.