Skip to main content

Difference between Horizontal Combination and Vertical Combination

Difference between Horizontal and vertical combination can be discussed under the following points :

(i) Competition in the raw material market: In case of horizontal combination, there is a close competition  for the raw materials among the business units.
           But, in case of vertical combination, there is no competitions in the raw materials market. It assures greater security with regard to the supply and cost or raw materials as well as disposal of intermediate products. It has self sufficient units as far as supply of raw material is concerned.

(ii) Specialisation: In case of horizontal combination every member produces the same final product. There is no specialisation as such. Every business unit is equally developed. They have to depend on outside firms.
      But, in case of vertical combination, every member is to devotes to particular section and specialises in that production. It can produce bettrer articles at cheaper prices.

(iii) Competition in marketing: Horizontal combination is the best solution to eliminate unhealthy competition in the process of marketing through common plans of marketing, advertising and distribution.
     But vertical combination cannot get rid of competition in distribution as fast as ultimate products are concerned.

(iv) Monopoly over supply: Horizontal combination is the best instrument to secure greater and greater control over the market. It can lead to monopoly prices which are fixed to suit high cost producers. Combining units can have maximum profit on sale.
     But, vertical combination cannot secure monopoly over market supply.

(v) Dependence on intermediate for final articles: In case of horizontal combination, firms either produce all the required things or get them from different sources. As they have alternative sources of supply, the stoppage of supply, the stoppage of supply in one case cannot affect the working of others and others units in the combination can continue their production.
    But, in case of vertical combination, if firms producing intermediate articles fail or their suppliers are finished, all successive stages of production are at stand still. No production of final article is possible and production will suffer.

(vi) Autonomy: In horizontal combination, there is centralisation only in the branch of marketing and not necessarily in the branch of production. Member units under horizontal combination are free in their internal affairs. They enjoy full internal autonomy and independence.
    But, in case of verticle combination, member units loss their independence. They have to look to the central body and they are guided by such a body even in routine matters. A member units has no internal autonomy. There is complete centralization and the member units is not free to deal with the local problems in its own way.


Popular posts from this blog

Why is Scandinavia so expensive ?

Hi I am Deepjit Karmakar, founder of and today here in this article I am gonna tell you why Scandinavia is so expensive. Across scandinavia, the average price of everything from a knitted  pay roll neck pastries from the local bakery are some of the highest in the world. Scandinavia is a region in Northern Europe that was a historical e made up of three kingdoms: Norway, Sweden and Denmark. They are United by their Viking heritage but also their shared reputation as one of the most expensive regions to live and visit. Whether it's buying a car or a TV. Consumers in Scandinavia pay some of the highest prices in the world. Even buying groceries is costly with all three countries' food and drink prices above the European average. All three countries also have a standard  VAT rate of 25%. Amongst all the European Nations, only Hungary has a higher rate. Heading to the bar is also pretty pricey. In Norway, having a beer or glass of wine will cost in ×2.5 times

Why is Singapore so rich and developed

 Hii! I am Deepjit Karmakar and today here in this article i am gonna tell you that why Singapore is so rich and developed. So, without wasting time let's get started. Singapore: Singapore is a tiny country, so tiny you can drive accross the island in just one hour. Despite its size and lack of natural resources, Singapore's 5.6 million people enjoy one of the highest average incomes in the world, ahead of countries like Germany, France and Japan. So, how did this little island get so rich?  Xiaomi 11 Lite NE 5G (Diamond Dazzle 6GB RAM 128 GB Storage) | Slimmest (6.81mm) & Lightest (158g) 5G Smartphone Explained:  Singapore doesn't have resources like coal or oil but it does have something which countries can't buy, location. The island sits in the middle of an important trade route connecting Asia to Europe. That's the key reason why the British decided, back in 1819, to set up a colony in Singapore. Location isn't everything though. There are several count

Japanese Management Approach

  Fossil Chronograph White Dial Men's Watch-CH2882 Amazon's Choice for "fossil watches for men" 16% off Japan has emerged as a world leader in industrial development. Today japan has great commercuial success. The japanese 'economic miracle' has attracted the attention from east and west. In this respect, many countries are turning to the japanese style of management. Although the entire japanese style of management may not be applicable to all nations due to social and cultural differences, certain characteristics features may find wide applicability. The roots of unique practices and style of Japanese management are as follows- (a) Groupism : Groups are the primary social unit throughout japan. Without getting the consensus of his group, the leader of a group can't do anything. In japan, self is seen as part of a group. (b) Confucianism : It is a descipline of life-style. It emphasizes the importance of loyalty to a boss, obedience to a senior person, th