Lateral Integration in Business

What Is a Lateral Integration in Business + Examples

Lateral integration is a synonym for horizontal integration, and it refers to a business that is following a diversification strategy by operating at various phases of production and industries while being managed uniformly.

Horizontal Integration

In marketing, lateral or horizontal integration is far more widespread than lateral or horizontal integration in manufacturing. Hong Kong Telecommunications Ltd was founded when the Hong Kong Telephone Co., Ltd. merged with the cable and wireless (HK) Co., Ltd.

Organizations’ integration requirements vary, and complicated lateral integration techniques are only required when the integration requirements are high. Lateral integration happens when two or more companies join to offer distinct goods that share some characteristics.

This lateral or horizontal integration process is typical of capitalist economies, which have a strong propensity to concentrate sectoral concentration into fewer and fewer companies and monopolies.

Lateral integration refers to a corporation’s growth to encompass previously rival businesses in the same area of service or product manufacturing.

Lateral or Horizontal Integration

A method employed by a firm or organization to offer a kind of product in many marketplaces is known as lateral or horizontal integration. Several minor subsidiary firms are formed to provide this market coverage. Each company sells the goods to a particular market group or geographic location. This is sometimes referred to as horizontal marketing integration.

When a company has operations in many places manufacturing comparable items, this is known as lateral or horizontal integration. A merger of competitors occurs when the goods of both companies are comparable. A monopoly is formed when all producers of an item or service in a market join forces. An oligopoly exists when there are just a few rivals.

Lateral Integration’s Benefits

The choice to execute lateral integration has various advantages for the firm. For instance, the most significant are:

  • increasing taxes – the merger expands the firm’s operating region, and consequently the amount of transactions. When providing services or selling things, an employee ratio indicates greater revenue.
  • lowering production costs – when two firms join, there may be an opportunity to save cash by deferring the acquisition of specialized equipment.
  • accumulating knowledge and experience – each company has its own set of experiences in the fields in which it works. Firms can share information they’ve collected over time after horizontal merger.
  • enhancing client recognition – the more items or services a firm offers, the more known its name gets. Customers nowadays are more inclined to trust well-known companies than they are to trust new enterprises. As a result, a particular organization’s products can reach a considerably bigger number of people.

Lateral Communication Examples

Let’s take a deeper look at lateral communication in the workplace using some real-world instances.

  • Communication between teams on the side

Effective communication between members of each unit is essential for successful cross-departmental collaboration. In this case, lateral communication occurs when members of separate teams speak with persons from other departments who are in the same hierarchical position.

  • Communication between members of the same squad on the side

This is one of the most prevalent workplace examples of lateral communication. After all, contact between members of the same team occurs virtually constantly at work. This form of interchange makes up the majority of internal communication, whether it’s trading ideas, brainstorming, or sharing applicable business memes. At the same time, communication among team members has several advantages in terms of cooperation and spirit, improved collaboration and production, and overall team connection.