Horizontal Integration
It’s a business strategy for growth where companies either take over, merge or aim for expansion internally. Any of these upon successful implementation will result in
1. Increased market share
2. Balances competition
3. Enhanced product coverage and growth
4. Improves Customer Satisfaction
Take Over: In this strategy, Company A takes over all the activities of Company B including the customers of Company B. In the telecom industry in India during the period 2010-20 a bunch of new entrants were acquired by the large players as they couldn’t sustain the competition which involved huge investments to roll out as well as maintain the existing network. Without maximizing revenue investments became a huge question
1. RCOM acquired SSTL
2. Jio acquired the assets of RCOM
3. Bharti Airtel acquired Loop Telecom
4. Vodafone acquired C&WW (Cable & Wireless Worldwide) in the UK
Merger: In this strategy Company A merges with Company B and both jointly operate to deliver the services/ products to the customers. There is a clear demarcation of powers defined by the % stake one owns in the merger. There are quite a few examples in the telco domain again
1. Vodafone Merged with Idea and jointly operates under the brand VodafoneIdea
2. BT (British Telecom) and EE merged and operate under the brand BT EE they provide wireline and wireless services in the UK
3. Virgin Media and O2 merged and operate under the brand VMO2 and provide wireline and wireless services in the UK
Internal Expansion: In this strategy, the company decides to deploy capital to expand horizontally create value for its customers, generate revenue and minimize dependencies on partners. Again there are quite a few examples in the telco space
1. Jio started as a telco and deployed fibre to deliver wireline and wireless services how ever invested heavily in expanding horizontal services under Jio Consumer platforms which has
a. Jio Money
b. Jio Apps and Jio TV
c. Jio Mart
d. Jio Sign
2. Airtel investing heavily in the data centre business under the brand Nxtra Data
Impact on Business Excellence Strategy
The business excellence function will be realigned towards the new organizational strategy, the existing projects/ initiatives will be reprioritized and more importance will be given to
1. Ensure the combined business builds and gains momentum
2. Leverage the synergies between both companies, pick up the best practices from each other and enhance a combined learning
3. Define cross-functional and cross-company collaboration that helps colleagues to work towards a common goal
4. Define a transformation approach and drive the colleagues to contribute to the transformation goals
In a situation where Company A acquired the Company B, there are higher chances to
1. Stall the projects/ initiatives of Company B as more focus and priority will be given to drive the initiatives which were up and running in Company A
2. Allocation of resources (Financial, people and logistics) to the existing initiatives under implementation in Company B