Horizontal integration

Economic theory of ownership.

Horizontal integration is a strategy used by a business or corporation that seeks to sell one type of product in numerous markets. To get this market coverage, several small subsidiary companies are created. Each markets the product to a different market segment or to a different geographical area.

The GAP[?] retail clothing corporation is a good example of a business that practices horizontal integration. GAP Inc. controls three distinct companies, Banana Republic[?], Old Navy[?], and of course the GAP itself. Each company has stores that market clothes tailored to appeal the needs of a different group. Banana Republic sells more expensive clothes with a more "upscale" image, the GAP sells moderately priced clothes that appeal to middle-aged men and women, and Old Navy sells inexpensive clothes geared towards children and teenagers. By using these three different companies, GAP Inc. has been very successful at controling a large segment of the retail clothing industry.

see also: target market, economies of scale, chain ownership[?], monopoly

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