Horizontal Acquisition

Read the overview below and complete the activities that follow.

Horizontal mergers and acquisitions, which involve combining the operations of firms within the same product or service market, provide an effective means for firms to rapidly increase the scale and horizontal scope of their core business.

The goal of this exercise is for you to understand the strategic benefits and risks of expanding a companys horizontal scope of operations.

Before completing this exercise, be sure to review Ch. 6, Strengthening a Companys Competitive Position; specifically, the section entitled Horizontal Merger and Acquisition Strategies and Illustration Capsule 6.3, Walmarts Expansion into E-Commerce via Horizontal Acquisition.

In 2016, Walmart expanded its presence into e-commerce via a horizontal acquisition of Jet.com. This acquisition was driven by which strategic objective?

Multiple Choice

• Reducing the number of industry key success factors.

• Expanding its geographic coverage or extending its business into new product categories.

• Reducing the number of strategic groups in the industry.

• Facilitating its shift from a low-cost leadership strategy to a focused low-cost strategy.

• Lengthening its value chain and thereby putting it in a better position to deliver superior value to buyers.