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.

Walmarts horizontal acquisition strategy of Jet.com

Multiple Choice

• offered superior alternatives to forming alliances or partnerships with existing rivals.

• was an effective way to pursue a blue-ocean strategy and an outsourcing strategy.

• was not successful because of the financial drain of using Walmarts cash resources to accomplish the acquisition.

• offered considerable cost-saving opportunities and was beneficial in helping the company expand into a new industry.

• offered the best way to differentiate its product offering and used a differentiation strategy to strength its market position.