What does horizontal growth refer to?

Horizontal growth refers specifically to a business strategy involving the merging or taking over of other companies that operate in the same industry or offer similar products and services. By pursuing horizontal growth, a company can increase its market share, reduce competition, and achieve economies of scale. This type of growth typically aims to consolidate resources and capabilities within the same operational sphere, allowing for improved efficiencies and enhanced product offerings.

For example, if one car manufacturer acquires another company that produces similar vehicles, this would be considered horizontal growth because both companies operate within the same market segment—automobiles. Such strategic moves enable businesses to leverage their existing strengths and can lead to a stronger positioning in the market by expanding their reach and influence over competitors.