1. What are the differences between horizontal and vertical company boundaries? Integration determines ownership and control of assets, and it is through ownership and control that companies are able to exploit contractual gaps. It determines who controls resources, makes decisions, and distributes profits when contracts are incomplete and business partners disagree. Horizontal integration is the process of acquiring or merging with industry competitors (e.g. acquisitions and mergers) to increase market share. Increased profits and profitability when horizontal integration:• Reduces cost structure and creates increasing economies of scale• Increases product differentiation: product bundling/total solution/cross-selling• Replicates the business model in more new market segments within the same industry• Reduces industrial rivalry by eliminating excess capacity in the industry• Increases bargaining power and gains greater controlVertical integration is the process in which multiple stages of production and/ or distribution of a product or service are controlled by a single company or entity, in order to increase the power of that company or entity in the market. Vertical integration differs between industries, companies within the same industry, and transactions within the company. A company can expand its operations backward into industries that produce inputs for its products or into industries that use, distribute, or sell its products. Types of vertical integrations: • Backward integration The company expands its operations into an industry that produces inputs for the company's products. • Forward IntegrationCompany is growing in an industry that uses, distributes or sells the company's products. • Full Int...... middle of paper ...... and incentives to implement the strategy. The importance of structure persists even in the face of Internet growth, globalization, and changing workforce demographics. Types of organizational structures: • The unitary functional structure (U-form) • The multi-divisional structure (M-form) • The matrix structure • The network structure The U-shaped structure used to allow companies to exploit economies of scale in the marketing and distribution of production. As businesses began to diversify in the 20th century, the U shape became cumbersome and the M shape emerged as a better alternative. The M form leads to duplication of activities, when companies expand globally, integrating international divisions into their structure. As businesses attempt to balance local responsiveness with global economies, a combination of matrix forms and networks helps create flexible organizations..