There are three main form of Integration or amalgamation between firms.
1. Horizontal Integration
This occurs when firms engaged in the production of the same type of good or service combine. Most amalgamations are of this type, for example the joining of british Petroleum with Amoco in the oil and gas industry.This type of Integration may provide a number of economies of scale. For example, The employment of more specialized machines and labour, the spreading of administration cost and bulk buying.The Major Critism of firms linking horizontally is that very large firms are formed which are able to dominate the market.
This occurs when firms engaged in different stages of production combine. This woud be the case if an oil refinery combined with a chain of petrol situation.
3. Lateral Integration
This happen when firms in the same stage of production, for example, rimary or secondary production, but producing diferent products combine. This is often termed a congongmerate merger to form congongmerates which are firms which produce a wide range of products.
- Anonim. (2015). Amalgamasi. http://www.mediabpr.com/kamus-bisnis-bank/amalgamasi.aspx (Diakses tanggal 3 Oktober 2015)
- Dan Moynihan & Brian Titey. (2015). Economics, A Complete Course for IGCSE and O Level: University of Cambridge International Examination.
Dan Moynihan & Brian Titey. (2015). Economics; A Complete Course for IGCSE and O Leel. 2015. hlm 218