True or false: A horizontal integration strategy leads to industry consolidation.

Analysis of the Statement

1. Understanding Horizontal Integration:

   • Horizontal integration occurs when a company acquires or merges with other companies that are at the same level of the supply chain within an industry. This can involve taking over competitors to increase market share, reduce competition, or achieve economies of scale.

2. Industry Consolidation:

   • Industry consolidation refers to the process where a company increases its market power through mergers or acquisitions, leading to a reduction in the number of firms operating in that industry. This often results in fewer competitors, greater market dominance of larger players, and an overall shift in the competitive landscape.

3. Relationship Between the Two:

   • When companies pursue horizontal integration, they often acquire or merge with other companies in the same industry. This naturally leads to fewer independent firms remaining in the market. As a result, horizontal integration facilitates industry consolidation as firms combine their resources and capabilities.

Final Answer

True: A horizontal integration strategy does lead to industry consolidation as it involves merging with or acquiring competitors, thereby reducing the number of firms in the industry.