The Meaning of Vertical and Horizontal Integration

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The Meaning of Vertical and Horizontal Integration

Horizontal integration is where an organisation owns two or more

companies, on the same level of the buying chain. An example of this

is the First Choice Group; they own First Choice Travel Agency and

First Choice Hypermarket, both of which are on the same level of the

buying chain. The advantage of horizontal integration is that it can

increase the company’s market share. Another good example of this type

of integration is when EasyJet purchased the airline Go from British

Airways. Now EasyJet and Go both operate under the company name of

EasyJet.

Vertical integration is when an organisation own companies on two or

more levels of the buying chain. Examples of this can be found within

“The Big 4,” all of them own an airline, travel agent and a tour

operator. The companies have until recently used different names for

their travel agency, airlines and tour operators, but now they are

power branding their companies so that customers can see whom they are

booking with. An example of this is TUI UK, which has rebranded its

companies using the Thomson name.

Task 2B

This diagram shows the vertical integration that Thomson used to

expand as an organisation.

Sector

2004 (Year)

2005 (Year)

Airline

Britannia Airways

Thomson Fly

Tour Operator

Thomson

Thomson

Travel Agent

Lunn Poly

Thomson

An example of Horizontal &

Vertical Integration

“The Big 4”

World Of TUI

Thomas Cook

My Travel Group

First Choice

Airline

Thomson Fly

Thomas Cook Airways

My Travel Lite

First Choice Airways

Tour Operator

Thomson

Thomas Cook Holidays

Airtours

First Choice

Travel Agent

Thomson Travel

Thomas Cook Travel

Going Places

First Choice Travel Shops

[IMAGE]

Airline

[IMAGE]

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