QS Study

Objectives of Horizontal Combination

The horizontal combination is the association or merger of business organizations doing exactly the same type of business or trade. To achieve some general objectives of this combination will be made some industries or organization. The main object of forming a horizontal combination is to eliminate competition. There are some other objectives for which business organizations form horizontal combination.

The objectives of the horizontal combination are discussed below:

Eliminating the Competition: For globalization competition among every business, a sector is increased. For this reason, local or foreign competitors create a horizontal combination to eliminate competition and to exist in the market for a long time.

Large Scale of Production: To produce large-scale production every individual needs a lot of capital but single in organization sometimes provide this capital. Then they make a horizontal combination for the continuous production of a large scale of products.

Collective Distribution: As individual organization cannot distribute its products on services airway ever, corner of own country and foreign market. So for distributing the goods and services to the whole world same business organizations create the horizontal business combination.

To keep greater stability: Horizontal combination can keep greater stability. In case of a small firm, for inexpert of an employee or the owner may it leads to close down the work. But this does not happen in a horizontal business combination because. There are many persons employed in that organization. The work of one who is absent may be done by other.

To get benefits of finance: Normally along with the horizontal distribution total working capital of the combining units is more than the requirement The horizontal combination can easily transfer fund from the main source to any of its branches in time of need with a view to facilitating the weak one to work smoothly and speedily.

Maximization of Profits: the Horizontal combination is formed at the time when most of the business units try to eliminate competition to earn profit monopoly. This leads to the small business units to form a group for the benefit of all and thereby helping one another mutually to enjoy some common economies and eliminating wasteful competition among them.

Research and development: The horizontal combination is blessed with enough to financial resources and the scope of its operation is broader than the individual small unit. Thus some favor for forming such a big unit to take advantages of these with a view to pooling renowned researchers to find out ways and means of lowering cost of production and finding out a new area of markets and can develop.

Inter-change of technological development: Nowadays business organizations create a horizontal business combination to inter-change of technological development. The researcher in the methods of production and quality are capable of finding out hater method of production. This improved method found out in one unit can be available to other business units by horizontal combination without incurring any expenditure thereto.

These are the main objectives of horizontal combination for with business organization try to combine them. When same business organizations want to achieve these objectives then they make a horizontal business combination.