Texas Real Estate Brokerage Sales Apprentice Education (SAE) Practice Exam

In terms of strategy, what's the difference between horizontal expansion and integration?

1. One involves acquiring, while the other involves merging

2. Only location matters in expansion

3. Integration is about gaining more market share

4. They both mean the same strategy in business

The correct answer is: One involves acquiring, while the other involves merging

When discussing business strategies, horizontal expansion and integration are fundamentally different in their approach to growth. Horizontal expansion involves a company broadening its operations into new geographic markets or customer segments, typically through opening new locations, franchising, or establishing new service lines. This type of growth allows the company to reach a larger customer base without necessarily changing the structure or function of the existing business. Integration, on the other hand, generally refers to a company's strategy of merging with or acquiring other companies to consolidate operations or market presence. This could be through vertical integration, where a company controls its supply chain by absorbing suppliers or distributors, or through horizontal integration, where a company seeks to strengthen its position within its industry by acquiring competitors. The correct answer highlights that one strategy involves acquiring other businesses (integration) while the other focuses on expansion through location or service offerings (horizontal expansion). This distinction is crucial in understanding how businesses choose to grow and compete in their markets. The other choices do not accurately capture this key differentiation in strategic approach.