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

What is horizontal integration in a business context?

1. Increasing product variety

2. Acquiring businesses at different stages of production

3. Merging with companies at the same stage of business

4. Expanding product lines within the same market

The correct answer is: Merging with companies at the same stage of business

Horizontal integration occurs when a company merges with or acquires other businesses that operate at the same level in the industry. This strategy is often employed to increase market share, reduce competition, and enhance economies of scale. By consolidating operations within the same stage of business, a company can leverage shared resources and capabilities, streamline processes, and potentially offer a more comprehensive range of products or services to its customers. For example, if a real estate brokerage were to merge with another brokerage that offers similar services in the same market, both firms would benefit from shared marketing efforts, reduced overhead through combined operations, and a broader client base. This form of integration emphasizes collaboration and consolidation at the same operational level rather than branching out into different stages of production or introducing diverse product offerings.