Final answer:
Vertical integration involves acquiring companies in different steps of the manufacturing process, while horizontal integration involves acquiring direct rivals. Vertical integration ensures control over the entire supply chain, while horizontal integration expands market share and eliminates competition.
Step-by-step explanation:
Vertical integration and horizontal integration are both strategies that companies use to expand their operations, but they involve different types of mergers.
Vertical integration occurs when a company acquires other companies that are involved in different steps of the manufacturing process. This allows the company to have control over its entire supply chain, from raw materials to finished products. By vertically integrating, a company can protect itself against the potential loss of suppliers and streamline its manufacturing process.
Horizontal integration, on the other hand, involves merging with or acquiring companies that are direct rivals. This type of merger allows companies to expand their market share and eliminate competition. However, horizontal mergers may face more challenges in obtaining antitrust approval due to concerns about monopolistic behavior.