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There are two generic corporate growth strategies, ‘vertical’ and ‘horizontal,’ that involve acquisition of other businesses and by which companies compete in the industry. In vertical strategy a company grows by acquiring control of additional stages in production or distribution that it already does not have and horizontal strategy is when the company acquires its competitors or related businesses. The vertical and horizontal strategies that entail mergers and acquisitions can both be used to address Porter’s 5-forces that affect a company’s competitive factors within the industry (Porter,1980). The five forces are: 1) threat of Established Rivals, 2) threat of Substitutes, 3) threat of potential New Entrants, 4) Power of Suppliers, and 5) Power of Buyers. Three of these forces; threat of rivals, threat of substitutes, and threat of new entrants derive from ‘horizontal competition’, whereas the other two forces; bargaining power of suppliers and bargaining power of customers derive from ‘vertical competition’ within the industry.
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