Type of integration referring to the mergers or acquisitions between busineses which operate in different markets.
Below is a graphic to illustrate the perceived benefits of a conglomerate merger and the possible motives behind firms involved in the merging process. The idea is that just like stock portfolios the best strategy is to diversify to minimise risk i.e. to move into as many markets as possible, so if one market collapses the exosure to risk is low and any losses can be offset by gains in the other markets. This type of integration can also foster innovation and invention by allowing new ideas and approaches to be implemented from agents that specialise in different markets. Finally the larger the company the more economies of scale opportunites are available and that can only benefit the profit channel of the companies involved.
