How does horizontal integration within an industry affect the surviving firms?

To start off, horizontal integration is the process of a company increasing production of goods or services at the same part of the supply chain. Horizontal integration within an industry affect the surviving firms by strengthening the bargaining power of the surviving firms vis-à-vis suppliers and buyers.

First of all, let's understand that horizontal integration means companies acquire others which operate in the same line of business, for various reasons. This process can have different impacts on the struggling or surviving firms. Depending on the size and importance of the surviving firms, horizontal integration can be a lifeboat or nightmare. Small firms, when embodied to by big corporations can regain balance and competitiveness, enjoying all the support of the parent company, especially if they operate in a different aspect of the overall business and following the agreement between the parent company and the now subsidiary company (ies). Reversely, surviving firms may basically terminated in the process of merging with a bigger concern. This is the case of former small French car manufacturers which were bought by giants Peugeot and Renault. We no longer hear of the petty car makers.