What is meant by horizontal and vertical integration and how can they profit a firm?

Firms may grow through integration - vertically or horizontally. Both strategies ultimately increase a firm's competitive position. Vertical integration refers to the supply chain and how a company can grow and increase their control within their specific industry. This is done vertically through the acquisition of another level of the supply chain that is either higher or lower than you. For example, a retail store selling clothes may use vertical integration to acquire their supplier's operations. This would be beneficial to the retailer as it would allow them to gain a secure control of raw materials (e.g. cotton), reduce issues with suppliers such as delays, improve your profit margins, as well as taking away the opportunity for the manufacturer's competitors to use this supplier and raw materials in the future. Unlike vertical integration, Horizontal integration involves the acquisition of firms in similar industries, on the same level of the supply chain as you. Thus, acquiring your indirect competitors. For example, a clothing retailer acquiring another clothing retailer but with slightly different target markets. This widens a firm's control in that specific level of the supply chain. This simultaneously eliminates competitors and maximises market share.