What Is An Example Of Horizontal Integration In History: The Standard Oil Monopoly

Horizontal integration, a prominent business strategy of the 19th century often referred to as “monopolizing,” involved a company taking control over various aspects within a specific industry. This meant that a single business would oversee and manage multiple stages or components of a particular sector. A quintessential example from the 19th century is the oil industry led by John D. Rockefeller. In this case, Rockefeller’s company not only extracted crude oil but also refined it, transported it, and distributed the final products. This practice aimed to consolidate market power and increase efficiency by streamlining operations under one entity. By doing so, businesses sought to dominate their respective industries and gain a competitive edge.

An illustrative instance of horizontal integration can be observed in the acquisition of Instagram by Facebook (now Meta) in 2012 for a reported $1 billion. This strategic move exemplifies how companies within the same industry, in this case, social media, can combine their operations to enhance their market presence and offerings. Instagram and Facebook both specialized in photo-sharing services, thereby sharing similar production stages. This integration allowed Meta to consolidate its position in the social media landscape and expand its user base, demonstrating the potential benefits of horizontal integration within a competitive industry.

During the Industrial Revolution, an illustrative instance of horizontal integration involved John D. Rockefeller’s remarkable consolidation of the oil industry. This consolidation granted him substantial authority, which he strategically leveraged to exert influence over both suppliers and rivals. For instance, Rockefeller was able to exert pressure on railroads, compelling them to offer him preferential rates due to the sheer volume of his product shipments. This strategic maneuver allowed Rockefeller to significantly bolster his dominance within the oil sector.