What are the main challenges or risks of horizontal integration for your business?

1 Cultural alignment

One of the biggest challenges of horizontal integration is achieving cultural alignment between the different entities involved. Culture refers to the shared values, beliefs, norms, and practices that shape how people work and interact in an organization. When you integrate with another business, you may face cultural clashes, misunderstandings, resistance, or conflicts that can undermine the potential benefits of the merger or acquisition. To avoid this, you need to foster a culture of collaboration, communication, and trust across the integrated units. You can do this by involving key stakeholders from both sides in the integration process, creating a common vision and mission, establishing clear roles and responsibilities, and providing training and support to facilitate cultural adaptation.

3 Strategic alignment

A third challenge of horizontal integration is strategic alignment, which involves ensuring that the integration supports the overall goals and objectives of your business. You may face difficulties such as misaligned priorities, conflicting interests, or divergent expectations among the different units or stakeholders. You may also face external pressures or threats from competitors, customers, regulators, or suppliers that can affect your integration strategy. To overcome this, you need to define and communicate a clear and compelling value proposition for the integration, align the resources and capabilities of the integrated units with the market opportunities and challenges, and create a governance structure and a feedback mechanism to coordinate and align the strategic decisions and actions.

4 Change management

A fourth challenge of horizontal integration is change management, which involves managing the human and organizational aspects of the integration. You may face challenges such as employee turnover, low morale, anxiety, or resistance to change among the staff or managers of the integrated units. You may also face challenges such as loss of identity, culture shock, or power struggles among the leaders or teams of the different units. To overcome this, you need to adopt a proactive and participatory approach to change management, involving and engaging the people affected by the integration, communicating the vision and the benefits of the integration, addressing the concerns and the needs of the people, and providing recognition and rewards for the achievements and contributions of the people.

5 Innovation management

A fifth challenge of horizontal integration is innovation management, which involves fostering and leveraging the innovation potential of the integrated units. You may face challenges such as loss of creativity, diversity, or agility among the staff or teams of the different units, due to standardization, centralization, or bureaucracy. You may also face challenges such as duplication, fragmentation, or misalignment of the innovation efforts or outputs of the different units, due to lack of coordination, collaboration, or integration. To overcome this, you need to create and maintain a culture of innovation across the integrated units, encouraging and enabling the generation and sharing of ideas, knowledge, and insights. You also need to establish and support a cross-functional innovation process, involving and integrating the inputs and outputs of the different units, and aligning them with the strategic goals and customer needs.

6 Risk management

A sixth challenge of horizontal integration is risk management, which involves identifying and mitigating the potential risks or uncertainties associated with the integration. You may face risks such as legal, regulatory, or ethical issues, due to compliance, governance, or reputation factors. You may also face risks such as operational, financial, or strategic issues, due to integration costs, synergies, or performance factors. To overcome this, you need to conduct a comprehensive and systematic risk assessment of the integration, involving and consulting the relevant stakeholders and experts from both sides. You also need to develop and implement a risk management plan, including risk identification, analysis, evaluation, treatment, monitoring, and reporting.

7 Here’s what else to consider

This is a space to share examples, stories, or insights that don’t fit into any of the previous sections. What else would you like to add?