Interrelationships

Topics: Marketing, Strategic management, Monopoly Pages: 4 (826 words) Published: June 24, 2013
Intro
what are interrelationships in general?
An interrelationship is where different brands or companies get owned or become a part of the same organisation. This occurs with larger tour operators that generally own their own hotels, airlines and travel agencies. Benefits of this include:

- Ability to control the quality of all different products in the package. - Offering a good value for money holiday packages in a price competitive market. - Giving customers a seamless holiday package.

This happens in two ways which are horizontal integration and vertical integration.

Main
Horizontal integration:
This is when an organisation owns two or more companies on the same level of the buying chain. For example: Thomas cook owns several tour operators all on the same level. Thomas cook owns Sunset, Airtours, Manos holidays, Club 1830 and Direct holidays.

Why businesses use it:
horizontal integration would be used by businesses because it is an effective way to own the biggest share of the market. Once you have bought up all the competitors on the same level of your business, you will capture the whole market.

Advantages of this are:
1) prices can be increased as there are few competitors selling the same product, allowing you to earn more money. This would make smaller businesses struggle to make a profit as customers are going to the company with the market share. 2) If you buy up competitors on the same level this means that customers can be offered a wider choice of product to choose from. If you have a wider range of choice more customers are willing to come to you as it appeals to them, the outcome would be making a higher profit. For example Thomas Cook own Club 1830 which appeals to the younger generation who want to have fun.

3) When a large company has a good name to themselves customers would trust other companies owned by them.

Disadvantages of this are:
1) If someone has a bad experience with one company they may choose...
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