In Hong Kong, some firms may expand by combining or integrating with another firm. In this project, we are going to investigate the advantages of the horizontal integration. 　

Horizontal Integration

      Horizontal integration takes place when firms producing the same product, or firms in the same production stage, combine together. 

     The combination of Dao Heng Bank and DBS (HK) Limited is an example of horizontal integration, and this is also case we have taken to be the case study in this project.

     By integrating firms, firms can:

1. Benefit from economies of scale - when firms combine, their production scale will be larger. They 
    can enjoy the benefits of economies of scale and lower the average cost.

   ( This will be further discussed in Question 5)                                       

2. Making more efficient use of resources - make more efficient use of the latter's resources

3. Closing down some plants to reduce loss - cut costs

4. More market share increase influence over the market

    - increase the scale of the firm to control the market price.

5. Turning competitors into partners

6. There will be more customers because of the goodwill