SQA Higher Business Management Practice Exam

Horizontal integration occurs when a company acquires or merges with competitors in the same industry, leading to several significant outcomes. One primary result of horizontal integration is the reduction of competition in the market. When companies merge or acquire others, they often consolidate market share and create a more dominant position within the industry. This can lead to a smaller number of players in the marketplace, which reduces competition. With fewer competitors, the company may have more control over pricing and market dynamics, which can impact consumers and increase the company's profitability.

On the other hand, while economies of scale can often increase with horizontal integration as firms consolidate resources, a decrease in these economies would not align with typical outcomes. Likewise, increased product diversity is commonly associated with vertical integration, where a company expands its operations into different stages of production or different types of products. Lastly, higher job security for new employees is not a guaranteed outcome; consolidation can sometimes lead to job redundancies as overlapping positions are eliminated.

Thus, the most direct and recognizable outcome of horizontal integration is indeed the reduction of competition in the market.