I love Bose - I think they meet the market with a level of precision between price and quality that resonates well with consumers. Using Bose, I will explain the concepts of Horizontal and Vertical Integration.
Bose Operations
Bose is an American company that designs, manufactures, and retails stereo speakers. They operate within the Electronic Equipment industry (“Bose on the Forbes”, 2019). As an organization, they are uniquely structured to take advantage of the market. Revenue in 2018 was $3.8 billion, leading the market while their closest competitor, Sonos, brought in revenue of $1.1 billion (“Bose Competitors”, 2019).
Background
The history of Bose is rich in curiosity and innovation. In 1964, Dr. Amar G Bose began creating stereo speakers while he was a Professor at the Massachusetts Institute of Technology. He pursued this because he was not satisfied with the existing stereo speakers in the market, and within four years, was able to produce a system with sound that seemed almost as though it was a live music experience (“Bose on the Forbes”, 2019).
Horizontal and Vertical Integration
Bose offers a very recent and excellent example of vertical integration. On January 14th, 2019, Bose acquired ZiipRoom, a cloud-based productivity and connectivity software (“Bose Competitors”, 2019). In this situation, Bose immediately will be able to benefit from ZiipRoom’s product offering and expand into the office-conference room business. This will prove lucrative since they will be able to expand their business into conference room technologies while using the latest cloud-based technologies.
Other examples of vertical integration include the acquisitions of Detour and The Sync Project (Bose Organization, 2019), which has helped Bose remain its competitive edge over geo-based positioning and health monitoring, respectively. This pattern of acquisition is common through Bose’s history: they purchase software and hardware from other organizations that will help Bose “buy” the solution instead of “make” in the “make-or-buy” decision (Besanko, 2016).
In terms of horizontal integration, Bose has been a model for the industry before the industry was created. Through market research, continually adapting their products, and acquisition of competitors, Bose has released multiple sound related products that fit in businesses, stadiums, homes, automobiles, and as portable devices. From personal to business needs, Bose has captured the largest market share because of their vertical and horizontal integration strategies.
Thus, Bose has proven to be a market firm that can achieve economies of scale in production by continually surviving market competition, resulting in innovative products (Besanko, 2016).
References
Besanko, D., Dranove, D., Shanley, M., & Schaefer, S. (2016). Economics of Strategy (7th ed.). John Wiley & Sons, Inc.
Bose Competitors, Revenue and Employees - Owler Company Profile. (2019). Retrieved January 16, 2019, from https://www.owler.com/company/bose
Bose on the Forbes America's Largest Private Companies List. (2019, January). Retrieved January 16, 2019, from https://www.forbes.com/companies/bose/#1088a83b1c46
Bose Organization. (2019). Retrieved January 16, 2019, from https://www.crunchbase.com/organization/bose
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