MERGERS AND JOINT MERGERS 2
Mergers and Joint Mergers
Melinda Dalton, Reginald Palmer, Tracy Coutee, Twana Davis
October 13, 2014
ECO/365
Christopher Rakovalis
The following paragraphs will discuss week four 's readings that covered vertical mergers, horizontal mergers, conglomerates, and joint ventures. Companies use mergers and joint ventures to increase profitability and efficiency. The following paper will go over the three alliances as well as a joint venture and how it differs from the mergers. Each business arrangement is used to attempt an improvement for the company, the important thing to remember is which will be most beneficial and why.
A horizontal merger occurs when two competing companies in …show more content…
For instance, a manufacturer merging with a supplier of essential components or raw materials or with a distributor or retailer that sells its products. The goal of vertical mergers is to improve efficiency or reduce costs. Vertical mergers can help to secure access to critical supplies and help to reduce overall costs by eliminating the costs of finding suppliers, negotiating deals, and paying full market prices. It can improve efficiency by synchronizing production and supply between the two groups and ensuring that supplies are available when you need them. A vertical merger can help deal with competitors by making it difficult for competitors to obtain vital supplies, therefore, weakening existing competitors and increasing barriers to the entry of new competitors. Let 's take a look at the technology advancement implemented for the creation of a new iPhone. Apple will merge with the suppliers and distributors for the benefit of having the production accessible for the company when manufacturing and distributing the …show more content…
Combining activities, which in turn, will increase their efficiency, can eliminate redundancy between the two organizations. At times, this merger can involve corporations that offer entirely different services or products. These types of mergers are referred to as conglomerate mergers. A conglomerate is "a corporation that is made up of a number of different, seemingly unrelated activities. In a conglomerate, one company owns a controlling stake in a number of smaller companies, which conduct business separately. Each of a conglomerate 's subsidiary companies runs independently of the other business divisions, but the subsidiaries ' management reports to senior management at the parent company." (investopedia.com). Some examples of conglomerate mergers viewed between Proctor & Gamble and Gillette, Walt Disney and the American Broadcasting Company, and ITT, Avis Rent-a-Car, Sheraton Hotels and Continental Baking. To the typical consumer, mergers like the ones listed above do not make sense, but it the world of business; there are positive benefits for all parties