Mergers and Joint mergers

Topics: Mergers and acquisitions, Monopoly, Vertical integration Pages: 4 (932 words) Published: October 17, 2014
MERGERS AND JOINT MERGERS

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 the same market joins together to become one firm or one identity. The two companies could have an influence on the competitive market if the companies have a large percentage of that market. The result of the two companies combine will be an increased advantage over their competitors. If the two groups are joining together are small businesses, they could have little to no advantage over their competitors in the market. For example, if two unknown mobile cellular companies merge to increase their services and products, the affect on the existing market could be minimal. If two well-known mobile providers such as "Apple and Samsung" combine in the market of mobile cellular phones and different accessories, it would give them an advantage over their competitors because of their popularity. The companies have a larger impact on the market at this time with the latest IPhone and Samsung Galaxy. Therefore; a competitor has a large percentage in the market would decrease barriers of entry for new competitors.

A vertical merger occurs when two companies that are next to each other on the supply-chain decide to become one entity and use it as a way to gain a competitive advantage within the marketplace. For instance,...

References: Joint venture, (n.d.). Retrieved from http://www.law.cornell.edu/wex/joint_venture
Mergers vs. Joint Ventures: What 's the Difference? (2012). Retrieved from http://www.brighthub.com/office/entrepreneurs/articles/82448.aspx
Kim, E. (2012), CNNMoney: Retrieved by http://money.cnn.com/2012/07/16/technology/microsoft-nbc-split/index.htm
Scilly, M. (2014), Houston Chronicle: Difference between Mergers and Joint Ventures, Retrieved from:www.smallbusiness.chron.com
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