Mergers and Joint VenturesSharod L. Edwards, Derrick Hubbard, Oriel Frederick, Michael Thompson, Charles Barker, and Valerie Carpenter ECO/365October 27, 2014Daniel PuenteMergers and Joint VenturesWhile companies are faced with many challenges one of the most challenging are when companies merge. There are several different types of mergers which these companies must consider horizontal, vertical, and conglomeration. A horizontal merger occurs when two companies from the same industry consolidate their assets and eliminate competition allow them to reach potential higher gain within market. Vertical mergers occur when two or more companies operating at different levels are producing goods or services for a particular industry. The goal of a vertical merger is to increase efficiency throughout the chain and increase synergies and potential profits. Whereas, conglomerate businesses involve acquisitions from two or more firms which are unrelated and support different customer bases. This usually occurs when companies are looking to diversify their businesses by reaching out into different markets. “Each company will then take an interest, both operational and financial, in the new company and their share in the profits or losses of the new venture, which will be directly linked to the level of involvement or commitment they put forth from the start” (Scheid, 2010). Vertical Merger VS. Joint Venture
In order to discuss the differences in vertical mergers and joint ventures, it is important that you have a clear understanding what the two words mean. First off here is what a vertical merger means, it is when two companies in the same industry and channel decide to join forces and become one company (www.brighthub.com, 2014). Now here is an example in case you don’t understand let’s take Coke they make a liquid drink and they buy the bottles from another manufactory and they realize it would better that they create a vertical merger with the bottling company and...
References: Scheid, J. (2010). Mergers vs. joint Ventures: what 's the difference? Retrieved: on August 22, 2014 from http://www.brighthub.com/office/entrepreneurs/articles/
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