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Mergers And Joint Mergers Essay

941 words - 4 pages

MERGERS AND JOINT MERGERSMERGERS AND JOINT MERGERS 2Mergers and Joint MergersMelinda Dalton, Reginald Palmer, Tracy Coutee, Twana DavisOctober 13, 2014ECO/365Christopher RakovalisThe 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, 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 product.In the...

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