1 / 7

Mergers and Takeovers

Mergers and Takeovers. Extra Notes for Economic Environment of Business. Mergers. When two companies join to form one new firm, it can be: voluntary, also known as a ‘merger’ or forced, when it is known as a ‘takeover’. Mergers.

vanessa
Télécharger la présentation

Mergers and Takeovers

An Image/Link below is provided (as is) to download presentation Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author. Content is provided to you AS IS for your information and personal use only. Download presentation by click this link. While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server. During download, if you can't get a presentation, the file might be deleted by the publisher.

E N D

Presentation Transcript

  1. Mergers and Takeovers Extra Notes for Economic Environment of Business

  2. Mergers When two companies join to form one new firm, it can be: • voluntary, also known as a ‘merger’ or • forced, when it is known as a ‘takeover’

  3. Mergers Merger activity is an example of ‘integration’ taking place within industries. This can be: • vertical integration, where firms at different stages in the production chain merge and • horizontal integration, where competing firms in the same industry merge

  4. Why Integrate? Firms are sometimes keen to merge when: • they can make savings from being bigger • this is known as gaining ‘economies of scale’ • they can compete with larger firms or eliminate competition • they can spread production over a larger range of products or services

  5. Economies of Scale There are several types of economy of scale: • technical economies, when producing the good by using expensive machinery intensively • managerial economies, by employing specialist managers • financial economies, by borrowing at lower rates of interest

  6. Economies of Scale • commercial economies, by buying materials in bulk • marketing economies, spreading the cost of advertising and promotion • research and development economies, from developing better products

  7. Economies of Scale There are sometimes problems that can affect integrated firms. These are known as ‘diseconomies of scale’ • firms are too big to operate effectively • decisions take too long to make • poor communication occurs

More Related