4.2.4 global mergers and joint ventures

global mergers

a permanent agreement between two businesses from different countries to join together

joint venture

when two businesses join together for a limited period of time

reasons for mergers/joint ventures

spreading risk, entering new markets/trade blocs, acquiring national/international brands/patents, securing resources/supplies, maintaining/increasing global competitiveness

spreading risk

a business may gain sales in one market when there are economic fluctuations in another

takeover/aquisition

when one business gains control of another, which can be achieved by buying 51% or more of the shares

reasons for businesses to grow globally

spreading risk, economies of scale, access to trade blocs, access to natural resources, lower production costs, increasing competition, specialisation, extend the life of a product, avoid high corporation tax