Mergers and Takeovers

Merger - 2 or more companies join together

Takeover - when one company purchases another - could be hostile or agreed

  • High risk

    • Poor communication

    • Culture clashes

    • Expensive

Can happen because

  • Greater market power

  • Diversify into different markets

  • Achieve growth quicky

  • Remove a competitor

Horizontal integration - 2 businesses in the same stage of the production process

  • Achieves economies of scale

  • Job roles can be duplicated leading to redundancies because of similar HR structure

  • Removes a competitor'

Vertical integration - 2 firms at different stages of the production process

  • Gain control over supply chain - help reduce bargaining power of buyers/suppliers as they are becoming their own buyer/supplier

  • Different sets of expertise

  • Issues with communication

  • Lose sight of what they are good at