Vertical Mergers: A vertical merger is a merger in which one firm supplies its products to the other. A vertical merger results in the consolidation of firms that have actual or potential buyer-seller relationships. The firms in vertical mergers operate at different stages of production process where buyer-seller relation or manufacturing at different stages of the same product is possible (Gaughan, 2007). There are two types of vertical mergers. (i) ‘Backward or upstream vertical integration’ in which the primary motive is usually to move towards a dependable source of supply. Dependability can be determined not just in terms of supply availability, but also through quality maintenance and timely delivery considerations. Having timely access …show more content…
Conglomerate mergers result in joining of firms which compete in different product markets, and which are situated at different production stages of the same or similar products. That is to say, neither the products nor the inputs of these merging firms are the same. Conglomerate mergers result in significant advantages gained by the merging firms since they are the fastest means of entry into different activity fields in the shortest possible time span. Moreover, they reduce the financial risks by “not putting all the eggs in one basket” (Gaughan, 2007). There are three types of conglomerate mergers: (i) Product Extension: In this type of mergers, firms that sell non-competing products and use related marketing channels of production processes merge. (ii) Market Extension: In such mergers, merging firms manufacture the same products or services but market them in different territorial markets. That is to say: it is a merging of two firms selling competing products in separate geographic markets. In this way the firms get the opportunity to market their products in a wider range. (iii) Pure Conglomerate Mergers: In such mergers, there is no relationship between firms neither in respect to manufacturing nor in respect to marketing and mergers are realized between firms operating in entirely different
A merger is a partial or total combination of two separate business firms and forming of a new one. There are predominantly two kinds of mergers: partial and complete. Partial merger usually involves the combination of joint ventures and inter-corporate stock purchases. Complete mergers are results in blending of identities and the creation of a single succeeding firm. (Hicks, 2012, p 491). Mergers in the healthcare sector, particularly horizontal hospital mergers wherein two or more hospitals merge into a single corporation, are increasing both in frequency and importance. (Gaughan, 2002). This paper is an attempt to study the impact of the merger of two competing healthcare organization and will also attempt to propose appropriate clinical and managerial interventions.
Synergistic gains are generated when there are a bundle of actors that can provide a higher level of value together than otherwise could have been achievable comparing the companies operating on their own (Eun and Resnick, 2007). As Homeplus expanding its business through acquiring its competitor (Homever) and convenience stores (C-Space), there were synergistic gains for Homeplus. The synergistic gains imply advantages such as shared production and product development, and expansion of market presence. Since the acquired firms (Homever and C-Space) share their product categories with Homeplus, there is a gain of larger economies of scale that can lower the production cost for Homeplus. Thus, it can be seen that the integration strategy of Homeplus generates a clear synergy.
Mergers is when two firms or entities, often of about the same size, agree to become one single new entity or organization rather than remain separately owned and/or operated. This kind of action is often referred to as a ‘merger of equals’. Financially, the stocks of both companies are migrated into a new stock with the new name of the company issued. (CIPD, 2009)
There are two types of mergers: horizontal and vertical. A horizontal merger is one that occurs when two or more organizations with similar goals, missions or interests merge together to create one organization. A vertical merger is one that occurs when two or more organizations with different missions come together. Usually, the services they offer can work together in some complimentary way. Horizontal mergers are more common in the non-profit sector (An Itch To Get Hitched).
In recent times, global competition and the drive to leverage advantage, has resulted in both small and larger companies combining resources. Consolidations of markets are one of the main reasons for Mergers and Acquisitions. Corporate organizations possessing similar products and services are looking to both consolidate and expand; thereby utilizing joint interests to further their goals.
Mergers among companies is not a new concept, in fact, this concept has been used since the 1980s. There are a few reasons that companies decide to merge. A merge can increase the performance which produces a stronger company. A stronger workforce is the dream of all companies. Companies love the idea that they are able to produce a product in half the time. Diversification is another reason companies like mergers. A company that merges to diversify may acquire another company in a seemingly unrelated industry in order to reduce the impact of a particular industry's performance on its profitability. Companies seeking to sharpen focus often merge with companies that have deeper market penetration in a key area of
The vertical merger happens when a company moves up or down its own product line. The sensible reason for merging with or acquiring a company is that it makes financial sense.
A successful organization recognizes its need to adapt changes to survive global competition. Locally and around the globe, mergers and acquisitions are becoming more common between companies. Mergers occur when two or more companies combine their operations and participate as equal partners in order to achieve strategic and business objectives (Sudarsanam, 2003). Sudarsanam, S 2003, Creating Value from Mergers and Acquisitions The Challenges An Integrated and International Perspective, Harlow FT Prentice Hall. An acquisition occurs when a company takes over a smaller company and gets control to determine how combined operations will be managed (Shook & Roth, 2010). Shook, L V & Roth,
A merger happens when two companies decide to combine into one entity or when one company acquires another. One plus one makes three: this equation is the special outcome of a merger or an acquisition. Two companies together are more valuable than two separate companies - at least, that's the reasoning behind merging. A merger can also happen when two firms, often of about the same size, agree to go forward as a single new company rather than remain separately owned and operated. This kind of action is more precisely referred to as a "merger of equals." Both companies' stocks are surrendered and new company stock is issued in its place.
I believe that merger waves occur as the result of industry shocks (regulatory changes, technological developments, etc.). However, mergers can only happen if there is liquidity in markets and capital is easily available, so this is the reason we see mergers primarily during times of economic prosperity. Industry shocks and economic conditions that lead to bull markets can also be reason for companies to spin off or seek out different divisions in order to adjust to new market environments. These factors together are what drive mergers and cause them to occur in waves.
This is a merger that exists when an entity merges with one of its suppliers forming a buyer seller relationship. For example, a merger between a company that produces furniture with a company that produces wood.
‘Horizontal Merger’ is when two companies with similar products join together. ‘Vertical Merger’ is two companies at different stages in the production process. ‘Conglomerate Merger’ is when two different types of companies join together. ‘Market extension merger’ is between two companies who produce the same product but sell in different markets. ‘Product Extension merger’ is between companies with related production but they do not compe...
This video provides an overview of product diversification. It explains that there are two types of diversification, which are related diversification and unrelated diversification. In addition, the video informs that diversification often involves merger and acquisition activities. Furthermore, it stresses the importance of keeping diversifications balanced, as in some instances, companies that do not take advantage of diversification, can miss out on some benefits, and/or could experience negative effects. However, on the other hand, the opposite could also occur, because some companies that over-diversify, extend themselves too far and can experience detrimental and disadvantageous effects as well. The key is staying
According to a North American dictionary entry vertical integration is defined as “merging of companies in supply chain: the merging of companies that are in the chain of companies handling a single item from raw material production to retail sale” (“Vertical Integration,” 2009). Though the definition of vertical integration is quite simple the concept is much more complicated than one may think. There are four strategic factors that must be established by business leaders before the implementation of vertical integration can take place that must be well-thought-out in order to achieve any level of success. The factors that influence vertical integration are economic, market, operational, and strategic.
Vertical integration is the process in which several steps in the production and/or distribution of a product or service are controlled by a single company or entity, in order to increase that company’s or entity’s power in the marketplace. Vertical integration differs across industries, firms within the same industry, and transactions within the firm. A company may expands its operations backward into industries that produces inputs to its products or forward into industries that utilize, distribute or sell it products.