Mergers and joint ventures Essay
Mergers and Joint VenturesErica Channell, Brenda J Lohman, Brian Uminski, and Chelsie WilsonECO/365December 15, 2014Alexander HeilMergers and Joint VenturesThere are several types of mergers in the business world. Horizontal, vertical, and conglomerate are a few that one would consider if the company chose to follow the route and merger with another company. A company contemplates merging with another company depending on the economic situation and the relationship between the different companies. There could be any number of reasons such as it would help to keep both companies ranging from increasing their revenue or increasing their supply.Horizontal MergerHorizontal mergers take place in businesses often and can have a large effect on any industry. Linton (2014), “A horizontal merger takes place when two companies offering similar, or compatible, products or services to the same market combine under single ownership.
If the other company sells products similar to yours, your combined sales give you a greater share of the market” (Para. 2). The difference between a horizontal and vertical merger is that a horizontal merger combines two companies in the same industry that make similar products. Whereas a vertical merger is when the two companies are in the same supply chain. So instead of a corporation absorbing a supplier or a distributor they are eliminating some competition and increasing their footprint in the market.
A horizontal merger differs from a conglomerate because there is no parent company in the horizontal merger, and the conglomerate does not necessarily gain market share by taking on another company. A joint venture can be similar to a horizontal merger because two companies are combining to accomplish a goal or work on a project or product together. The difference is that when a joint venture is to the companies do not remain together wherein a horizontal merger they meet and remain as one group from that…