3.2.2 Mergers and takeovers Flashcards
What is Integration?
The bringing together of two or more businesses
What is a Merger?
When two or more businesses agree to become integrated to form one business under joint ownership
What are some reason for external growth?
Secure supplier Secure outlet Gain foothold Benefit from expertise Brand recognition Synergy Achieve corporate objectives
What would be an example of a horizontal type of intergration?
Body shop merging with Lush
What is Horizontal intergration?
Merging or taking over a company with similar or the same products or producing similar things
What are some benefits of Horizontal intergration?
You gain access to all their assets Immidiate access to all profits Gain access to their ideas Increased marker share Less competition
What is a takeover?
When one business gains control over another and becomes the owner, can be achieved by buying 51% of the shares
What is Vertical Intergration?
When 2 businesses at different stages within a process integrate
What is Conglomerate Intergration?
2 unrelated businesses integrate together
What are some Disadvantags of Horizontal Intergration?
Other company could be in debt Possible conflict (People dont like change)
What is an example of Forward vertical Intergration?
Apple opening new stores
What is an advantage of Vertical Intergration?
Direct control
Control Prices
Customer Service
What is the main disadvantage of Vertical Intergration?
Costs lots of money
What is an example of Backwards Vertical Intergration?
Starbucks buying their own coffee bean farm?
What are some Advantages of Backwards Vertical intergration?
Customer Loyalty
Secure Supply Chain
