4.2.4

Question 1

Definition of a Merger

Answer 1

When two businesses form to create one business

Question 2

Definition of a Joint Venture

Answer 2

When two businesses join together to share knowledge, resources to form a separate entity

Question 3

5 Reasons for Mergers or Joint Ventures

Answer 3

-Spreading Risk
-Entering new market / trade bloc
-Acquiring brand names / patents
-Securing resources / supplies
-Maintaining / increasing competitiveness

Question 4

3 Benefits of Merger or Joint Venture

Answer 4

-Economies of Scale
-Diversifying risk
-Opportunity to enter new market

Question 5

4 Drawbacks of a Merger or Joint Venture

Answer 5

-Initial costs
-Diseconomies of scale
-Culture clash
-Redundancies