4.2.4 reasons for global mergers or joint ventures

Question 1

define merger

Answer 1

an agreement that unites two existing companies into one new company

Question 2

define joint ventures

Answer 2

a legal between two businesses to work together on a specific project

Question 3

define takeover

Answer 3

occurs when one company makes a bid to assume control of or acquire another, often by purchasing a majority stake in the target firm

Question 4

spreading risk over different countries

Answer 4

having production in several countries, the ups and downs of the foreign exchange market can cancel themselves out.
only producing in the uk but exported half of your output, a rising pound hits your competitiveness and your profit margin

Question 5

entering new markets

Answer 5

joint venture has the advantage of local expertise, you might not get if you entered the market alone

Question 6

acquiring brand names / patents

Answer 6

acquiring well known products or patents can be a spur to global takeovers or mergers

Question 7

securing resources and supplies

Answer 7

investments are made by businesses in places like Africa and Brazil to secure raw materials

Question 8

increasing global competitiveness

Answer 8

critical to long term survival
small market share will suffer declining profitability due to absence of eos