demergers Flashcards
how will workers benefit and not from a demerger
Workers will benefit from reduced cultural conflicts between different divisions with different attitudes. This will reduce tension, increase productivity and job satisfaction, benefitting workers.
However, workers will suffer from lower job security. They won’t know which new division they’ll join after the demerger and if one of the division is sold to raise funds, workers may lose their jobs entirely.
who will consumer benefit and not from demergers
Firstly, after demerging, each new smaller firm can specialise in their job, increasing efficiency, reducing costs and prices, but also increasing quality. This will benefit consumers. However, if the demerged aretoosmall, it might reduce economies of scale, increasing LRAC, so firms will have to put their prices up.
