Demergers 3.1.3 Flashcards
1
Q
What are the 4 reasons for a demerger
A
Reduced Diseconomies of scale - ↓Firm size, ↓DOS, ↓Costs, ↑Profits
Specialisation - ↑Productivity, ↓Costs, ↑Profits
Asset Sales - Raise money, ↑Profits, ↑ Dynamic Efficiency
Cultural differences - ↓Conflicts, ↑Productivity, ↑Profits
2
Q
Pro of Demerging to workers
A
Reducing Cultural differences
3
Q
Con of Demerging to workers
A
Reducing Job Security
4
Q
Pro of Demerging to Consumers
A
Lowers prices and increases quality
5
Q
Con of Demerging to Consumers
A
Reduces economies of scale
6
Q
Benefits to the society of a de-merger
A
Allocative efficiency
Dynamic efficiency
Job opportunities
7
Q
Costs of a demerger
A
Parts sold for Losses
Lack of finances
