Demergers Flashcards
1
Q
Why might business choose to demerge?
A
- release money to pay off business loans
- experiencing diseconomies of scale
- release money to reinvest into the firm-
- increase overall profits due to higher individuals profits
2
Q
What is the impact of demergers of businesses?
A
- may become more efficient as it can focus on smaller amounts of production
- reduces diseconomies of scale
- greater independence
- may increase market value and profit
3
Q
What is the impact of demergers on consumers?
A
- improved consume choice
- less exploitation of monopoly power
- more competitive and lower prices
4
Q
What is the impact of demergers on workers?
A
- improved manager workers relationship and lower principal agent problem
- more opportunity for employment in two firms rather than one
5
Q
Why might businesses choose to stay small?
A
- less regulation and administration
- diseconomies of scale
- being broken up by the CMA
- loss of control
6
Q
Why might firms have to stay small?
A
- no access to finance to allow growth
- CMA intervention
- lack the skills and expertise to expand
