Global Mergers And Joint Ventures (section 18) Flashcards
Definition - global merger
An agreement where 2 or more firms in different countries join to become a single business
Definition - joint venture
Legal agreement where 2 or more businesses work together on a joint project.
Why might a business decide to become a global merger or joint venture
Spreading the risk across different countries- there are lots of opportunities for mistakes, however a foreign firm in a joint venture or merger can bring advanced knowledge and legal requirements to reduce risks
Access to different markets- the firms involved will all have the access to different markets.
Securing resources and supplies- one of the firms invloved might have a good relationship with a supplier that another firm might want. Will help secure the supplies and the resources.
What a intellectual property
Includes the copyrights and patents of the creations and ideas.
How can a global merger and joint venter beat competition
Economies of scale- Mergers ad venters will increase the size of the global market which will reduce the unit costs which will allow them to reduce the prices of the products, giving them a competitive advantage
Remove competitors- If 2 or more businesses merge together (from the same market) there is going to be less competition.
Taxes can be lowered- If a business mergers with another business from a country with lower taxes, they can reinvest this money (that would have gone towards tax) to more efficient ways of working, making them more competitive.
