Market Dominance

Question 1

What is meant by market dominance?

Answer 1

A measure of market shares compared to competitors. (The more market shares the higher the dominance).

Question 2

What is meant by a merger?

Answer 2

Where two companies join together to form a new larger business.

Question 3

What is an acquisition/takeover?

Answer 3

Where control of another company is achieved by buying a majority of its shares.

Question 4

What is meant by organic growth?

Answer 4

Involves expansion from within a business.

Examples:

• opening new stores
• launching new products
• increasing production capacity

Question 5

What are the advantages and disadvantages of organic growth?

Answer 5

Advantages:

• lower risk, less financ, less expensive than external growth
• growth rate allows the business to grow at a more sensible rate

Disadvantages:

• slow growth - shareholders may prefer more rapid growth
• small or shrinking markets have fewer opportunities

Question 6

What is meant by a monopoly?

Answer 6

A market dominated by one seller.

Question 7

What are the disadvantages of mergers and acquisitions?

Answer 7

• may suffer from diseconomies of scale due to size
• may take on extra debt
• result in redundentcies (employee)
• result in high prices (customers)
• dominant businesses dictating terms and conditions (suppliers)

Question 8

What is a synergy?

Answer 8

The value and performance of two companies combined will be greater than the sum of the seperate individual parts (2+2=5)