Business Combinations
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Business Combinations. Merger – combination of two or more businesses into one firm. Done to become larger and/or more efficient. Sometimes names of businesses are changed. Horizontal Merger – two or more firms that produce the same kind of product join forces.

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Business Combinations

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Business combinations

Business Combinations

Merger – combination of two or

more businesses into one firm

  • Done to become larger and/or

  • more efficient

  • Sometimes names of businesses

  • are changed


Business combinations

Horizontal Merger – two or

more firms that produce the

same kind of product join forces

Ex: Ford buying Volvo

XM Radio & Sirius

Time Warner-AOL


Business combinations

B) Vertical Merger – firms in

different steps of marketing or

manufacturing join together

Ex: Shell Oil (refineries) merged

with Texaco (gas stations)


Business combinations

Conglomerate – business made up

of several companies, each one

producing different goods & services

  • Diversified make unrelated

  • products to avoid possible

  • financial failure

Example: General Electric


Business combinations

Franchise – business where the

owner(s) pays a parent company to

sell their products themselves

Ex: McDonald’s, Tim Horton’s


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