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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. 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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  1. 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

  2. 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

  3. B) Vertical Merger – firms in different steps of marketing or manufacturing join together Ex: Shell Oil (refineries) merged with Texaco (gas stations)

  4. 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

  5. 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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