Mergers Activity • Every student should have an INDEX CARD. Each index card names a company. • Find other students with whom to merge your company. • As a GROUP, answer the questions below and turn them in for credit (include name): • What companies were part of the merger? • Why would your companies choose to merge? • Explain whether your merger is a horizontal or vertical merger.
HOW AND WHY BUSINESSES MERGE Reasons for Merging IDENTITY Gain/Lose Eliminate Competition Efficiency
BUSINESS COMBINATIONS 1. Horizontal Merger 2. Vertical Merger 3. Conglomerate 4. Multinational
HORIZONTAL MERGER 2 or more companies in the same business come together Example 1 Nike and Adidas Example 2 Sprint and Nextel
VERTICAL MERGER Firms involved in different steps of the manufacturing process come together Example 1 Ford Truck Co. buys a tire company and an engine parts supplier Example 2 Coca-Cola buys A sugar farm And a trucking Company to deliver its soda
CONGLOMERATE FIRM THAT HAS AT LEAST 4 DIFFERENT BUSINESSES MAKING UNRELATED PRODUCTS, NONE OF WHICH IS RESPONSIBLE FOR A MAJORITY OF ITS PROFITS Example 1 Honda Cars, motors, boats, power products Example 2 Yamaha Musical instruments, motor cycles, home theater, vehicles
MULTINATIONAL Definition: corporation with operations in more than one country, moving goods and services around the world Strengths: Spread technology; generating new jobs; provide tax money to host country Weaknesses: unfair influence on politics of the host country; Exploitation of low wage workers; exporting scarce natural resources (like oil); interfering with development of local businesses
MERGERS Pizza Hut, Domino’s & Vocelli Pizza (H) Pepsi & Coke (H) Herr’s Chips & Lay’s Chip’s & Snyder’s Pretzels (H) Cricket & Verizon & AT&T (H) HGTV & Food Network & Travel Channel (H) Traveler Mag & Bargain Vacations Mag (H) ExxonMobil & Shell Oil & Imperial Oil (H) General Motors & Goodyear & Guardian Glass (V) Bob’s Farm & Judy’s Grocery & Boo’s Restaurant Crombie’s Coffee Beans & Moo Moo Dairy Farm & Sweet Cookies Bakery & Coconuts Coffee and Ice Cream Parlor V)