A merger occurs when two firms join together to form one. The new firm will have an increased market share, which reduces competition. This reduction in competition can be damaging to the public interest, but help the firm gain more profits.
However, mergers can give benefits to the public.
1. Economies of scale. This occurs when a larger firm with increased output can reduce average costs. Lower average costs enable lower prices for consumers.
Different economies of scale include:
· Note a vertical merger would have less potential economies of scale than a horizontal merger e.g. a vertical merger could not benefit form technical economies of scale. However in a vertical merger there could still be financial and risk-bearing economies.
Some industries will have more economies of scale than others. For example, car manufacture has high fixed costs and so gives more economies of scale than two clothing retailers.
More on economies of scale
2. International Competition. Mergers can help firms deal with the threat of multinationals and compete on an international scale.
3. Mergers may allow greater investment in R&DThis is because the new firm will have more profit which can be used to finance risky investment. This can lead to a better quality of goods for consumers. This is important for industries such as pharmaceuticals which require a lot of investment.
4. Greater Efficiency. Redundancies can be merited if they can be employed more efficiently.
5. Protect an industry from closing. Mergers may be beneficial in a declining industry where firms are struggling to stay afloat. For example, the UK government allowed a merger between Lloyds TSB and HBOS when the banking industry was in crisis.
6. Diversification. In a conglomerate merger two firms in different industries merge. Here the benefit could be sharing knowledge which might be applicable to the different industry. For example, AOL and Time-Warner merger hoped to gain benefit from both new internet industry and old media firm
yes but all not necessarily one thing merger is the one company to another company all share and assist and roll and regulation in the company India now present economic condition is safe and
The economic advantage of piezoceramics is that it is inexpensive and economical. This is because it makes use of less electricity than EEPROMS.
it is a scince
south and west A far-reaching river system was an economic advantage for which sections of the US during its expansion and development?
A loss of comparative advantage.......
yes it is necessary
A conglomerate merger is one between two strategically unrelated firms from which economic benefits is not possible for the bidder or the target. The merger between Walt Disney Company and American Broadcasting Company is a conglomerate merger.
micro economic policy to increase S.A exports potential micro economic policy to increase S.A exports potential micro economic policy to increase S.A exports potential micro economic policy to increase S.A exports potential micro economic policy to increase S.A exports potential micro economic policy to increase S.A exports potential micro economic policy to increase S.A exports potential
For economic advantage.
The economic advantage of piezoceramics is that it is inexpensive and economical. This is because it makes use of less electricity than EEPROMS.
what are the needs for social and economic foundation of co-operative association in nigeria?
disadvantages- unlikely economic benefits will be generated for the target or the bidder advantages- diversification
advantage and dis advantage of centralization and decentralization advantage and dis advantage of centralization and decentralization
it is a scince
Purchasing Merger Consolidation Merger
There is no economic status advantage for a sloth, only a sloth seller.
inderias
They had economic advantages