Mergers and Joint Mergers Essay

The following paragraphs ordain discuss week fours readings that cover vertical mix inrs, horizontal mergers, roll ups, and gistt ventures. Companies use mergers and joint ventures to increase profitability and power. The following paper exit go over the three alliances as comfortably as a joint venture and how it differs from the mergers. apiece business concern arrangement is used to attempt an cleansement for the company, the important thing to remember is which testament be most beneficial and why.A horizontal merger occurs when ii competing companies in the same securities industry joins unitedly to become one firm or one identity. The two companies could gestate an influence on the competitory market if the companies have a large percentage of that market. The result of the two companies combine lead be an increased advantage over their competitors. If the two groups be joining together are small businesses, they could have little to no advantage over their com petitors in the market.For example, if two unknown nomadic cellular companies merge to increase their run and products, the affect on the existing market could be minimal. If two well-known mobile providers such as Apple and Samsung combine in the market of mobile cellular phones and different accessories, it would restrain them an advantage over their competitors because of their popularity. The companies have a larger impact on the market at this judgment of conviction with the latest IPhone and Samsung Galaxy.Therefore a competitor has a large percentage in the market would minify barriers of entry for new competitors.A vertical merger occurs when two companies that are next to each former(a) on the supply-chain decide to become one entity and use it as a way to gain a competitive advantage within the marketplace. For instance, a manufacturer merging with a supplier of essential components or raw materials or with a distributor or retailer that sells its products. The goal o f vertical mergers is to improve efficiency or take down costs. Vertical mergers can help to secure access to critical supplies and help to reduce overall costs by eliminating the costs of finding suppliers, negotiating deals, and paying full market prices.It can improve efficiency by synchronizing production and supply between the two groups and ensuring that supplies are available when you shoot them. A vertical merger can help deal with competitors by making it difficult for competitors to restrain vital supplies, therefore, weakening existing competitors and increasing barriers to the entry of new competitors. Lets take a look at the technology advancement implemented for the creation of a new iPhone. Apple will merge with the suppliers and distributors for the benefit of having the production accessible for the company when manufacturing and distributing the product.In the world of business, there are measure when companies can merge in order to expand their operations in o ther markets, and possibly set about the risk of the company by doing so. Combining activities, which in turn, will increase their efficiency, can eliminate wordiness between the two organizations. At times, this merger can involve corporations that offer entirely different services or products. These types of mergers are referred to as conglomerate mergers. A conglomerate is a corporation that is made up of a number of different, seemingly unrelated activities. In a conglomerate, one company owns a arrogant stake in a number of smaller companies, which conduct business separately.Each of a conglomerates subsidiary companies runs independently of the other business divisions, but the subsidiaries management reports to senior management at the parent company. (investopedia.com). Some examples of conglomerate mergers viewed between Proctor & Gamble and Gillette, Walt Disney and the American BroadcastingCompany, and ITT, Avis Rent-a-Car, Sheraton Hotels and Continental Baking. To th e ordinary consumer, mergers like the ones listed above do not make sense, but it the world of business there are positive benefits for all parties involved.Unlike a merger, a joint venture does not require dissolution of their original business or change the organizational structure, but rather two business entities join forces to undertake a single project or aspect of business. The only similarity between the two is that they both include two business entities joining together. A joint merger is a short-term partnership in which the persons jointly undertake a transaction for mutual profit as well as each person contributes assets and share risks.Joint ventures can also be used by companies to gain entrance into foreign markets. Microsoft entered into a joint venture with NBC to create MSNBC. The two companies ventured to bring business news to the television and online. While the two are joins as one for MSNBC, Microsoft and NBC have their companies. Microsoft has their busine ss market in online products and technology. NBC has their television broadcasting network. The two businesses do not affect each other. The two companies halt ownership of the entity.When two or more companies agree to combine into one entity, it will be referred to as a horizontal, vertical, or conglomerate merger. On the other hand, when two or more businesses enter into a joint venture for a specific object will not incorporate the companies as one. The companies will be able to work together for the new entity, but their overall concept of their business will remain the same. Meaning the companies can perform their business separately from the joint venture.ReferencesJoint venture, (n.d.). Retrieved from http//www.law.cornell.edu/wex/joint_ventureMergers vs. Joint Ventures Whats the Difference? (2012). Retrieved fromhttp//www.brighthub.com/office/entrepreneurs/articles/82448.aspxKim, E. (2012), CNNMoney Retrieved by http//money.cnn.com/2012/07/16/technology/microsoft-nbc-split /index.htmScilly, M. (2014), Houston Chronicle Difference between Mergers and Joint Ventures, Retrieved fromwww.smallbusiness.chron.com