ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -A vertical merger occurs when two companies operating at different levels within the same industry’s supply chain combine their operations. Such mergers are done to increase synergies achieved through the cost reduction, which results from merging with one or more supply companies.

Detailed explanation-2: -What Is a Vertical Merger? A vertical merger is the merger of two or more companies that provide different supply chain functions for a common good or service. Most often, the merger is effected to increase synergies, gain more control of the supply chain process, and ramp up business.

Detailed explanation-3: -The main objective of a vertical merger is to improve a company’s efficiency or reducing costs. A vertical merger occurs when two companies previously selling to or buying from each other combine under one ownership. The businesses are typically at different stages of production.

Detailed explanation-4: -Horizontal Versus Vertical Mergers These competitors operate within a similar industry or have like products. A completed horizontal merger leaves the market with one less competitor and a larger combined firm. A vertical merger is a combination of firms at different levels of the supply chain.

Detailed explanation-5: -Horizontal mergers involve two competitors merging. Vertical mergers involve a buyer and a seller merging. Both of these types of mergers involve companies that are combining their related business operations. Congeneric mergers also involve companies in related lines of business, while conglomerate mergers do not.