ECONOMICS
COMPETITION AND MARKET STRUCTURES
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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publishing company bought a movie company
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textile company became a multinational corporation
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food chain bought another food chain
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trucking company bought an airline
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Detailed explanation-1: -Answer and Explanation: a) Burger King’s takeover by McDonald’s will be a horizontal merger because both companies operate in the same industry (fast food) and at the same value chain stage.
Detailed explanation-2: -A merger between Coca-Cola and the Pepsi beverage division, for example, would be horizontal in nature. The goal of a horizontal merger is to create a new, larger organization with more market share.
Detailed explanation-3: -Example: Merger of Vodafone India and Idea Cellular Limited, two telecommunication companies, is a classic example of a horizontal merger.
Detailed explanation-4: -Horizontal integration is the strategy of acquiring other companies that reside along a similar area of the supply chain. For example, a manufacturer may acquiring a competing manufacturing firm to better enhance its process, labor force, and equipment.
Detailed explanation-5: -A horizontal growth strategy would involve either consulting in a new geographic area or in a new industry. For example, let’s say your current customer base is entirely made up of accounting firms. You might expand to offer your software to businesses in other industries to gain more market power.