ECONOMICS
COMPETITION AND MARKET STRUCTURES
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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Horizontal Merger
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Vertical Merger
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Diagonal merger
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Conglomerate Merger
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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: -Effective Vertical Integration McDonalds is integrated in every stage of the supply chain through partnerships with contracted suppliers. This means that the fast-food chain processes the meat themselves, grows its potatoes and transports its own materials.
Detailed explanation-4: -Example: Merger of Vodafone India and Idea Cellular Limited, two telecommunication companies, is a classic example of a horizontal merger.
Detailed explanation-5: -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.