Mergers and Joint Ventures
ECO365
October 22, 2014
Lola Jackson

Mergers and Joint Ventures
Discuss the differences between horizontal, vertical and conglomerate mergers and how those differ from a joint venture.
Mergers are when two companies join their organizational structures and business operations together. This is done if both companies will receive more benefits from working together than they would have done by working separately. Some companies merge in order to stay in business while others retire from the industry in order not to go bankrupt.
Horizontal mergers are usually between two companies from the same industry who provide the same service or sell the same product. The business’s that merge horizontally used to work as competitors and in order to eliminate the competition the stronger of the two will offer to buy out the other. This type of merger can occur when there is potential for growth in revenue. It will also provide advantage over the market, giving consumers fewer choices on where to obtain the goods or services. It can eliminate some duplicate costs for producing the good or service, and the decrease in cost can lead to an increase in profit. There have been a number of large companies that have had horizontal mergers in the recent years. The most common of these have been in the banking industry. Horizontal mergers are closely monitored by the Department of Justice ("Amosweb Encyclonomic Web Pedia", 2014). They monitor this insure efficient competition and enforce antitrust laws.
Vertical mergers are between to companies from the same supply chain that used to work next to each other. By working together as one organization, more information can be shared, which can increase coordination and productivity.
Conglomerate mergers are between two companies that worked in different industries and supply chains. These companies