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    Concept Map 3

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    The document discusses different types and forms of business combinations including horizontal, vertical, lateral, and diagonal combinations. It describes combinations such as associations, federations, consolidations, mergers, acquisitions, and amalgamations. Some key reasons for business combinations are to eliminate competition, achieve economies of scale, and gain access to technology and research facilities. Potential advantages include increased capital and market share, while disadvantages can include high costs and creation of monopolies.

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    Concept Map 3

    Uploaded by

    mike ranin
    56 views9 pages
    The document discusses different types and forms of business combinations including horizontal, vertical, lateral, and diagonal combinations. It describes combinations such as associations, federations, consolidations, mergers, acquisitions, and amalgamations. Some key reasons for business combinations are to eliminate competition, achieve economies of scale, and gain access to technology and research facilities. Potential advantages include increased capital and market share, while disadvantages can include high costs and creation of monopolies.

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    The document discusses different types and forms of business combinations including horizontal, vertical, lateral, and diagonal combinations. It describes combinations such as associations, federations, consolidations, mergers, acquisitions, and amalgamations. Some key reasons for business combinations are to eliminate competition, achieve economies of scale, and gain access to technology and research facilities. Potential advantages include increased capital and market share, while disadvantages can include high costs and creation of monopolies.

    Copyright:

    © All Rights Reserved
    Download as PPTX, PDF, TXT or read online from Scribd
    Download as pptx, pdf, or txt
    56 views9 pages

    Concept Map 3

    Uploaded by

    mike ranin
    The document discusses different types and forms of business combinations including horizontal, vertical, lateral, and diagonal combinations. It describes combinations such as associations, federations, consolidations, mergers, acquisitions, and amalgamations. Some key reasons for business combinations are to eliminate competition, achieve economies of scale, and gain access to technology and research facilities. Potential advantages include increased capital and market share, while disadvantages can include high costs and creation of monopolies.

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    Classifications
    of Business
    Combinations
    Types of Business Combination

    • Horizontal Combination - Two or more businesses of the same


    product or trade combines.
    • Vertical Combination – One or more stages of the production or
    distribution is controlled by one company.
    • Lateral Combination – Two or more firms with different kinds of
    product combines.
    • Diagonal Combination – combination of the main unit engage in
    production is combined with the support unit.
    • Circular Combination -
    Forms of Business Combination

    • Association
    1. Trade Association
    - A not for profit association consists of individuals or companies with
    common interests, who acts as a representative for the industry they are
    in.
    2. Chamber of Commerce
    - Association in a particular place that protects and promotes the interest of
    the businesses in the community or place.
    3. Informal Agreement
    - Formed solely based on trust of all parties involved to set restrictions of
    output, fixation of prices, and etc.
    Forms of Business Combination

    • Federation
    1. Pools
    - Members from the pooling agreement agrees to control the deman or supply
    of a product without giving up their separate entities.
    2. Cartel
    - Pool having a common sales agency.
    • Consolidation (Partial)
    1. Trusts
    - An agreement binded by a trust certificate to promise a transfer of
    controlling amount of stock to a board of trustee.
    Forms of Business Combination

    2. Holding Companies
    - Organization owning a controlling amount of their share capital by
    combining industrial units.
    3. Community of Interests
    - A group of common stockholders or directors who controls the business
    policy of several companies.
    • Consolidation (Complete)
    1. Merger
    - Two or more organizations merge and their operations are absorbed by a
    new org.
    Forms of Business Combination

    2. Acquisition
    - Refers to the process of acquiring a company at a price called acquisition
    price, paid by cash, shares, or both
    3. Amalgamation
    - Two or more businesses consolidate their business and form a new one.
    Reason for Business Combination

    • Elimination of competition • Growth of joint stocks


    • Solve capital problems companies
    • Achieve economies • Status in market
    • Effective management • Demand and supply balance
    • Tariff Facilities • Transport and communication
    development
    • Uniform policies
    • Research facilities
    • Use of technology
    • Economic instability
    • Face cries
    Advantages

    • Increase in Capital • Experts Services

    • Elimination of Competition • Research Work

    • Saving in Expenses • Use of Modem Technology

    • Controls over Production • Stability

    • Large Scale Marketing • Division of Labor


    Disadvantages

    • Creation of Monopoly • Costly Management


    • The concentration of wealth • Over Capitalization
    • Reluctant to be Accepted • Misuse of Funds
    • Changes in Friction
    • National Interest Ignored
    • No Personal Contact

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