Transcript Business Combination - Hamburg Middle School

Businesses would merge for two reasons
1. The desire for the business to become bigger.
2. Efficiency - Economies of Scale: the cost of
production falls as producer grows.
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A Horizontal Merger is combining two or
more firms that produce the same kind of
product or service.
A Vertical Merger is combining firms involved
in different steps of manufacturing a good.
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Conglomerates – a firm that has at least four
businesses, each making unrelated products.
GE
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Multinational Corporations – a large
corporation with branches in several
countries.
◦ Multinationals helped developing nations by…
which can hurt workers in the U.S.
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A Franchise is a business that licenses the
right to SELL ITS products in a given area.
A franchisee is when a person buys the rights
to sell the parent company’s products.
Four types of food franchises:
 Fast Food – McDonalds, Burger King, Wendy’s
 Pizzerias – Pizza Hut, Dominoes, Papa John’s
 Ice Cream – Dairy Queen, Cold Stone…
 Coffee – Tim Horton’s, Dunkin’s, Starbucks
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An oligopoly is where a few companies
control a large portion of a market.
The four largest companies total 40% of a
given industry.
◦ Cereal, Cell Service Providers…
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If a seller in an oligopoly lowers their prices,
other producers in that industry will LOWER
PRICES.
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A CARTEL is an organization of COMPANIES
and COUNTRIES that agree to act together to
set PRICES and limit PRODUCTION.
OPEC
OPEC altogether contributes 40% of the
world’s oil production.
Libya
Algeria
Venezuela
Ecuador
Nigeria
Angola
Iran
Iraq
Former members
include:
Indonesia
Gabon
Qatar
Kuwait
Saudi
Arabia
UAE
4.
5.
6.
1.
2.
3.
4.
5.
6.
Saudi Arabia
Iran
UAE
Iraq
Nigeria
Kuwait
Venezuela
8. Algeria
9. Angola
10. Libya
11. Qatar
12. Ecuador
7.
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A COOPERATIVE is a business operated for
the shared benefit or the owners, who are
also its customers.
◦ Associated Press (News Co-Op)
◦ Sunkist Growers (Farmers Co-Op)
◦ BJ’s (Consumer Co-Op)
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Non-Profit Organizations acts like a business
organization.
It’s purpose is usually to BENEFIT SOCIETY.
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Amnesty International
Red Cross
UNESCO
Salvation Army
There are five conditions:
1. MANY BUYERS & SELLERS - no one can
dominate
2. STANDARDIZED PRODUCTS - no quality
difference
3. INDEPENDENT BUYERS/SELLERS competition reduces prices
1.
2.
3.
WELL INFORMED BUYERS/SELLERS - a
weakness*
5. FREEDOM TO ENTER/EXIT THE MARKET anyone can enter
The closest example of perfect competition is
FOOD.
4.
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Monopolistic competition is different as it:
OFFERS SIMILAR BUT NOT STANDARD PRODUCTS.
Four ways monopolistic competition tries to gain
business through non-price competition:
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Many buyers and sellers
Similar but differentiated products
Limited control of prices
Freedom to enter/exit the market
Uses DIFFERENTIATION to distinguish products.
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A monopoly is a MARKET STRUCTURE in
which only ONE seller sells a product for
which there are no close substitutes.
A monopoly is A PRICE SETTER, RESTRICTS
THE MARKET and IS THE ONLY SELLER.
Natural Monopoly
Geographic Monopoly
When the costs of production are
lowest if only one firm provides
output.
i.e. Water Companies
Government Monopoly
i.e. Buffalo Sabres
TYPES OF
MONOPOLIES
When the government either
owns and runs the business or
authorizes only one producer.
i.e. the Post Office
When there are no other producers
or sellers within a given region.
Technological Monopoly
When a firm controls a
manufacturing method, invention
or a type of technology.
i.e. Apple® Patents