Chapter 21, Problem 1QP

a.

Summary Introduction

To discuss: Company GM acquires company F a hypothetical merger is horizontal, conglomerate, or vertical.

Explanation of Solution

The acquiring of company F by company GM is a horizontal merger. A horizontal merger is the consolidation of the firms which are in the similar type of industry. The competition is generally higher among the firms that operate in the similar space.

b.

Summary Introduction

To discuss: Company F acquires company W a hypothetical merger is horizontal, conglomerate, or vertical.

Explanation of Solution

The type of merger that are involved in the business activities that are not related is known as the conglomerate merger. These types of mergers takes place between various industries or companies that are located in different locations. Company F acquires company W and it is a conglomerate merger

c.

Summary Introduction

To discuss: Company W acquires company KH a hypothetical merger is horizontal, conglomerate, or vertical.

Explanation of Solution

The type of merger where two firms that manufacture separate services or parts along with the final product’s value chain is known as the vertical merger. Company W acquires company KH and it is a vertical merger

d.

Summary Introduction

To discuss: Company KH acquires company GM a hypothetical merger is horizontal, conglomerate, or vertical.

Explanation of Solution

The type of merger that are involved in the business activities that are not related is known as the conglomerate merger. These types of mergers takes place between various industries or companies that are located in different locations. Company KH acquires company GM and it is a conglomerate merger