Question

4. Two of UK’s larger wine distribution companies, Bibendum and PLB, merged their businesses in October 2014. Bibendum is primarily a restaurant supplier while PLB focuses on supplying wines to retailers. Does this suggest a means through which the merger might create value added? Hint: in your response, consider both economies of scale and scope for the new firm structure.

Answer 1

Answer-

Bibendum and PLB are two larggest wine companies who merged together, and yes their merger suggests a means through which it can create value as;

A) market expansion and new opportunity - before merger both companies had their fixed distribution channel for business as -Bibendum was primarily a restaurant supplier while PLB focused on supplying wines to retailers. But with merger, now both companies can supply their products through each others distribution channel which provides them new business opportunities

B) Increase in supply- when companies gets mergerd they tend to increase their efficiency through their work which means when two wine companies got merged, now they have more resources, larger market to serve and larger demand from the market.

C) Monopoly in the market- SInce two of the largest wine comapnies got merged which means both companies got rid of their toughest competitior, so now there is no one in the market who cancompete with this new merged company which ultimately tend to create monopoly in the market by killing all the competitiors.