Question

Question 2: 10 a. Draw the contrast (similarities & dissimilarities) between market extension merger & product extension merger?

b. Is globalization of political & legal environments advantageous for globalized business or economy? If Yes, how? Please, also discuss disadvantages if you think there are any?

Answer 1

a) Market extension merger refers to the merger between two or more companies that sells the same products or services but operating in different regions or market. The type of merger is to help the companies to expand their market access and increase the consumer base. Since the number of companies is very less in the type of merging, they help one and the other for everyone to increase their market access and profit.
Product extension merger functions in a way allowing the companies to group together their products so that they can access a large number of customers. Companies share the resources and the channels while they group the products and earn higher profits. Products between the firms must be related and they should operate in a same market.
b) Globalization of political and legal environments enlarges the idea of politics from a nation wise aspect to a global aspect. Formation of global political organization and institutes try to make the nations more cooperative and efficient. Globalization of political systems has increased the ability of business in a global aspect. Reducing barriers through the political globalization have increased the efficiency of international trade. Organizations like WTO and UN got better influence in the decisions of nations. Nations cannot take a decision that is different from the global interest in most of the circumstances. This has effects on determining tariff rates etc. which is a factor affecting international business. Political globalization has also influenced the nations to adopt effective political and economical plans from other nations to attain better environment and find effective markets in international trade helping other countries to develop and establish. Political globalization also have an indirect disadvantage in the trade that is country’s with better efficiency can exploit the countries with lower I case of trade. Countries forming internal groups can act indirectly against other economically.