Question

a. Draw the contrast (similarities & dissimilarities) between market extension merger & product extension merger? ​ ​​​​

Answer 1

Definitions

Market Extension Merger

It is an acquisition in which the acquiring company increases its market through product extension or geographical extension. A very good example of market extension merger is the acquisition of Eagle Bancshares Inc by the RBC Centura.

Product Extension Merger

It occurs when a company merges with another company that makes a similar product to that made by the first company. The acquisition of Mobilink Telecom Inc. by Broadcom is a proper example of product extension merger.

Differences

While market extension and product extension mergers may seem similar, they are not the same. The key difference is in the fact that market extension mergers usually involves two companies that produce the same product or service, while with product extension mergers, the two companies that come together do not produce the same product or service.

Similarity

Both are important forms of merger. Both involves expansion of the market share and increase of customer base.