Question

In: Economics

Which one of the following is considered a horizontal Merger? b. Ford merges with General Motors...

Which one of the following is considered a horizontal Merger?

b. Ford merges with General Motors d. Socialism and Communism c. Ford merges with McDonalds a. Ford merges with Goodyear Tire

Solutions

Expert Solution

Horizontal Merger means a merger between companies working in the same field, producing same kind of product. When competition is higher in the market, a merger between similar companies raises the market share. It also reduces competition and costs also reduce.

The correct answer to your question is:

(b.) Ford merges with General Motors is a horizontal merger. General motors and ford, both belong to the same industry i.e. automobile industry, hence their merger would be horizontal one

This proves that other options are wrong because

(d.) socialism and communism are two very different topics. They do have a common point that both encourage public or state ownership. Whereas, communism can be also considered a little part of socialism. So no horizontal merger.

(c.) Ford teamed up with McDonald’s to use their food waste for car parts. This is also not horizontal merger as bith the firms belong to two different fields.

(a.) Merger of Ford with Goodyear tire is an example of vertical merger. Because vertical merger means two companies that have different supply chain functions but for a common product merge.

Rahul Sunny answered 1 year ago
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