Assignment Writing Help on Joint Ventures versus Mergers

Joint ventures vs mergers

A merger is an external growth strategy in a company. It takes place when companies combine to form a new cooperate organization legally. Sometimes a merger may be involuntary or voluntary. In case of financial problems, a company might decide to merge in order to retain its employee’s positions and rehabilitate. There are three types of mergers, horizontal, vertical and conglomerate, that differ in many ways (“ Joint Ventures and Eco 365”, 2014).

A horizontal merger takes place when two companies engage in the same field of products and services consolidate. This is done to save the interest of clients and avoid competition. Vertical merger differs from other mergers in that; it involves companies in different stages of production or supply chain coming together. Unlike other types of mergers, horizontal and vertical, conglomerate merger occurs when two unrelated companies join forces (Scheid, 2010). It is neither a horizontal nor a vertical merger.

Joint venture alternatively involves the coming together of two or more business entities to perform a business aspect or a single business project. To combine effort or to effect change a new business might be formed. It does not necessarily involve the changing of organizational business structure or dissolution of the original businesses as it occurs in mergers. Sharing of profit or loss takes place according to financial and operational involvement (Ward, 2014). Ventures are neither complete nor in some case permanent like mergers. When the business venture is over, they may decide to dissolve. Before engaging in this form of business many factors have to be considered because of the positive and negative outcomes of the business involvement.

References

Mergers and Joint Ventures Eco 365. (2014, February 20). Retrieved March 30, 2015, from http://www.termpaperwarehouse.com/essay-on/Mergers-And-Joint-Ventures-Eco-365/279846ure

Scheid, J. (2010, October 8). What’s the Difference Between Mergers and Joint Ventures? Retrieved March 30, 2015, from: http://www.brighthub.com/office/entrepreneurs/articles/82448.aspx

Ward, W. (2014, November 13). Amos WEB: Economics with a touch of Whimsy! Retrieved March 30, 2015, from http://www.AmosWEB.com