task on mergers

HideShow resource information
  • Created by: marina
  • Created on: 02-07-12 09:05
Preview of Mergers

First 484 words of the document:

a. Small firms can survive successfully in the hotel industry for many reasons.
Firstly, economies of a scale may be limited meaning that these firms will be
able to operate at the minimum efficient scale of production. Secondly, barriers
to entry may be low allowing firms to enter the market more easily, thus having a
bigger chance of succeeding. For example, the cost of setting up their firm may
be small and their products may be easy to sell. Thirdly, the size of the market
may be very small so they will be able to dominate it with their firm, thus making
profit order to survive. Moreover, firms in the hotel industry may be price takers
meaning that they will provide their service at the price the market is at, thus
customers are more likely to spend money in this industry as they are not being
over charged which allows small firms to survive in this industry.
b. If hotel chains offer a nonhomogenous product that has slight differences they
may be able to survive through advertising to highlight the slight differences in their
product which will make them much more appealing for certain customers.For
example, the hotels could be closest to the beach in the area which would make
them much more appealing to tourists who want to spend their time on the beach.
a. Easyjet may have contributed to a greater economic efficiency in the UK in
recent years by providing the necessary competition to prevent large firms
from exploiting the market. Although Easyjet is now a large firm it maintains
efficiency in the market by providing low cost air services which ensures that
other providers of this service will not be able to charge more than they
a. Horizontal merger
b. Vertical merger
c. Vertical merger
d. Conglomerate merger
Q4. pg. 391
a. Procter & Gamble may have chosen to merge with Gillette rather than
develop its own brands which would have been in competition with those of
Gillette because this merge enables them to have a bigger market share
without having to create a brand from scratch which could take a while to
develop the same reputation as Gillette. As they are rivals, now that these
are taken over it reduces the competition for them. With this reputation they
will be able to sell their products much easier to super markets and this will
enable them to be price makers because they own a large sector of this type
of company , thus can name the price super markets should sell the products
allowing them to make more profit. Moreover, with this merge it has allowed

Other pages in this set

Page 2

Preview of page 2

Here's a taster:

With the larger size due to the combined company it will make it easier for
them to be price makers due to providing more products that shops need to
sell thus they can negotiate prices more. Moreover, now that there is a
combined company they can use the same supplier that may allow
production to be much cheaper as they can order bigger numbers which will
allow them to have better deals with the supplier.…read more

Page 3

Preview of page 3

Here's a taster:

From the data it can be assumed that Ford's purchase of KwikFit did not
led to greater economic efficiency as it was sold it 3 years later indicating an
economic failure.…read more


No comments have yet been made

Similar Economics resources:

See all Economics resources »See all resources »