How do firms grow?

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Merger between two firms at the same stage of the production process. To achieve economies of scale, or to increase market share
Horizontal integration
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Merger between two firms at different stages of the production process, within an industry. TO increase barriers to entry, increase control over suppliers, or to ensure a smooth production process.
Vertical integration
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Closer to the consumer
Forward vertical integration
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Further from the consumer
Backward vertical integration
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Merger between firms in entirely unrelated industries, to spread risk, widening the range of output. Also allows firms to use funds to cross-subsidise investment in new areas.
Conglomerate integration
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Other cards in this set

Card 2

Front

Merger between two firms at different stages of the production process, within an industry. TO increase barriers to entry, increase control over suppliers, or to ensure a smooth production process.

Back

Vertical integration

Card 3

Front

Closer to the consumer

Back

Preview of the front of card 3

Card 4

Front

Further from the consumer

Back

Preview of the front of card 4

Card 5

Front

Merger between firms in entirely unrelated industries, to spread risk, widening the range of output. Also allows firms to use funds to cross-subsidise investment in new areas.

Back

Preview of the front of card 5

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