ACCA Strategic Professional · Advanced Financial Management · Acquisitions and mergers versus other growth strategies
Two firms, one making aircraft components and the other supplying the raw alloys it uses, merge. Which type of merger is this?
This is a vertical merger, because the two firms operate at different stages of the same supply chain, one as supplier and the other as customer. Horizontal mergers involve competitors, and conglomerate mergers involve unrelated businesses.
- AHorizontal merger
- BVertical mergerCorrect
- CConglomerate merger
- DConcentric merger with no operational link
Explanation
A merger between firms at different stages of the same supply chain, such as a customer and its supplier, is a vertical merger. A horizontal merger joins direct competitors at the same stage. A conglomerate merger joins unrelated businesses.
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