BUS 082 Lecture Notes - Lecture 25: Horizontal Integration, Vertical Integration, Revolving Credit

• School: College of The Sequoias
• Department: Business (BUS)
• Course: BUS 082
• Professor: Porterfield

Document Summary

Companies are guided by a variety of acquisition strategies in their pursuit of growth and enhanced profitability: horizontal integration, vertical integration, conglomeration. Advantages: increased control over key raw materials and other inputs, ability to capture upstream or downstream profit margins, improved supply chain coordination, moving closer to the end user to own the customer relationship. Conglomeration refers to a strategy that brings together companies that are generally unrelated in terms of products and services provided under one corporate umbrella: united in their business approach, seeks to benefit from portfolio diversification benefits. Example: general electric ( ge : ge operates a variety of businesses in several sectors including aerospace, energy, financial and insurance services, healthcare, and transportation. Refers to sourcing of internal and/or external capital used as consideration to fund an m&a. Form of financing directly drives certain parts of merger consequences analysis; thereby affecting the amount an acquirer is willing to or can afford to pay for the target.