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Government Case

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The objectives for this week were based on chapters 8, 18, and 21. Learning Team B determined that week four was slightly overwhelming, but we undoubtedly looking forward to the upcoming week. As a group, we believed that week three and its material was a lot to absorb with an abundance of knowledge. This week's discussion included researching externalities, merging and government intervening.

Externalities are the effects of a decision on a third party that are not taken into account by the decision maker (Colander, 2010). The externalities can be positive or negative. If the externalities are negative, then they are detrimental the third party. If the externalities are positive, then they are beneficial to all of the third parties. A negative externality example would be a homeowner making improvements to their property but cause their neighbors property to lose value or have a problem where a repair is needed. An example of a positive externality would be sharing leadership material that I have learned from different classes that I have attended over the years with Publix. I had a good understanding of the antitrust material but I had some problems with the taxation and government intervention principles. I read these chapters several times and just couldn't grasp the information.

This portion will discuss the topics that were easy to understand, the difficult topics that we struggled with, and the topics we can relate to the current job field. The topics of chapter 18 are differentiating among horizontal, vertical, and conglomerate mergers. Horizontal and vertical mergers are very similar and it was easy to understand the meaning of both topics. On the other hand, conglomerate was the difficult topic and we struggled with the meaning of these mergers.

Merger is a general term meaning the act of combining two companies. Merger takes place in the business world when one company purchases another company. There are three types of mergers which are called horizontal, vertical, and conglomerate. The first two types of mergers were easy to understand. A company is called a horizontal merger when the combining of two companies in the same industry. A gasoline station is an example of horizontal merge. Vertical merger is the opposite of horizontal merge, which is the combination of two companies that are involved in different phases of producing a product. One company would be the buyer of products and the other would be the supplier.

The third mergers are conglomerate mergers which was more difficult to understand. The meaning of conglomerate mergers is the merging of relatively unrelated businesses. At first, I though conglomerate merge meant the same meaning as vertical merge but both mean different things. A company called Tyco acquired nine firms which included health care, finance, personal care, and security industries. The part that I could not understand was that no antitrust action was taken. The only way to classify why unrelated firms want to merger are five general reasons which are the following To achieve economies of scope, to get a good buy, to diversify,



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