2.

Potential main merits of vertical integration are: Improve supply chain More opportunities to differentiate as there is more control over processes Ability to leverage profit margins Can increase entry barriers as a larger organisation can have access to more capital and resources as well Leads to expansion of the core competencies of a firm

Horizontal: when a business tries to become a monopoly by buying other companies that hold similar products, and essentially acquiring the competitors so that they become a monopoly. Vertical: when a company has control of or expands their business into each step of a process, like different points of the same production path. Horizontal Units carrying on the same trade or activity join together Eliminates competition among the units Vertical Units operate at different stages of manufacture of a product Does not eliminate competition among units as they were not competing each other in the first place Cannot lead to a monopoly Combination of successive stages of production. Stoppage at one part affects all the subsequent ones.

Nature

Elimination of competition

Control of market Inter-dependency

May lead to full control of a monopoly Not interdependent as far as raw materials are concerned. Stoppage of one uni doesnt affect others

3. merger = two companies come together "permanently" for mutual gains or to reduce competition acquisition = one company buys another company which may or may not be doing well Mergers are used at a time when companies can see an advantage by coming together, essentially creating a 1 + 1 = 3 situation. This is when both companies collaborate together peacefully and use each other capabilities to leverage as a group. Usually they are used when both companies can see that they can get out something from the collaboration which they do not have and also use it as a tool to continue growth of the company. Acquisitions on the other hand have a negative connotation attached to it. This happens when companies want to take control over other companies and turn it into one big company. It is usually used when a company buys out the other company in order to expand itself. It takes over the resources, capitals and customers among other aspects and then uses them to continue growing. 5. A retrenchment strategy is a corporate-level strategy that seeks to reduce the size or diversity of an organization's operations. This strategy can be useful in many situations. One situation is to slash

expenditures. This can be done by laying off employees, closing offices or branches, reducing benefits, freezing hiring or salaries, or even cutting salaries. There are numerous other ways in which a company can employ retrenchment. These can be non-employee related, such as reducing the quality of the materials used in a product, or moving headquarters to a location where operating costs are lower. The other time when it would be necessary is to downsize in one market that is proving unprofitable and build up the company in a more profitable market. If one market has become obsolete due to modernization or technology, then a company may decide to change with the times to remain profitable.