VERTICAL INTEGRATION
 
  • Definition: backward and forward integration
  • Measurement and extent
  • Reasons for integration
  • economic

  • - technical

    - control

    - historical
     
     

  • Significance in Irish context
  • Disintegration and quasi-integration
  • .

    .

    ECONOMIC ADVANTAGES OF VERTICAL INTEGRATION


  • Can take advantage of complementary activities

  •  
  • Increased communications and control

  •  
  • Development of market

  •  
  • Disintegration

  •  
  • Effects on Competition

  •  
  • Overseas Firms

  • - Tax System and transfer pricing

    - Repatriation of Profits
     
     
     

                                                          DIVERSIFICATION
     
     

        - Geographical

        - Product

        - Technological
     

        - As a negative strategy

        - Avoidance of market dominance

        - Slow growth in existing market

        - Risk spreading

        - Inability to survive
     

        - Types

        - Rationale

        - Operating and Financial Effects
     

                    CONGLOMERATE DIVERSIFICATION


        - with integration (economies of scale)

        - without inetgration (technology, marketing ability)
     
     

        - higher market value for earnings

        - change in debt/equity ratio

        - reduction of risk

        - "creative" accouning

        - corporate tax relief
     
     

        - traditional holding companies

        - large diversifiers

        - mild diversifiers

        - classic conglomerates
     
     


     

                                                         MERGERS
     
     


    - horizontal
    - vertical
    - diversified
      (related and unrelated)
    - shell companies
     
     

    -  majority and minority stakes
    -  reverse takeovers




    Reasons for Mergers
     

    - growth
    - profitability
    - synergy
    - market dominance
      - as rational investment strategy
    - merger waves
    - means of financing mergers
      - concentration
    - ownership
      - advantages and disadvantages