Horizontal Combinations

CORPORATE COMBINATIONS IN THE USA

Listen to Dialogue No 2 between two speakers and answer the questions below. Then listen again and check your answers.

1. Who are talking?

2. What are the main departments of TMN Ltd.?

3. How many divisions are there in the production depart­ment?

4. Who reports to the Financial Manager?

5. What are the functions of the purchasing department?

Unit 3. READING COMPREHENSION

The most common way of joining businesses is through mergers. A merger occurs when one company absorbs anoth­er. In a merger, the absorbed company is often forced to abandon its identity.

In the 1980s, the number of mergers increased dramati­cally. Between 1980 and 1985, more than 60 of the top 500 corporations in the United States merged with other compa­nies. Multibillion-dollar corporate mergers in the mid-1980s included Nestie's acquisition of Carnation, Capital Cities Communications' acquisition of the American Broadcasting Corporation (ABC), and General Motors' acquisition of Hughes Aircraft Company. In 1985 alone, more than 3.000 mergers and acquisitions occurred.

Three types of business mergers take place — horizontal combinations, vertical combinations, and conglomerate combinations.

A merger between two or more companies that produce the same good or service or dominate one phase of the production of a good is a horizontal combination. The Standard Oil Company provides a classic example of a horizontal combina­tion. In the 1870s, John D. Rockefeller and his associates formed the Standard Oil Company of Ohio.

Over the next 12 years, Rockefellers group purchased refineries throughout the United States. By 1882, Standard Oil controlled almost all of the country's oil industry. The Standard Oil Trust was formed in 1882 to unify the manage­ment of the various companies under Standard Oil's control. In the same year Standard Oil of New Jersey was chartered as one of the companies within the trust.

Vertical Combinations

A merger between two or more companies that are involved in different phases of the production of the same good or service is a vertical combination. The founding in the United States Steel Corporation in 1901 combined companies involved in different phases of the production and distribu­tion of steel. The combined companies owned ore deposits, iron mines, coal mines, shipping companies, railroads, and steel mills. United States Steel's founder, J.Pierpont Morgan, built the world's first billion-dollar corporation through the merging of these varied companies.

Дата добавления: 2014-12-29