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M & A = Mergers and Acquisitions, Integration, Franchising, Strategic…
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Integration
Horizontal integration: same industry, stage of production.
An example of vertical integration is technology giant Apple (AAPL), which has retail locations to sell product as well as manufacturing facilities around the globe.
Facebook and Instagram
One of the most definitive examples of horizontal integration was Facebook's acquisition of Instagram in 2012 for a reported $1 billion. Both Facebook and Instagram operated in the same industry (social media) and shared similar production stages in their photo-sharing services.
Vertical integration: different stages in production process
- Vertical forward: to consumers.
- Vertical backwards: to suppliers.
Franchising
A form of business ownership.
- you buy a license to trade using another firm’s name, logo, brands and trademarks.
- The franchisee pays a royalty payment, and a license fee to the parent company; the franchisor.
- growth
Example: Subway
A franchise that focuses on healthful submarine sandwiches, Subway started life in 1965 as Pete’s Super Submarines.
Strategic Allience
Main goal: is to gain synergy (1+1=3)
- A mutually advantageous conjunction or compatibility of distinct business participants or elements ( resources/ efforts)
Example: Ford and Eddie Bauer
You might remember the Ford Explorer Eddie Bauer edition. Premium leather seats and other luxury features throughout the vehicle. Then aside from the car itself, Eddie Bauer was producing luggage sets with Ford branding on them. These co-branded items were great advertising points for both companies.
Joint Ventures
A business arrangement in which two or more companies agree to pool their resources for the purpose of accomplishing a specific task. This task can be a new project or any other business activity. However, the venture is its own entity, separate from the participants' other business interests.
Example: Hulu, which began life as a joint venture between NBC Universal, Providence Equity Partners, News Corporation and then The Walt Disney Company. Launched in 2007, Hulu was originally conceived to run programming from these four companies and their respective subsidiaries. Over the years, Hulu has begun developing its own programming.
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