Reasons for Global Mergers or Joint Ventures

• global merger


  permanent agreement between two businesses from two different countries to join together
• joint venture


  two businesses join together to share their knowledge, resources and skills to form a separate business entity for a limited period of time
• reasons for global mergers and joint ventures

  • spreading risk
  • entering new markets or trading blocs
  • securing resources or supplies
  • acquiring national or international brand names
  • maintaining or increasing global competitiveness
• benefits of global mergers/joint ventures

  • economies of scale
  • diversifying risk
  • opportunity to enter new markets
• drawbacks of global mergers/joint ventures

  • high initial cost and no guarantee of return on investment
  • potential diseconomies of scale
  • culture clash
  • redundancies