Demergers

• What is a demerger?

  The seperation of a large company into two or more smaller companies
• How is focusing on the core business a reason for a demerger?

  This would enable higher profits to be made through the benefits of specialisation
• How is increasing profit a reason for a demerger?

  By selling the parts of the business that might be making a low profit, higher profits can be achieved
• How is raising finances a reason for a demerger?

  Shares in the new company could be sold, meaning the money raised could be used for investment in the main business
• How is avoiding diseconomies of scale a reason for a demerger?

  Large firms can be difficult to manage if they invlove many different activities
• How is meeting demands of regulators a reason for a demerger?

  A firm might have to sell a part of its business by a regulatory authority as a means of increasing competition
• What is the impact of demergers on businesses?

  They allow focus on the main business, make profit from selling parts of the larger business, and remove loss making parts of the larger business
• What is the impact of demergers on workers?

  There might be an increase in job security if loss making parts of the larger business are demerged, and there would be an increased focus on the business to enable it to be more profitable
• What is the impact of demergers on consumers?

  More competition would lead to lower prices, and the business would be better focused to meet consumer demand