Question

When two firms who do not participate in the same industries, for example a software company and a fast food restaurant company decide to merge, the result is called a ____________ merger?

Answer 1

When two firms who do not participate in the same industries, for example a software company and a fast food restaurant company decide to merge, the result is called a conglomerate merger. A conglomerate merger is defined as two or more companies that come together to work together when they have absolutely no related things in common when in comes to their businesses. There are two types of conglomerate mergers, pure and mixed. In a pure conglomerate merger the businesses have nothing in common and just want to expand their business areas. A mixed conglomerate merger is when firms want to expand their product lines or target markets.