Question

Tech Solutions, Inc., a manufacturer of laptops, is considering a merger with Outtel, a leading producer of microprocessors and other computer chips. Tech Solutions believes such a merger would give them a guaranteed source of needed components, and enable them to have better control over quality. If this merger occurs, it would be an example of a horizontal merger. True False

Answer 1

Answer:

False

Explanation:

A merger refers to a corporate agreement between two firms who come together combining assets and resources and working as a single identity to reap synergestic gains.

A vertical merger refers to a form of merger wherein the purpose is to provide supply chain functions with respect to a common product or service. Usually in a vertical merger, the company merges with it's immediate supplier i.e provider of raw materials so as to reduce costs and to improve efficiency.

In the given case, the company is considering merging with it's supplier of inputs so as to make required components available as well as to improve quality. This is a case of vertical merger.