Question

A few years ago, in order to gain market share, Blackboard™, a well-known management system software company used by many colleges and universities, joined forces with WEB CT™, another management system software company. Both companies were in the same industry and originally competed against one another. In business, we would call the joining of these two firms a(n):

Answer 1

Answer:

horizontal merger

Explanation:

Based on the information provided within the question it can be said that in this scenario the joining of these two firms would be known as a horizontal merger. This refers to when two firms within the same industry join together since they already produce very similar products. Which is the case in this scenario since both companies make management system software.

Answer 2

Answer:

horizontal merger

Explanation:

A horizontal merger is a business consolidation between two firms in the same industry. The main advantages of horizontal mergers are:

1. obviously the market share immediately increases
2. synergies can be formed in order to increase competitive advantages

If the merger only results in higher market share it is useless, both companies must be able to either increase total sales or lower total costs, and obviously if both can be achieved it would be great.

In this case, both Blackboard and WEB CT produced management system software and both operated in the same market.