1answer.
Ask question
Login Signup
Ask question
All categories
  • English
  • Mathematics
  • Social Studies
  • Business
  • History
  • Health
  • Geography
  • Biology
  • Physics
  • Chemistry
  • Computers and Technology
  • Arts
  • World Languages
  • Spanish
  • French
  • German
  • Advanced Placement (AP)
  • SAT
  • Medicine
  • Law
  • Engineering
tatiyna
2 years ago
8

In 2001, HP acquired Compaq. The merger had an impact on two different markets: desktop PCs and servers. Pre-merger market share

s in the desktop PC market were as follows: Dell, 13; Compaq, 12; HP, 8; IBM, 6; Gateway, 4. Pre-merger market shares in the servers market were as follows: IBM, 26; Compaq, 16; HP, 14; Dell, 7. Source: Bank of America report, October 2001. Data for 2001Q2.
(a) Determine the value of HHI in each market before the merger.
(b) Assuming market shares of each firm remain constant, determine the value of HHI after the merger.
(c) Considering the values determined above and the DoJ merger guidelines, was the Department of Justice right in allowing the merger to take place?
Business
1 answer:
svetlana [45]2 years ago
3 0

Answer:

HP and Compaq

Value of HHI          Desktop PC         Servers

a) Before the merger   429                   1,177

b) After the merger      621                   1,616

c) Considering the HHI values determined in the various markets above (before and after the merger) and the DoJ merger guidelines, the DoJ seems to be right in allowing the merger to take place with respect to the desktop PC market as the 200 basis point mark was not reached.  This is not the same with respect to the servers market, where the combined value of HP Compaq exceeds the 200 basis point mark.

Explanation:

a) Data and Calculations:

Pre-merger market shares in the desktop PC and servers markets:

           Desktop PC   Servers

               Market       Market

Dell,            13                 7

Compaq,    12               16

HP,              8                14

IBM,            6               26

Gateway,   4                  0

HHI in the desktop PC market = 13² + 12² + 8² + 6² + 4²

= 169 + 144 + 64 + 36 + 16

= 429

HHI in the servers market = 7² + 16² + 14² + 26² + 0² =

= 49 + 256 + 196 + 676

= 1,177

After the merger:

                Desktop PC   Servers

                    Market       Market

Dell,                   13                 7

HP Compaq    20               30

IBM,                   6               26

Gateway,          4                  0

HHI in the desktop PC market = 13² + 20² + 6² + 4²

= 169 + 400 + 36 + 16

= 621

HHI in the servers market = 7² + 30² + 26² + 0²

= 40 + 900 + 676

= 1,616

                         

Value of HHI          Desktop PC         Servers

a) Before the merger   429                   1,177

b) After the merger      621                   1,616

Market power of Compaq and HP in the desktop PC market before the merger = 208/429 = 48.5% (144 + 64)/429

Market power of HP Compaq in the desktop PC market after the merger = 400/621 = 64.4%

Increase in basis point (HHI) = 192 (621 = 429)

Market power of Compaq and HP in the servers market before the merger = 452/1,177 = 38.4% (256 + 196)/1,177

Market power of HP Compaq in the servers market after the merger = 900/1,616 = 55.7%

Increase in basis point (HHI) = 439 (1,616 - 1,1177)

You might be interested in
Aunt Mabel promised to give you $9000 when you successfully complete your freshman year, $6000 when you successfully complete yo
Blababa [14]

Solution :

At every stage the formula used will be :

$\frac{\text{available balance}}{(1+\text{interest rate})}= \text{required bank balance}$

After the junior year, Aunt Mabel's bank balance will be :

$=\frac{8000}{1.0925}$

= $ 7,322.65

Aunt Mabel's bank balance after sophomore year will be :

7,322.65 + 1000 = $ 8,322.65

$=\frac{8,322.65}{1.0325} $

= $ 8060.677

After the freshman year, bank balance of Aunt Mable's will be :

8060.677 + 6000 = $ 14,060.677

$=\frac{14,060.677}{1.0250} $

= $ 14.0606

If Aunt Mabel can predict the interest rate with accuracy, she will have to deposit :

$ 14.0606 + $ 9000 = $ 9,014.06

$=\frac{9014.06}{1.0525}$

= $ 8,565.241

4 0
3 years ago
A 10 year 7% municipal bond, quoted on a 5.00 basis, is priced at 104. A 10 year 6% municipal bond, quoted on a 5.00 basis, is p
goldfiish [28.3K]

Answer:

D. 102.2

Explanation:

Using a simultaneous equation

Since the year is constant

We will use the the basis and municipal bond as our variables

So equation 1 = 7x+5y=104

Eqn ii= 6x + 5y= 101

Using eliminating method

X=3

Substitute for x in equation 1 to get the value of y

7(3) + 5y=104

5y=104-21

Y=16.6

To get the price for the percent of 6.40 at 5% basis substitute for the value of X and Y respectively in the both equation

6.4x+5y=?

6.4(3) + 5(16.6)=

19.2+83=102.2

3 0
3 years ago
How is a traditional work week different than a compressed work week?
galben [10]
A compressed workweek<span> has you working 40 hours in fewer </span>than<span> five days. The most widely used schedule is 10 hour days for four days a week.</span>
6 0
3 years ago
What is not one of seven mistakes to avoid when managing​ processes?
Afina-wow [57]

Answer:

bankruptcy

Explanation:

7 0
3 years ago
Correll Company, which operates a mail-order clothing business, is physically located in State L. This year, the firm shipped $1
Wewaii [24]

Answer:

Correll Company

a. Yes State R residents who purchased Firm L (out-of-state) merchandise owe use tax on their purchases.

b. State R would collect $1,080,000 additional revenue ($18 million * 6%) if Correll was required to collect the use tax at the point of sale and then remit the tax collected to State R.

Explanation:

a) Data and Calculations:

Cost of merchandise to customers in State R = $18 million

State R's sales and use tax on the purchase and consumption of retail goods within the state = 6%

Amount that Correll could collect for State R = $1,080,000 ($18 million * 6%)

b) Note that Correll (Firm L) collecting the State R use tax does not affect State R residents' legal liability to pay the use tax.  Unfortunately, not many people actually remit their self-assessed use tax.

6 0
3 years ago
Other questions:
  • Dividing a stock's current price per share by the issuing company's earnings per share results in
    15·2 answers
  • How much will be paid in fees if a late payment is made??
    8·1 answer
  • f the interest rate is 7.8% per year, approximately how long will it take for your money to quadruple in value? (Use the Rule of
    9·1 answer
  • When an organization adopts the ______ concept, it has made the attempt to know as much about the consumer as possible and has d
    5·1 answer
  • What are some of the primary reasons a company decides to expand internationally? Identify a company in the news that has recent
    8·1 answer
  • Because of its size and relative power, Walmart can easily impose controls on small manufacturers, such as Brown Betty Dessert B
    11·1 answer
  • The Allowance for Bad Debts has a credit balance of $ 7 comma 500 before the adjusting entry for bad debts expense. After analyz
    12·1 answer
  • Which of the following accurately describes a capital gain?
    15·1 answer
  • QUESTION 6 of 10: Ashleigh hires a group of security staff. Each worker works an average of 80 hours per month at $14/hour. If h
    6·1 answer
  • true or false: the beta for the portfolio after the stocks have been added is the weighted average of the beta before the stocks
    14·1 answer
Add answer
Login
Not registered? Fast signup
Signup
Login Signup
Ask question!