What is a vertical business combination?

A vertical business combination occurs when a company acquires another company that is in the same vertical or industry, however, the company operates in a different stage of the supply chain. If a company acquired a company in the same vertical and same stage of the supply chain, then that would be a horizontal business…

What is a horizontal business combination?

If a company purchases another company in the same industry and stage of the supply chain, then the acquisition is considered a horizontal business combination. A horizontal business combination allows a company to increase their market share within the same vertical and stage of the supply chain. If the acquired company is in the same…

What is a business combination?

A business combination is a type of event or transaction and occurs when one company gains control (acquirer) over another company (acquiree). The main reason a company would consider a business combination is because the combined business would be stronger than the individual business operating separately. The acquirer would acquire the other company to obtain…

What is direct foreign investment (DFI)?

Direct foreign investment (DFI) is when a company or individual in one country invests money or assets into a business located in a different country. The company or individual would make the investment based on their desire to do business in that country. DFI is different from a portfolio investment as the company or individual…

What is a joint venture (JV)?

A joint venture is basically a partnership between two companies, however, a new legal entity is typically formed (LLC or corporation). The three main resources that two companies would form a joint venture would be to combine their skill sets or technology, revenue synergies / cost savings, or leverage resources. The two companies would form…

What does it mean to license a process or technology?

When a company licenses a process or technology to another company, they are basically letting that company utilize their process or technology in exchange for a fee. Presumably, the licensor has a unique process or technology that is patented or cannot be easily replicated, so the licensee is willing to pay a fee to utilize…

What is franchising?

Franchisors are entities that provide marketing services, deliver strategies, training and support to their franchisees in exchange for a fee.

What is an example of comparative advantage?

Comparative advantage is the specialization in production and trade of specific products with trading partners. The comparative advantage is the ability of an individual or group to carry out a particular economic activity (such as making a car) more efficiently than another activity. Remember, produce what you specialize in, and insource or outsource what you…