Word for combination of companies

The
most common way of joining businesses is through mergers. A merger
occurs when one company absorbs another.
In a merger, the absorbed company is often forced to abandon
its identity.

In
the 1980s, the number of mergers increased dramatically.
Between 1980 and 1985, more than 60 of the top 500 corporations
in the United States merged with other companies.
Multibillion-dollar corporate mergers in the mid-1980s included
Nestie’s acquisition of Carnation, Capital Cities Communications’
acquisition of the American Broadcasting Corporation
(ABC), and General Motors’ acquisition of Hughes
Aircraft Company. In 1985 alone, more than 3.000 mergers
and acquisitions occurred.

Three
types of business mergers take place — horizontal
combinations,
vertical
combinations, and conglomerate
combinations.

Horizontal
Combinations

A
merger between two or more companies that produce the same
good or service or dominate one phase of the production of
a good is a horizontal combination. The Standard Oil Company
provides a classic example of a horizontal combination.
In the 1870s, John D. Rockefeller and his associates formed
the Standard Oil Company of Ohio.

Over
the next 12 years, Rockefeller’s group purchased refineries
throughout the United States. By 1882, Standard Oil
controlled almost all of the country’s oil industry. The Standard
Oil Trust was formed in 1882 to unify the management of the various
companies under Standard Oil’s control. In
the same year Standard Oil of New Jersey was chartered as one
of the companies within the trust.

Vertical Combinations

A
merger between two or more companies that are involved
in different phases of the production of the same good
or service is a vertical combination. The founding in the United
States Steel Corporation in 1901 combined companies involved
in different phases of the production and distribution
of steel. The combined companies owned ore deposits, iron
mines, coal mines, shipping companies, railroads, and steel
mills. United States Steel’s founder, J.Pierpont Morgan,
built the world’s first billion-dollar corporation through
the merging of these varied companies.

Conglomerate
Combinations

A
merger between two or more companies producing or marketing
different products is a conglomerate combination. While
horizontal and vertical combinations have been common
since the mid-1800s, conglomerate combinations did not become common
until the 1960s and 1970s.

The
classic example of a conglomerate is the International Telephone
and Telegraph Corporation (ITT). Until the 1950s ITT
manufactured only telecommunications equipment. During
the 1960s and 1970s, however, ITT acquired hundreds
of subsidiaries — acquired companies that have not been forced
to abandon their corporate identities.

Today
ITT owns companies in more than 80 countries and is
involved in such varied enterprises as in production of frozen
foods and plumbing supplies and in operation of computer
services, consumer finance companies and hotels.

Trends
in Corporate Combinations

The
trend toward conglomerate combinations began in the 1960s
and carried into the 1970s. Conglomerate mergers
helped
to build corporate empires for ITT, Gulf &
Western,
and
many other major producers. During the 1980s, however, a
trend toward vertical and horizontal combinations redeveloped.
Companies in the 1980s tended to merge with other companies
that produced the same or related goods or services.

Advantages
of combinations. One
of the major business advantages of corporate mergers is efficiency.
By centralizing decision making within an industry, corporate
combinations,
especially horizontal and vertical combinations, can increase
efficiency. Costs also can be cut by eliminating unnecessary or
overlapping jobs and departments.

A
second business advantage of mergers is that buying an existing
business is often far less expensive than building new
plants, hiring new employees, or acquiring additional capital
in order to expand. In most mergers, the acquiring corporation
obtains additional capital resources and experi­enced
management and employees.

A
third business advantage of mergers is that the increased
size of merged corporations often makes it possible to
borrow more capital. This additional capital can be used for such
improvements as enlarging the sales
force or
modernizing
production facilities. In general, larger corporations also are
able to compete more effectively in the marketplace.

Disadvantages
of
combinations.
Corporate
combinations may
result in disadvantages for the merged corporation stockholders
and consumers. Corporate mergers sometimes have
negative consequences for the merged corporations, both
from the standpoint of corporate
performance and
from the
standpoint of worker satisfaction.

In
some instances, especially in conglomerates, the managers
of merged corporations may not have the necessary skills to supervise
the production of newly acquired goods and
services. Lack of supervisory skills can result in decreased
efficiency and profits.

Mergers
also may result in added unemployment because of
changes in business operations. Employees may be reshuffled
and
some people may be laid
off. The
employees who stay on
the job sometimes
suffer from low morale due to altered job descriptions or other
negative changes that occur in the workplace. While mergers usually
are
beneficial for stockholders
in the acquired company, almost half of all major mergers in the
United States result in a decrease in the value of the purchasing
corporation’s stock. For consumers, one of the
major disadvantages of corporate mergers is that they often
lead to decreased competition in the marketplace. This lack
of competition may result in higher prices for con­sumers.
It also may limit the choices available to consumers by
reducing the number of competing goods and services.

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When a voluntary association of firms is formed to achieve common goals and to enjoy the monopoly advantages, that sort of initiative is called business combination.

The combination may be formed by a written or oral agreement among the firms.

Sometimes firms decide to merge themselves into one unit. The main object of the business combination is to achieve common economic welfare for its members.

But it is considered to be unlawful if any of its objectives is against the public interest. Business combinations may be permanent or temporary.

Types of Business Combinations

Combinations may take several forms, such as horizontal, vertical, lateral, and diagonal, circular, or maybe a mixture of two or more of these types.

Horizontal Combination

A horizontal combination comes into being when units carrying on the same trade or pursuing the same productive activity join together with a common end in view.

Example of horizontal combinations are;

• Disney’s 2006 acquisition of Pixar.
• Facebook’s 2012 acquisition of Instagram.

The intensity of competition is naturally reduced when several units competing in the same line of business join together. The combining units can well take advantage of the various economics associated with large scale production by making common purchases, pooling resources for research, common advertising, etc.

Vertical Combinations

Vertical integration is the combination of firms in successive stages of the same industry. It implies the integration of various processes of an industry.

Vertical combinations are brought into existence with the following objects in view:

1. To eliminate the wasteful and unnecessary expenses involved in carrying on the connected processes separately.
2. To eliminate middlemen functioning between various units
3. To securer economies in marketing, advertising, and transport
4. To maintain control over the quality of raw materials and finished products.

Lateral Combination

Lateral integration refers to the combination of those firms which manufacture different kinds of products though they are ‘allied in some way.’

It can be of two kinds;

1. convergent lateral integration, and
2. divergent lateral integration.

The convergent lateral combination comes into existence when different forms join together to supply goods and services to help the functioning of major undertakings.

Example: For instance, a book publishing may join with other units producing paper, doing printing work, and providing bookbinding services.

Diagonal Combination

It is also called ‘Service’ integration Diagonal integration comes into existence when a unit providing auxiliary goods and services to industry is combined with a unit engaged in the mainline of production, within the organization.

Example: For example, if an industrial enterprise combines with a transport company, a power station or a repairs and maintenance workshop, and makes these facilities available within the organization, it will be said to have effected diagonal integration.

Circular Combination

When firms belonging to different industries and producing altogether different products and combine under the banner of a central agency, it is called a mixed or circular combination.

This is affected to ensure smooth conduct of business operations by making timely availability of auxiliary services within the organization.

Example, For example, Godrej is engaged in the manufacturing of cosmetics, electrical goods, office equipment locks, etc. The object is to secure the benefits of large-scale operations arising out of co-operation.

Forms of Business Combinations

Combinations take different forms that have been developed over some time.

1. Associations
   1. Trade associations.
   2. Chambers of commerce.
   3. Informal agreements.
2. Federations
   1. Formal Agreement.
   2. Pools.
   3. Cartels.
3. Consolidations
   1. Partial consolidations
      1. Trust.
      2. Holding companies.
      3. Community of Interest
   2. Complete consolidations
      1. Mergers.
      2. Acquisition.
      3. Amalgamations.

Associations

Business units combine to attain some purposes without surrendering their autonomy.

1. Trade Associations

Under trade association, business units engaged in a particular trade generally come together and discuss matters for the promotion of their economic and business interest.

They are generally formed on ‘territory bases.

Such association is organized on a non-profit basis and is essentially educational. Sometimes the association may make representations to the government to safeguard the interests of a trade or an industry.

1. Chamber of Commerce

Chamber of commerce is voluntary associations of persons connected with commerce, trade, and industry.

These are formed with the object of promoting and protecting the interests of business and business communities in a region, country, or even in the world as a whole.

Their functions include promoting, supporting, or opposing legislative or other measures affecting the trade interests of the members, the collection and dissemination of information concerning trade, commerce, etc. to members.

They also undertake the function of referring disputes arising out of trade activities to arbitrations for settlement, performing such other things as may be conducive to the expansion of trade.

1. Informal Agreement

Informal agreements involve the exchange of promise among members regarding restriction of output, fixation of prices, etc. They are also referred to as Gentlemen’s agreements.

It is only the moral duty of business units to keeping the promise.

Federations

Federations form of combination aims at rendering benefit to member-units for certain specific purposes under an agreement. Of such federations, ‘ Pools’ and ‘Cartels’ are most notable.

1. Pools

It means that the members of the pooling agreement joint together to regulate the demand or supply of a product without surrendering their separate entities.

The agreement may relate to the regulation of output, reallocation of output, redistribution of income, etc.

Haney defines and industrial pools as a form of a business organization established through a federation of business units whose members seek a degree of control over prices by combining some factors in the price making process in common aggregate and apportioning that aggregate among members.

1. Cartels

A pool having a common sales agency is known as Cartel. It is, thus, an output and profit pool.

The object of a cartel is to eliminate competition by forming a federation of producers that pool the output, fixes the price, and sells the product. The profits reaped by cartels are distributed amongst the members – units on a pre-determined basis.

Consolidations

The last form of combination is consolidation. This form involves the highest degree of integration. The consolidation may be of two types:

Partial Consolidation

1. Trusts

Trusts may be defined as a form of a business organization through temporary consolidation in which the shareholders of the constituent organizations under a trust agreement transfer a controlling amount of their stock to a board of trustees in exchange for a trusted certificate.

These trust certificates show their equitable interests in the income of the combinations.

Thus, trustees under the trust manage the affairs of the member concerns in the interests of the real owners, who are entitled to dividends based on trust certificates held by them.

1. Holding Companies

A holding company is a form of business organization that is created to combine industrial units by owning a controlling amount of their share capital.

Controlled companies are referred to as subsidiary companies. The subsidiaries are independent and function in their name. But they are effectively managed by the holding company.

1. Community of Interests

A Community of interest may be defined as a form of business organization, in which without any formal central administration, the business policy of several companies is controlled by a group of common stockholders or directors.

Thus, the administration of different companies is possible either through managerial integration, administrative integration, or financial integration.

Complete Consolidation

In complete consolidation, the combining units lose their entity.

It is defined as a form of business organization which is established by the outright purchase of the properties of the constituent organizations and the merging of such properties into single business units.

Complete consolidation may be of the following types:

1. Merger

A merger takes place when; two or more organizations merge, and their operations are absorbed by a news organization.

1. Acquisition

Acquisition refers to the process of acquiring a company at a price called the acquisition price or acquisition premium. The price is paid in terms of cash or acquiring the company’s shares or both.

To read more about mergers and acquisitions, click here.

1. Amalgamation

Amalgamation is an arrangement where two or more companies consolidate their business to form a new firm or become a subsidiary of any one of the companies.

For practical purposes, the amalgamation and merger of the terms are used interchangeably.

Causes/Reasons for Business Combination

Although the business combination is primarily formed for achieving a common (single) goal, it may also be formed keeping in mind the following reasons:-

1. Elimination of Competition

Due to hard competition among the firms’ rate of profit decreases. Some firms may suffer a loss also. So the industrialists feel pleasure in setting up a combination to avoid the competition.

1. To Solve Capital Problem

Small units of production face the problem of capital shortage. They cannot expand their businesses. As a result, small units may form a combination to overcome this problem.

1. To Achieve Economies

Some small units combine themselves to achieve the economies of large scale production advantage. It helps to purchase the raw materials at low prices and sell more product which would increase the profit

1. Effective Management

Generally, small units are unable to hire the services of experts and experienced managers. So small industrial units combine themselves to hire the services of effective management

1. Tariff Facilities

To compete with external firms, some industrial units combine themselves. The government also imposes heavy duties to protect domestic producers.

1. Uniform Policy

All the units adopt uniform policy due to business combinations. It regularizes the business activities of all the units.

1. Use of Technology

The business combination can use the latest technology and new methods of production because its sources are sufficient. In contrast, a single unit cannot do so.

1. To Face Crises

It is very difficult for the small industrial units to face crises in the days of inflation and deflation. So the small units combine themselves to face these problems easily.

1. Growth of Joint Stock Companies

The growth of Joint-stock companies has also made it possible for various industrial units to form combinations.

1. Status in Market

A big firm enjoys a higher status and respect than the smaller one. So, small business units prefer to combine themselves for higher status.

1. Demand and Supply Balance

A business combination is very useful in controlling the overproduction. It adjusts the supply according to the demand of the market. So overproduction cannot take place, and prices remain stable.

1. Transport and Communication Development Activities

It has made economic activities fast. Now there is close contact with a businessman with the others. So it has also contributed to the growth of combination.

1. Research Facilities

Small firms cannot set up the research department, while through business combination, these facilities can be enjoyed.

1. Economic Instability

In the case of economic and political instability, there is a chance of loss in every moment. To reduce the risk, small industrial units combine themselves.

Advantages of Business Combination

The advantages of a combination are controversial because the creation of monopoly and elimination of competition both are considered the merits and demerits of the combination.

Anyway, the following are the significant merits of combination:

1. Increase in Capital

The volume of capital may be increased by the formation of a combination. The members combine their resources to conduct large size business.

1. Elimination of Competition

By the formation of combination, unnecessary competition is eliminated, and member firms earn monopoly profit.

1. Saving in Expenses

Administrative production and distribution expenses reduce due to combination.

1. Controls over Production

The combination is very effective in controlling overproduction. It helps to adjust the supply according to the demand.

1. Large Scale Marketing

In the market, competition position is strong in bargaining. So it sells the product at a higher price.

1. Experts Services

A combination can acquire the services of experienced specialists. It increases the efficiency of the combination.

1. Research Work

A combination can spend money on research work, which is very important for the business. This research work reduces its cost and increases its profit.

1. Use of Modem Technology

A combination is capable of using the latest inventions and new methods of production as a consequence of a transfer of technology. It will increase profit.

1. Stability

A combination is a more stable form of business as compared to the individuals’ units. The chances of dissolution are also less than others.

1. Division of Labor

The principle of division of labor is applied in combination, which increases the production efficiency of combination.

Disadvantages of Business Combination

Following are important disadvantages of combination:

1. Creation of Monopoly

It creates a monopoly that is harmful to the people in the long run.

1. The concentration of wealth

It concentrates the wealth in a few hands and divides society into few classes, such as rich, middle, and poor.

1. Reluctant to be Accepted

The combination is disliked by the people, and it is not acceptable.

1. Changes in Friction

The chances of friction among directors and officers are bright. They quarrel with, each other for their interest

1. No Personal Contact

It is not possible to maintain direct contact between employees, creditors, and shareholders, due to this business may suffer a loss.

1. Costly Management

A combination hires costly management, which increases the cost of production.

1. Over Capitalization

There is always a danger of over-capitalization in the combination. It is harmful to the combination.

1. Misuse of Funds

The directors of the company enjoy unlimited power and misuse the capital.

1. National Interest Ignored

Generally, the combinations ignore the national interest, and they involved in such activities that are against the national interest.

English Synonyms and AntonymsRate these synonyms:4.5 / 2 votes

1. combination

   A conspiracy is a combination of persons for an evil purpose, or the act of so combining. Conspiracy is a distinct crime under common, and generally under statutory, law. A faction is more extensive than a conspiracy, less formal in organization, less definite in plan. Faction and its adjective, factious, have always an unfavorable sense. Cabal commonly denotes a conspiracy of leaders. A gang is a company of workmen all doing the same work under one leader; the word is used figuratively only of combinations which it is meant to stigmatize as rude and mercenary; crew is used in a closely similar sense. A conclave is secret, but of larger numbers, ordinarily, than a cabal, and may have honorable use; as, the conclave of cardinals.

   Synonyms:
   cabal, conclave, confederacy, conspiracy, crew, faction, gang, junto

Complete Dictionary of Synonyms and AntonymsRate these synonyms:3.0 / 1 vote

1. combination

   Synonyms:
   union, association, consortment, concert, confederacy, alliance, league, coalition, cabal, synthesis, co-operation

   Antonyms:
   division, disunion, disruption, dissolution, dispersion, analysis, opposition, resistance, non-location, removal

Princeton’s WordNetRate these synonyms:0.0 / 0 votes

1. combinationnoun

   a collection of things that have been combined; an assemblage of separate parts or qualities

   Synonyms:
   combining, compounding

2. combinationnoun

   a coordinated sequence of chess moves

   Synonyms:
   combining, compounding

3. combinationnoun

   a sequence of numbers or letters that opens a combination lock

   «he forgot the combination to the safe»

   Synonyms:
   combining, compounding

4. combinationnoun

   a group of people (often temporary) having a common purpose

   «they were a winning combination»

   Synonyms:
   combining, compounding

5. combinationnoun

   an alliance of people or corporations or countries for a special purpose (formerly to achieve some antisocial end but now for general political or economic purposes)

   Synonyms:
   combining, compounding

6. combinationnoun

   the act of arranging elements into specified groups without regard to order

   Synonyms:
   combining, compounding

7. combination, combining, compoundingnoun

   the act of combining things to form a new whole

   Synonyms:
   combining, compounding, combine

Matched Categories

1. • Alliance
   • Change Of Integrity
   • Collection
   • Mathematical Process
   • Politics
   • Sequence
   • Unit

Dictionary of English SynonymesRate these synonyms:0.0 / 0 votes

1. combinationnoun

   Synonyms:
   union, conjunction, connection, association

2. combinationnoun

   Synonyms:
   alliance, coalition, confederacy, league, complot, conspiracy, cabal

3. combinationnoun

   Synonyms:
   mixture, compound, amalgamation

Synonyms, Antonyms & Associated WordsRate these synonyms:2.0 / 2 votes

1. combinationnoun

   Synonyms:
   union, alliance, federation, confederacy, syndicate, league, cabal, merger, coalition, conspiracy, coöperation, collusion, amalgamation, synthesis, incorporation

PPDB, the paraphrase databaseRate these paraphrases:0.0 / 0 votes

1. List of paraphrases for «combination»:

   mix, merge, combined, combinations, mixture, conjunction, combo, combining, blend, conjugation, association, jumpsuit, suit, combine, scheme, intermix, blending, mixing, mixed, conjugate, locked

How to pronounce combination?

How to say combination in sign language?

How to use combination in a sentence?

1. Silvano Vinceti:

   We have used all the paintings in which Leonardo used Salai as a model and compared them to the ‘Mona Lisa’ and certain details correspond perfectly; so he used two models and added creative details which came from his own imagination, i believe that this goes with a long-time fascination of Leonardo’s, that is, the subject of androgyny. In other words, for Leonardo, the perfect person was a combination of a man and a woman.

2. Ron DeSantis:

   It’s a combination of steps forward and steps backwards, we’ve seen this movie before — whenever we see tremendous progress, there’s always backlash.

3. Michael Ochs:

   These people live among us, and when they’re intelligent like Gary was, it’s an even more dangerous combination because they can get away with it for a long period of time and go unnoticed… But sooner or later, they will make a mistake.

4. Jerry Cibulski:

   My clients are coming out of Manhattan and Brooklyn and they are looking for that combination of indoor and outdoor living, they want to go get fresh produce off the organic farms. Or go pick blueberries, then make breakfast from that.

5. An AstraZeneca spokeswoman:

   This supports our combination-focused strategy in oncology to help explore potential new treatment options, whilst keeping the cost of new therapies low enough to enable access for patients and payers.

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Translations for combination

From our Multilingual Translation Dictionary

• مزيجArabic
• съединение, комбинация, обединениеBulgarian
• combinacióCatalan, Valencian
• kombinaceCzech
• Kombination, VereinigungGerman
• τρίκυκλοGreek
• combinaciónSpanish
• sobitama, järjestus, kombinatsioon, kooslus, kombineerimaEstonian
• ترکیبPersian
• ratsastus, kombinaatio, yhdistäminen, yhdistely, yhdistelmä, yhdistysFinnish
• combinaisonFrench
• combinaciónGalician
• संयोगHindi
• combinazioneItalian
• 統合, 結合, 合併Japanese
• combinatioLatin
• kombinasjonNorwegian
• vereniging, verbinding, combinatieDutch
• kombinasjonNorwegian Nynorsk
• combinaçãoPortuguese
• combinație, combinareRomanian
• сочетание, объединение, соединение, комбинацияRussian
• kombinering, kombinationSwedish
• birlik, dernek, birleşim, cemiyet, kombinasyon, birleştirmeTurkish

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