1)Your school decides to expand and open a new campus in another state. Rather t

Question

1)Your school decides to expand and open a new campus in another state. Rather than acquiring land and building new buildings, the school board decides to merge with an existing school that has similar programs in the other state. The school you're merging with is a small commuter school with no dorms. 98% of its students are not only instate, but from the city the school is located in. This merger would be best described as a: A. vertical merger. B. geographic market extension merger. C. horizontal extension merger. D. product market extension merger. E. conglomerate merger. 2)The Truth-in-Lending Simplification Act: A. permits debt collectors to contact third parties but the debt collector may not state that the consumer owes a debt. B. redefines the necessary items to be included in a finance statement. C. requires the First Bank of the United States to issue model disclosure forms. D. requires the imposition of fines for technical breaches of the Act. E. eliminates statutory penalties for purely technical violations of the Act.

Explanation / Answer

Ans: B. geographic market extension merger A vertical merger is the merger of companies producing different products or services that are required for the producing the same finished product, for example, merger of companies making fabric and garments. A geographic market extension merger, in a market extension merger two companies offering the same product in different market merge to get access to bigger customer base. In geographic market extension merger the companies are providing the same product and service in geographically different markets, merge together to get access to the customer base both the geographical locations. In a horizontal merger, companies offering the same or similar or compatible products or services in a market merge under single ownership to increase the market share or to increase the range of product offerings to the customer. Product market extension merger takes place between companies offering related products in the same market. This merger helps them capture more customer base and hence earn better profits. For example: a telecom provider merging with a handset manufacturer. Conglomerate merger is when companies entering the merging contract have unrelated products and business. This cannot be termed either as market or product extension mergers. In this case the school is expanding its geographical presence by merging with a school in another geographical location. Thus the product offering is same but the market locations are different. Hence this is a geographical market extension merger.

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