Home > Q&A > Business > Why do firms purchase other corporations?
Cite this
Q

Why do firms purchase other corporations?

A

Firms acquire, merge, and purchase other companies for various reasons; the main reason is to have improved sales revenue and business gains. The following are the main reasons why firms decide to buy others in the same line:

  • To improve their sales concentration by reducing competition
  • To enjoy economies of scale that is likely to result from an increased business after the purchase
  • To enjoy operational benefits that might be with the sold company
  • To consolidate the market and enjoy management efficiencies that might come with the new acquisition

When a purchase is made, both companies conduct the exercise with mutual benefits to have a better company than when they are operating independently.

Answer's rating:

IvyPanda
IvyPanda
Answered by IvyPanda
One of our experts with a specialization in Business has kindly provided an answer to this question. Feel free to rate the answer and let us know if you liked it.

Cite This paper

Select a citation style:

Reference

IvyPanda. (2020, May 14). Why do firms purchase other corporations? https://ivypanda.com/q/why-do-firms-purchase-other-corporations/

Reference

IvyPanda. (2020, May 14). Why do firms purchase other corporations? Retrieved from https://ivypanda.com/q/why-do-firms-purchase-other-corporations/

Work Cited

"Why do firms purchase other corporations?" IvyPanda, 14 May 2020, ivypanda.com/q/why-do-firms-purchase-other-corporations/.

1. IvyPanda. "Why do firms purchase other corporations?" May 14, 2020. https://ivypanda.com/q/why-do-firms-purchase-other-corporations/.


Bibliography


IvyPanda. "Why do firms purchase other corporations?" May 14, 2020. https://ivypanda.com/q/why-do-firms-purchase-other-corporations/.

References

IvyPanda. 2020. "Why do firms purchase other corporations?" May 14, 2020. https://ivypanda.com/q/why-do-firms-purchase-other-corporations/.

References

IvyPanda. (2020) 'Why do firms purchase other corporations'. 14 May.

Check the price of your paper