Multiple choice

A company engaged in alcohol manufacturing merged with a cigarette manufacturing firm. What type of a merger is this?

  1. Horizontal merger

  2. Product extension merger

  3. Market extension merger

  4. Vertical merger

Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

Market extension merger takes place between two companies that deal in the same product, but in separate markets. Product extension merger takes place between two business organisations that deal in products that are related to each other and operate in the same market. Horizontal merger occurs between firms who operate in the same space, often as competitors, offering the same goods or service. A vertical merger occurs when two or more firms, operating at different levels within an industry's supply chain, merge operations. Merger of an alcohol manufacturing firm with a cigarette manufacturing firm is an example of a product extension merger.