{"id":3109,"date":"2023-10-04T11:05:34","date_gmt":"2023-10-04T11:05:34","guid":{"rendered":"http:\/\/localhost\/ecole9ja\/?p=3109"},"modified":"2023-10-04T11:07:45","modified_gmt":"2023-10-04T11:07:45","slug":"week-6-ss2-second-term-commerce-notes","status":"publish","type":"post","link":"https:\/\/ecolebooks.com\/nigeria\/posts\/week-6-ss2-second-term-commerce-notes\/","title":{"rendered":"Week 6 – SS2 Second Term Commerce Notes"},"content":{"rendered":"

\u00a0WEEK SIX\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0Date: ____________
\n<\/strong>TOPIC: INDUSTRIAL COMBINATIONS\/INTEGRATION
\n<\/strong>CONTENT
\n<\/strong>1.\u00a0\u00a0\u00a0\u00a0Definition
\n2.\u00a0\u00a0\u00a0\u00a0Reasons for industrial combinations
\n3.\u00a0\u00a0\u00a0\u00a0Forms of industrial combinations<\/p>\n

\u00a0INDUSTRIAL COMBINATION<\/strong>
\n\t\tIndustrial combination (or integration) is the coming together of two or more firms in order to form one large economically stable firm.<\/p>\n

\u00a0REASONS FOR INDUSTRIAL COMBINATION
\n<\/strong>1.\u00a0\u00a0\u00a0\u00a0Firms may integrate in order to fight economic recession
\n2.\u00a0\u00a0\u00a0\u00a0The desire to reap the advantage of monopoly
\n3.\u00a0\u00a0\u00a0\u00a0To obtain stable prices.
\n4.\u00a0\u00a0\u00a0\u00a0To obtain raw materials from direct sources.
\n5.\u00a0\u00a0\u00a0\u00a0To reduce cost of production and increase profits
\n6.\u00a0\u00a0\u00a0\u00a0To meet statutory capital requirements necessary for operations e.g. banks
\n7.\u00a0\u00a0\u00a0\u00a0In order to achieve large scale of production.<\/p>\n

\u00a0COMBINATION OF FIRMS
\n<\/strong>1.\u00a0\u00a0\u00a0\u00a0Vertical Combination:<\/strong> This refers to the joining together of firms which are engaged in different stages of production\/distribution.
\nWhere the manufacturer secures control of the firm supplying him with raw materials the integration is said to be backward integration on the other hand, where the manufacture takes control of the demand for his product by taking over a firm that sells his products, the integration is a forward integration.
\n2.\u00a0\u00a0\u00a0\u00a0Horizontal Combination:<\/strong> This refers to the combination of firms at the same stage of the production process.
\n3.\u00a0\u00a0\u00a0\u00a0Lateral Combination:<\/strong> This is the fusion of firms in different lines of business.<\/p>\n

\u00a0FORMS OF INDUSTRIAL COMBINATIONS
\n<\/strong>1.\u00a0\u00a0\u00a0\u00a0Cartel (Kartel):-<\/strong> This is a voluntary association of firms engaged in the production and sale of the same product. The firms coming together retains their individual identity and independence e.g OPEC <\/strong> (Organisation of Petroleum Exporting Countries).<\/p>\n

\u00a0REASONS FOR FORMING CARTELS\/AIM OF CARTEL
\n<\/strong>a.\u00a0\u00a0\u00a0\u00a0To control prices i.e. to keep up the prices of their products
\nb.\u00a0\u00a0\u00a0\u00a0 Control output through the use of production quotas
\nc.\u00a0\u00a0\u00a0\u00a0To eliminate competition thereby reducing wastes
\nd\u00a0\u00a0\u00a0\u00a0To maximize profit for members
\ne\u00a0\u00a0\u00a0\u00a0To serve as a Political\/Economic bloc capable of influencing world\/economic affairs
\nf.\u00a0\u00a0\u00a0\u00a0To assist member countries and non-member countries and to improve trade relationship among members.
\ng.\u00a0\u00a0\u00a0\u00a0To maximize productive efficiency of members
\nh.\u00a0\u00a0\u00a0\u00a0To stabilize the market and the industry.<\/p>\n

\u00a02.\u00a0\u00a0\u00a0\u00a0Trust:-<\/strong> This is a large amalgamation of different competing firms in different lines of business under a single control. In Trust, the merging firms will retain their identities but the trustee will take over the management and control i.e. the amalgamated firms are brought under a central control. Certificate will be issued to all members by the trustee.<\/p>\n

\u00a0DIFFERENCES BETWEEN CARTEL AND TRUST <\/p>\n

\n\n\n\n\n\n\n\n\n
\u00a0<\/td>\nTrust \u00a0<\/td>\nCartel\u00a0<\/td>\n<\/tr>\n
1.\u00a0<\/td>\nMembers will lose their independence <\/td>\nMembers will still maintain their independence.\u00a0<\/td>\n<\/tr>\n
2.\u00a0<\/td>\nTrust is a complete merger \u00a0<\/td>\nIt is voluntary and members can withdraw \u00a0<\/td>\n<\/tr>\n
3.\u00a0<\/td>\nIt has a vertical or lateral structure \u00a0<\/td>\nIt is horizontal in structure \u00a0<\/td>\n<\/tr>\n
4.\u00a0<\/td>\nCertificates are issued \u00a0<\/td>\nNo certificate is issued<\/td>\n<\/tr>\n
5.\u00a0<\/td>\nThere is no quota system\u00a0<\/td>\nThere is production quotas \u00a0<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/div>\n

<\/strong>
\n\u00a0AIMS\/OBJECTIVES OF TRUSTS<\/strong>
\n\t\t\ta.\u00a0\u00a0\u00a0\u00a0To bring the merging firms under central control.
\nb.\u00a0\u00a0\u00a0\u00a0To eliminate unhealthy competition.
\nc.\u00a0\u00a0\u00a0\u00a0To bring about increased and efficient production.
\nd.\u00a0\u00a0\u00a0\u00a0To reduce cost and eliminate waste.
\ne.\u00a0\u00a0\u00a0\u00a0To maximize profit.<\/p>\n

\u00a0EVALUATION
\n<\/strong>1.\u00a0\u00a0\u00a0\u00a0What is a cartel?
\n2.\u00a0\u00a0\u00a0\u00a0State three reasons for the existence of a cartel.<\/p>\n

\u00a03.\u00a0\u00a0\u00a0\u00a0Consortiums:-<\/strong> These are teams of independent firms who combine resources together to execute a project which is either too large or too complex for an individual firm to handle. When the project is fully executed. The profit\/loss is shared and the consortium is dissolved.
\n4.\u00a0\u00a0\u00a0\u00a0Price Rings:- <\/strong>These are formed when completing firms producing similar products come together and agree to fix uniform prices for their products. They usually set minimum prices below which no member may sell.
\n5.\u00a0\u00a0\u00a0\u00a0Holding Company:-<\/strong> These are firms that have brought controlling interest (equity shares)<\/em><\/strong> of 51% or more in other firms known as their subsidiaries. They are purely investment organizations.
\n6.\u00a0\u00a0\u00a0\u00a0Amalgamation\/Merger:-<\/strong> This refers to the fusion (joining together) of two or more previously independent firms to form one new firm with the old firms completely losing their former individual identities. The new firm usually takes a new name.<\/p>\n

\u00a0REASONS WHY FIRMS MERGE\/ADVANTAGES OF MERGERS <\/strong>
\n\t\t\ta.\u00a0\u00a0\u00a0\u00a0To raise large capital.
\nb.\u00a0\u00a0\u00a0\u00a0To control a larger share of the total market for a product.
\nc.\u00a0\u00a0\u00a0\u00a0To encourage research and development.
\nd.\u00a0\u00a0\u00a0\u00a0To enjoy the advantages of large scale production e.g. lower cost of production\/managerial economies of scale.
\ne.\u00a0\u00a0\u00a0\u00a0It lowers the cost of production.
\nf.\u00a0\u00a0\u00a0\u00a0It discourages unhealthy competition and eliminates wastes.
\ng.\u00a0\u00a0\u00a0\u00a0To diversify the activities of the firm into other areas.
\nh.\u00a0\u00a0\u00a0\u00a0To mobilize a pool of specialized managerial skill drawn from the previously independent firms.
\ni.\u00a0\u00a0\u00a0\u00a0It prevents over production.
\nj.\u00a0\u00a0\u00a0\u00a0It saves the cost of advertisement.
\nk.\u00a0\u00a0\u00a0\u00a0It leads to control of outputs and stabilize prices.
\nl.\u00a0\u00a0\u00a0\u00a0To increase the efficiency of management where the acquired company is poorly managed.
\nm.\u00a0\u00a0\u00a0\u00a0Centralized management.<\/p>\n

\u00a0DISADVANTAGES OF MERGERS\/INDUSTRIAL COMBINATIONS
\n<\/strong>a.\u00a0\u00a0\u00a0\u00a0It leads to monopoly.
\nb.\u00a0\u00a0\u00a0\u00a0It does not encourage specialization.
\nc.\u00a0\u00a0\u00a0\u00a0It denies consumers their right to make choice.
\nd.\u00a0\u00a0\u00a0\u00a0Absence of competition may reduce the quality of products.
\ne.\u00a0\u00a0\u00a0\u00a0It can lead to unemployment as some employees can be laid off.
\nf.\u00a0\u00a0\u00a0\u00a0It may force some other firms out of business.
\ng.\u00a0\u00a0\u00a0\u00a0Greater difficulty in managing a large firm will lead to a decline in efficiency.
\nh.\u00a0\u00a0\u00a0\u00a0Exploitation of consumers by monopolies.
\ni.\u00a0\u00a0\u00a0\u00a0Danger of over \u2013capitalization.<\/p>\n

\u00a0EVALUATION
\n<\/strong>1.\u00a0\u00a0\u00a0\u00a0State five differences between cartel and trust.
\n2.\u00a0\u00a0\u00a0\u00a0Explain three reasons why some businesses merge.<\/p>\n

\u00a0GENERAL EVALUATION QUESTIONS
\n<\/strong><\/p>\n

    \n
  1. \n
    Explain five factors affecting the choice of transportation of frozen products\n<\/div>\n<\/li>\n<\/ol>\n
      \n
    1. \n
      State five disadvantages of air transport\n<\/div>\n<\/li>\n
    2. \n
      State seven features of a public corporation\n<\/div>\n<\/li>\n
    3. \n
      List and explain six new trends in retailing\n<\/div>\n<\/li>\n
    4. \n
      State five features of a mail order business\n<\/div>\n

      \u00a0WEEKEND ASSIGNMENT
      \n<\/strong>1.\u00a0\u00a0\u00a0\u00a0A group of firms working together on a project too large or too complex for a single firm to undertake is referred to as (a) Consortium (b) Conglomerate (c) Co-operative (d) Partnership.
      \n2.\u00a0\u00a0\u00a0\u00a0The coming together of two or more companies to form one big viable company is known as (a) Association (b) Cartel (c) Merging (d) Trust.
      \n3.\u00a0\u00a0\u00a0\u00a0What is NOT <\/strong>an advantage of combinations (Monopolies) (a) Better opportunity to expand operations (b) Fall in the cost of selling (c) Pool of specialized managerial skills (d) danger of over-capitalization.
      \n4.\u00a0\u00a0\u00a0\u00a0Which of the following takes place when firms producing at different stages in the same industry combine (a) Conglomerate (b) Vertical integration (c) Horizontal Integration (d) Cartel.
      \n5.\u00a0\u00a0\u00a0\u00a0The merger of two companies producing the same type of product is an example of (a) Vertical integration (b) Horizontal integration (c) Lateral merger (d) An acquisition<\/p>\n

      \u00a0THEORY
      \n<\/strong>1.\u00a0\u00a0\u00a0\u00a0What is a business merger?
      \n2.\u00a0\u00a0\u00a0\u00a0Give three disadvantages of business merger<\/p>\n

      \u00a0READING ASSIGNMENT
      \n<\/strong>1.\u00a0\u00a0\u00a0\u00a0Essential Commerce for SSS by O. A. Longe Page 180 \u2013 184
      \n2.\u00a0\u00a0\u00a0\u00a0Comprehensive commerce for SSS by J. U. Anyaele Page 331 \u2013 336.\n<\/li>\n<\/ol>\n

      \t\t\u00a0<\/p>\n","protected":false},"excerpt":{"rendered":"

      \u00a0WEEK SIX\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0Date: ____________ TOPIC: INDUSTRIAL COMBINATIONS\/INTEGRATION CONTENT 1.\u00a0\u00a0\u00a0\u00a0Definition 2.\u00a0\u00a0\u00a0\u00a0Reasons for industrial combinations 3.\u00a0\u00a0\u00a0\u00a0Forms of industrial…<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[1,250],"tags":[],"class_list":["post-3109","post","type-post","status-publish","format-standard","hentry","category-posts","category-second-term-ss2-commerce"],"aioseo_notices":[],"_links":{"self":[{"href":"https:\/\/ecolebooks.com\/nigeria\/wp-json\/wp\/v2\/posts\/3109","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/ecolebooks.com\/nigeria\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/ecolebooks.com\/nigeria\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/ecolebooks.com\/nigeria\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/ecolebooks.com\/nigeria\/wp-json\/wp\/v2\/comments?post=3109"}],"version-history":[{"count":1,"href":"https:\/\/ecolebooks.com\/nigeria\/wp-json\/wp\/v2\/posts\/3109\/revisions"}],"predecessor-version":[{"id":3110,"href":"https:\/\/ecolebooks.com\/nigeria\/wp-json\/wp\/v2\/posts\/3109\/revisions\/3110"}],"wp:attachment":[{"href":"https:\/\/ecolebooks.com\/nigeria\/wp-json\/wp\/v2\/media?parent=3109"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/ecolebooks.com\/nigeria\/wp-json\/wp\/v2\/categories?post=3109"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/ecolebooks.com\/nigeria\/wp-json\/wp\/v2\/tags?post=3109"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}