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Top Gear Comp, a tech firm, decides to invest some of its excess cash by acquiring a coffeehouse chain. This would be a ___________.

a) Horizontal Integration
b) Vertical Integration
c) Conglomerate Merger
d) Hostile Takeover

1 Answer

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Final answer:

Top Gear Comp's acquisition of a coffeehouse chain constitutes a conglomerate merger, which is when a firm diversifies by owning multiple unrelated businesses.

Step-by-step explanation:

If Top Gear Comp, a tech firm, decides to invest some of its excess cash by acquiring a coffeehouse chain, this would be a conglomerate merger. A conglomerate merger is when a firm owns at least four businesses making unrelated products, which allows the corporation to diversify its interests and protect against losses in specific markets. This stands in contrast to a horizontal merger where a company joins with another that produces the same kind of product and a vertical merger which involves companies joining at different steps of a manufacturing process to streamline production and distribution.

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