Company Concentration

In the term (corporate) concentrations are in the national economy to the agglomeration of economic powers. The reason for this merger is usually the stipulation of one-sided terms of contract that one would like to achieve.

Performed Concentrations for example, by companies acquired or new companies are formed. The state is, of course, not interested in the formation of such concentrations in the form of economic powers. Accordingly, he endeavors to prevent the formation of such as far as possible by all legal means. In the worst case, a concentration leads to a monopolistic position of the respective company.

Basically, the term "concentrations" differs between different types:

• Horizontal concentration


• Vertical concentration


• Conglomerate concentration

Horizontal concentration

With a horizontal concentration, two or more companies join together that are located on the same production stage. Thus the same products are produced both in one company and in the other. As a result, only a larger number of work equipment and employees is needed.

Vertical concentration

Unlike the horizontal concentration is in the vertical concentration to a merger of companies with upstream or downstream products. The purchased company does not produce the same products as the parent company. Example: A ship builder buys a supplier who supplies the company with raw materials.

Conglomerate concentration

Another type of business combination is the so-called conglomerate concentration. This is an acquisition outside the sector companies. A concentration of this kind exists, for example, when an oil company buys a forwarding company. From a conglomerate concentration arise Conglomerates , ie companies that are active in completely different industries.

Advantages of concentrations

While bringing together a number usually many risks and dangers, such as an impending monopoly with himself, but there are also some advantages. For example, a concentration offers the possibility of rationalization. In addition, better conditions are possible with possible financing. The prerequisite for this is, of course, that both companies are financially sound.