Question

‘Healthy Juice India Ltd.’ and ‘Asli Juice Ltd.’ are engaged in the production of fruit juice. Both the companies sell the juice in 1,000 ml tetra packs and are in direct competition. To avoid competition, the management of both the companies decided to merge and formed a new company ‘Asli Healthy Juice India Ltd.’. The new company decided to sell the fruit juice through the company owned outlets throughout the country.[All India 2015]

Answer 1

Answer :

1. The Enterprise Growth Strategy involved is Horizontal merger. Horizontal merger: This merger is between companies in the same industry. It is a type of business consolidation that occurs between firms which are competitors and offering the same goods or service. It is in the condition where competition tends to be higher and the potential gains in market share are much greater for merging firms in such an industry. Example: A merger between Coca-Cola and the Pepsi beverage division would create a new larger organisation with more market share.

2. There is Direct/zero level of distribution channel.

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