What mergers, joint ventures and acquisitions all have in common, is that they each involve the dramatic restructuring of a company or organization, but in very different ways. A merger refers to an agreement between two companies to combine their resources, in order to arise as a more powerful and dominant marker player. For example, when Air France and KLM-Royal Dutch Airlines merged in May 2004 to form the Air France-KLM group, they automatically became continental Europe's largest carrier. This merger, however, turned out to be more of an acquisition, in that Air France remains the dominant player in the holding company, and the firm is based at the Paris Charles de Gaulle Airport, rather than in Amsterdam.
A joint venture, in contrast, is when two otherwise independent companies or entrepreneurs join forces in order to cooperate on a common project or in providing a specific service. In many cases, a new firm or organization is actually created, and both of the independent founders have a stake in this joint company. All revenue which is not re-invested into the firm is then divided between the founders. A good example of a joint venture is Verizon Wireless. In this case, Verizon teamed up with Vodafone to provide a mobile communication service.
An acquisition is simply when a more dominant company purchases a smaller firm, which also happens to be a competitor. By removing a key competitor from the market, the larger company increases its dominance. For instance, in October 2008 Delta Air Lines bought Northwest Airlines, and as such, it will eventually phase out the latter's independent brand name.
A joint venture, in contrast, is when two otherwise independent companies or entrepreneurs join forces in order to cooperate on a common project or in providing a specific service. In many cases, a new firm or organization is actually created, and both of the independent founders have a stake in this joint company. All revenue which is not re-invested into the firm is then divided between the founders. A good example of a joint venture is Verizon Wireless. In this case, Verizon teamed up with Vodafone to provide a mobile communication service.
An acquisition is simply when a more dominant company purchases a smaller firm, which also happens to be a competitor. By removing a key competitor from the market, the larger company increases its dominance. For instance, in October 2008 Delta Air Lines bought Northwest Airlines, and as such, it will eventually phase out the latter's independent brand name.
