Unit 11

May 17, 2026

Modes of Business Combination

A) Associations

1. Trade Association
2. Chamber of Commerce
3. Informal agreements

B) Federations

1. Formal agreements
2. Pools
3. Cartels

C) Consolidations

1. Partials Consolidations
   a. Trust
   b. Holding Companies
   c. Community of Interest

2. Complete Consolidations
   a. Mergers
   b. Acquisition
   c. Amalgamation

Types of Business Combination

A) Horizontal

These companies operate at the same level of production, distribution or supply chain.

A) Vertical

A vertical combination occurs when companies operating at different stages of production or distribution of the same product combines together. There are two types of Vertical Combination:

1. Forward Combination: Forward integration takes place when a company moves forward in the supply chain, that is, closer to the final consumer.

2. Backward Combination: Backward integration occurs when a company moves backward in the supply chain, that is, towards the source of raw materials.

C) Circular

A circular combination is a type of business combination in which two or more companies engaged in different but related lines of business combine together. These companies do not produce the same product (like in horizontal combination), but their products are related in nature, use similar raw materials, or serve similar customers. Example: a company manufacturing shoes combines with a company producing leather bags. Both companies are engaged in different products, but they use similar raw materials (leather) and target similar customers.

D) Conglomerate

A conglomerate combination is a type of business combination in which two or more companies engage in completely different and unrelated businesses merge or combine together.