Law
Advantages and Disadvantages for Shareholders in Control Group Essay Type Questions

Question Description

I’m trying to study for my Law course and I need some help to understand this question.

- Answer the following Essay Type Questions:


1- Write down and explain the advantages and disadvantages for shareholders in the control group. (2.50 marks)

2- Illustrate the different types of mergers in details, mentioning how- when - why it occurs? (2.50 marks)

3- Explain in details the two types of corporate litigation. And illustrate the nature of the derivative suit. (2.50 marks)

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Final Answer

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Running head: ESSAY TYPE QUESTIONS

Essay Type Questions
Student’s Name
Institutional Affiliation

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ESSAY TYPE QUESTIONS

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Essay Type Questions

1. Write down and explain the advantages and disadvantages for shareholders in the
control group. (2.50 marks)
Advantages


The control shareholders assist in the effective management of the corporation.
Controlling shareholders is the person or a group of individuals that own majority shares
in an organization, leading to the domination or control of the group. Such fact means
that the success or failure of an organization would affect their revenues and income the
hardest compared to other shareholders (Brueller, Carmeli & Drori, 2014). They,
therefore, help the management in making appropriate decisions that promote sustainable
business. The group is also critical in developing a risk management strategy that is
significant in reducing losses for the company.



The control shareholders help to cut management costs in the organization. The group is
involved in direct control and monitoring of the corporation, to enhance organization
performance and efficiency. Besides, there is no distinction between control and
ownership of the company (Brueller, Carmeli & Drori, 2014), which means that the
group is involved in direct control and management of business operations.

Disadvantages


Existence of control shareholders may lead to conflict of interests in the business. This is
due to the fact that other shareholders might feel aggrieved or dissatisfied with the
decisions made by the control group. The separation of powers and roles between the
management and company ownership does not exist in this set up as the shareholders

ESSAY TYPE QUESTIONS

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exert influence and direct control over the organization (Brueller, Carmeli & Drori,
2014). Such issues make monitoring of the company operations difficult, which may
threaten the growth and sustainability of the company.

2. Illustrate the different types of mergers in details, mentioning how- when - why it
occurs? (2.50 marks)
a) Horizontal Merger
This type of merger happens in organizations that are direct competitors in the industry. The
merger happens when the companies want to consolidate their resources to generate more
superior products or services (Milliou & Petrakis, 2007). Horizontal merger is critical in
reducing cost of business, increasing market share in the industry, and enhancing maximum
utilization of economies of scale.
b) Vertical Merger
This merger happens for companies that are in different sectors but with a similar supply chain.
The companies are, therefore, not direct competitors over each other in the industry. The merger
is achieved when two or more organizations combine ...

Gilmore (20804)
Cornell University

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