SS2 First Term Commerce Lesson Note – Trade Associations and Other Enterprises

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WEEK 4

SUBJECT:      SS II

TOPIC: TRADE ASSOCIATIONS AND OTHER ENTERPRISES

CONTENT:

• Consortium
• Cartel
• Amalgamation/merger/combine
• Trust
• Holdings

SUB-TOPIC 1: CONSORTIUM

Meaning of consortium:

It is an association of firms that pool their financial resources together to finance a project they cannot embark upon individually as a result of the project complexity or financial requirement.

Resources for forming a consortium

1. To finance a project, which requires a large capital outlay.
2. When the project is technically complex

SUB-TOPIC 2: CARTEL

Meaning of cartel

A cartel is the association of firms, producers etc, in the same line of business formed to acquire or possess a monopoly business power. Cartel will arise where there are very few sellers or firms in one line of trade. Cartel was first developed in Germany.

The main purpose of cartel is to

1. Regulate the prices of their products by controlling output of members.
2. To ensure higher profit for members.

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