Econimics-Merger Between AOL A

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FastTrack servers
� Netscape Development Tools
� Netscape Commerce Applications
At the present, Netscape Communications is a supplier of AOL Inc. Netscape is upstream from AOL; Netscape supplies its Internet browser (Netscape Navigator or

Netscape Communicator) to AOL. AOL is being charged a fee for the use of Netscape's product. This fee is based both on a fixed and a variable component.
Netscape is currently undervalued as a company, but has valuable technology and resources that AOL can incorporate into its offering to its consumers. America Online's proposed $4 billion acquisition of Netscape would offer a graceful and lucrative exit for an Internet pioneer that's been foundering for a year. This will give AOL a chance to advance its position in the browser/content market. Furthermore, It would also fortify AOL's arsenal against an increasingly aggressive foe: Microsoft.
Analysis and Recommendations
The main issue of concern is whether or not it is beneficial ...

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and at work.
The proposed merger will advance AOL's multiple-brand strategy with one of Internet's best known brands; Netscape. This combination will increase the variety of products that AOL provides to the global market. These various products will allow AOL to benefit from economies of scope as the total cost of producing these products will definitely be lower when one company produces them than the two producing them individually. The company may be able to lower costs by fully utilizing its resources (labour, materials, etc.) and fixed costs. Products requiring similar Research and development efforts and technology may also be less costly as such efforts are not duplicated. ...

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