Benefits Of Synergy

Abstract: Benefits of synergy are many. To promote the theory of “two plus two equals five”, into a phenomenon, synergy plays an important role. Starting from cost effectiveness to developing latest technology, a lot can be achieved by adopting the concept of synergy.

Synergy allows a merger or an acquisition to be cost effective. It also increases profit of the companies. Synergy is a latent force, whose benefits cannot be denied. Benefits of synergy are many and some of them are summarized below: Reduction in the number of workers: Whenever one hears of a merger or an acquisition, it is an accepted fact that there ought to be restructuring of the work force. By work force, we not only mean the employees but also the managers at the top level and middle level. In fact the Chief Operating Officer or the CEO may also be shuffled. Whatever be the case, by laying off, the merging companies save a lot of money. This clearly indicates the benefits of synergy. Exploring new avenues and opening new vistas: Whenever one company merges with another, there are many areas, which may be totally unknown to the new company. As a result of synergy, the new companies better their skills in distribution and marketing thereby leading to increased opportunities in sales. Benefits of synergy is also evident from the fact that as a result of the mergers, investment opportunities of the new companies also increases. Economies of scale: Benefits of synergy is also manifested when the purchasing power of the new companies is enhanced. If a bigger company places order, the negotiation of prices can be done more effectively. More over, placing bulk orders prove to be effective. New Technological know how: In the event when a bigger company merges with a company whose size may be small but whose technological know how can propel the new company ahead, the benefits of synergy comes into play. By adopting the latest technology, the newly formed company have a better competitive edge over the other companies.

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Last Updated on : 29th July 2013