Question

What is synergy? In the context of a divisional corporation, explain in detail how does the...

What is synergy? In the context of a divisional corporation, explain in detail how does the corporation achieve synergy.

Homework Answers

Answer #1

Synergy refers to the scenario in which multiple components work in harmony. It refers to working in a group for mutual gain. The benefit of two or more things working together shall be better than working in an isolated manner.

In cororate world synergy can be attained by amalgamations and mergers/acquisitions. Two or more companies may join together in the arrangement of merger and can work together aiming for larger market coverage and thereby increase the total revenue. Economy of scale shall be attained since the fixed costs shall be common to both the companies and thereby most of the costs can be avoided. Sharing technical knowhow, customer base etc helps in a productive manner. Managers in the companies shall work in synergy with the subbordinates and with the higher level management to attain enterprise objectives.

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