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Why Merge? Consumer and Business view Well in business terms “one plus one equals three”, an idea known as ‘synergy’, this means that two businesses joining together will create a stronger business. The new organisation which will result from the merger or takeover is expected to be more effective than the simple addition of its two constituent parts. There are great advantages to merging and the one that is most commonly known is economies of scale! Yes I hear accounts scream, it means that with a new larger organisation you get to bulk buy in greater numbers than originally, therefore, you can ask for a cheaper price, reducing fixed costs, giving higher profits or a lower price to the consumer, a good example of this is Tesco. Tesco is now ‘numerically’ classed as a monopoly, buy numerically I mean “a monopoly is a firm that reaches 25% market share or more”. This is the point we all look towards as managers. Consumers hope for this also because it usually leads to price cuts. Perfect competition among the numerical monopolies may be best for the consumer.

Contributed by legendary on March 5, 2008, at 5:23 PM UTC.

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