according to this theory if the management of firm a is more efficient than the firm b and if the firm a acquires firm b, the efficiency of firm b is likely to be brought up to the level of the firm a
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well this concept is called as 'synergy'. Here basic idea of this theory in simple terms is 2+2=5.
where 2 companies collaborate or acquire one with expectations or to basically optimize it's productivity. every company has got it's weakness and strengths! and accordingly companies pick there partner companies to boost it's working/operations or basically to make a firms Working more effective/efficient.
**example: HeroHonda! moto corp hero's. strength is it's distribution channel
Honda's strength is it's technology and at the same point it's weakness is its network and distribution channel! according they both collaborated with intention or expectation or producing/earning more that what they were getting doing business solely!
where 2 companies collaborate or acquire one with expectations or to basically optimize it's productivity. every company has got it's weakness and strengths! and accordingly companies pick there partner companies to boost it's working/operations or basically to make a firms Working more effective/efficient.
**example: HeroHonda! moto corp hero's. strength is it's distribution channel
Honda's strength is it's technology and at the same point it's weakness is its network and distribution channel! according they both collaborated with intention or expectation or producing/earning more that what they were getting doing business solely!
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