Question

Advantage and disadvantages of business combination

Answer 1

advantages of business combination:-

1. Competition between and among the companies will be eliminated.

2. Amount of capital can be increased by combining business.

3. Establishment and management cost can be reduced.

4. Benefits of large scale production can be secured.

5. Operating cost can be reduced by avoiding duplication.

disadvantages of business combination:-

1. Business combination brings monopoly in the market, which may be harmful for the society.

2. The identity of the old company finishes.

3. Goodwill of the old companies decrease.

4. Management of the company becomes difficult.

5. Business combination may result in over-capitalization.