answersLogoWhite

0


Best Answer

The motive for a business combination, such as a merger, attempt to create a business with more value than the sum of the individual businesses alone.

This may occur because the combined business would have a broader set of products to offer, a greater reach in the market place, or lower production and overhead costs due to elimination of duplication and creation of economies of scale.

Interestingly, many combinations result in a total market value less than the sum of the original two. This happens because of cultural conflicts creating internal struggles and discord (known as "blue team vs. red team issues). It can also be due to creation of a company with more levels of management between the decision-makers and those with customer contact. In some cases customers of Company X cannot stand Company Y and refuse to do business with the new Combined Company.

User Avatar

Wiki User

11y ago
This answer is:
User Avatar

Add your answer:

Earn +20 pts
Q: What are the motives which lead to the formation of business combination?
Write your answer...
Submit
Still have questions?
magnify glass
imp