![]() ![]() Shared information technology: Each company in the merger can have its own proprietary access to information technology, potentially creating opportunities for operational efficiencies. Supply chain efficiencies: If one company has access to better supply chain relationships, the other company can take advantage of those relationships during a merger and streamline its own supply chain, benefiting from the associated cost savings. It also saves money if a company was paying a fee to access the patent. Patents: Access to patents can allow the merged organization to create more competitive products and generate more revenue. When companies that produce complementary products merge, they can bundle their products to generate higher sales. There are various types of synergy, including:Ĭomplementary geographies and customers: This occurs when two organizations with different geographies and customers merge and help increase consumer demographics and revenue for the new company.Ĭomplementary products: A complementary product is one that the consumer receives without having to pay directly for it. Related: What Is Strategic Acquisition? (Definition, Benefits and Tips) Types of synergy Synergy can affect the value of an organization, as it enables the company to produce higher cash flows from existing assets, higher rates of growth, longer growth periods or lower costs of capital.Īchieves the organizational vision and mission The effects of it can also boost employee morale, give companies a competitive advantage, increase customer satisfaction and expand market share. Synergy is important because it allows companies to achieve greater business efficiency and effectiveness as an organization. Related: The Potential Pros and Cons of a Corporate Merger Why is synergy important? An example of this is when a team is overly social and spends more time socializing and not enough time working. In situations where there is negative synergy, people or organizations can accomplish more if they work independently than when they work together. ![]() You can achieve synergy through factors like combined talent, combined technology, streamlined processes that allow for cost reduction and increased revenue. Shareholders can benefit from synergy, as a post-merger share price often increases because of the effect synergy has on the deal. Synergy is often the primary motivation behind pursuing a merger. It refers to how two or more companies can cooperate to produce results that are better or more effective than any they could have achieved on their own. Synergy is the working together of two or more parts, where the combined effort is greater than the effectiveness of the individual parts alone. In this article, we discuss synergy, why it's important, the different types of synergy and the requirements for accomplishing it, and we offer examples of how companies can implement synergy in the workplace. Whether you're considering a merger or just trying to increase efficiency within an organization, synergy can lead to reduced costs, streamlined processes and increased profitability. Creating synergy in the workplace can help an organization by combining efforts, and companies may find that collaborating is better than working alone. Synergy is the interaction of two parts working together to create something better than either original component. ![]()
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