Advantages And Disadvantages Of Business Combination
The main objective of business combination is to eliminate cut-throat competition and secure theadvantages of large scale production. Following are the 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.
6. Research and development facilities are increased.
7. Monopoly in the market can be achieved.
8. Bulk purchase of materials at reduced price is possible.
9. Stability of the price of goods is maintained.
Following are the 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
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.
6. Research and development facilities are increased.
7. Monopoly in the market can be achieved.
8. Bulk purchase of materials at reduced price is possible.
9. Stability of the price of goods is maintained.
Following are the 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
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