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Business Combination

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Business Combination Unification or several business units which are similar or different in nature, in order to serve a common purpose of all the units. It may be simple or complex. Cause of combination ‡ ‡ ‡ ‡ ‡ ‡ ‡ ‡ ‡ ‡ ‡ ‡ Facing Competition. Growth of joint stock company. Promoting economic growth. Self defense of the individual units. Desire for prestige and power. To obtain economies of scale. To combat depression and recession. Research and development Finance Pool Cost reduction Prof
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  Business Combination Unificationorseveralbusinessunitswhicharesimilarordifferentinnature,inordertoserveacommonpurposeofalltheunits.Itmaybesimpleorcomplex.  Cause of combination  Facing Competition.  Growth of joint stock company.  Promoting economic growth.  Self defense of the individual units.  Desire for prestige and power.  To obtain economies of scale.  To combat depression and recession.  Research and development  Finance Pool  Cost reduction  Profiteering motive  Government policy  A dvantages  It provides economies of large scaleproductionand operation  Risk of overstocking is minimisedand distributedamong the units  Profitability enhance due to joining of hands  It closed down the inefficient unit.  It promotes foreign trade and helps t build upforeign currency  It maximize the value of share  Disadvantages  It promotes higher price for goods andservices due to absenseof competition  It provides opportunity t practice unfairmeans by the combined unit.  Its difficult to manage a huge size combinedunit  It encourages imperialism , bureaucracy andmonopoly
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