Advantages/merits of merging of firms
- It helps to expand the market in form of increased sales resulting from large firms.
- It increases employment opportunities as a result of large scale production.
- It increases utilization of resources hence increased output.
- It helps to minimize unnecessary competition among firms producing related products in form of duplication of commodities.
- It ensures reliable supply of raw materials.
- It improves efficiency in management. This is because people of different expertise and experience are combined together under the merger.
- It reduces the cost of advertising for individual firms.
- It enables firms to carry out research jointly at a reduced cost.
- It enables firms to access capital (loans) from financial institutions as a result of merging.
- It enables the firms to share risks involved in production.
- It enables firms to access the use of better techniques of production.
- It increases profits of each firm due to large scale production.
- It promotes specialization among firms which increases the level of output.
CATEGORIES Economics
TAGS Dr. Bbosa Science
