The following are good reasons for mergers:
I. Economies of scale
II. Economics of vertical integration
III. Complementary resources
IV. Surplus funds
V. Eliminating inefficiencies
VI. Industry consolidation

Question

Quizplus · Accepted Answer

All of the reasons listed are good justifications for mergers. Achieving economies of scale allows the merged company to spread fixed costs over a larger output, reducing per unit costs. Vertical integration can lead to greater efficiency and control over the supply chain. Complementary resources can fill gaps in capabilities, while surplus funds can be put to productive use in investments or reducing debt. Eliminating inefficiencies can enhance profitability and industry consolidation can result in a stronger, more competitive market.

The Following Are Good Reasons for Mergers