A merger adds value by creating synergies.Which of the following is not a possible source of synergy?
A) Economies of scale
B) Economies of vertical integration
C) Combined complementary resources
D) Diversification

Question

Quizplus · Accepted Answer

Diversification is not a source of synergy. In fact, diversification increases risks and heterogeneity, making it difficult to create synergies. The other answer choices (A, B, and C) are all possible sources of synergy. Economies of scale result in cost savings, economies of vertical integration help to strengthen the supply chain, and combined complementary resources can enhance innovation and competitiveness.

A Merger Adds Value by Creating Synergies