When one firm buys out another because it is thought that the two firms will complement each other in such a way that the output of the combined firms will be greater than the sum of the current individual outputs of the two companies,the managers are counting on
A) synergy.
B) closed system inversion.
C) entropy.
D) subsystem enhancement.
E) open system conversion.

Question

Quizplus · Accepted Answer

The concept described in the scenario is that of synergy, where the combined output of the two firms is expected to be greater than the sum of their individual outputs. Synergy is a commonly cited reason for mergers and acquisitions. The other options listed (closed system inversion, entropy, subsystem enhancement, and open system conversion) are not relevant to the scenario described.

When One Firm Buys Out Another Because It Is Thought