Business Combination: Objectives
The basic objective of combinations is the sustained profitable growth of the combining enterprises. This basic objective is realized by achieving economies of scale, reducing competition, preventing the entry of new firms and controlling the market.
The objectives of combinations are:
- Achieving sustained growth and profits.
- Reduction in competition.
- Preventing the entry of new firms by creating entry barriers.
- Achieving monopoly status.
- Undertaking large scale production and benefiting from economies of scale.
- Investing in common facilities and infrastructure.
- Avoiding cut-throat competition and the evils associated with it.
- Achieving greater financial strength and stability.
- Investing in research and development to innovate new products.
- Pooling of material and manpower to ensure efficiency in operations.
- Sharing knowledge of best practices for mutual benefit.
- Maintaining stability in prices.
- To withstand the effects of business cycles.