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Sunday, 19 June 2011

Advantages or Merits of Combination or Business combination

Advantages of Business Combination :-
The advantages of combination are controversial because creation of monopoly and elimination of competition both are considered the merits and demerits of the combination. Any how following are the important merits of combination :

1. Increase in Capital :-
The volume of capital may be increased by the formation of combination. The members combine their resources to conduct large size business.

2. Elimination of Competition :-
By the formation of combination unnecessary competition is eliminated and member firms eran monopoly profit.

3. Saving in Expenses :-
Administrative production, and distribution expenses reduce due to combination.

4. Controls Over Production :-
Combination is very effective to control over production. It helps to adjust the supply according to the demand.

5. Large Scale Marketing :-
In the market competition position is strong in bargaining. So it sells the product at higher price.

6. Experts Services :-
A combination is able to acquire the services of experienced specialists. It increases the efficiency of the combination.

7. Research Work :-
A combination is able to spend money on research work which is very important for the business. This research work reduces its cost and increases its [profit.

8. Use of Modern Technology :-
A combination is capable to use the latest inventions and new methods of production. It will increase its profit.

9. Stability :-
A combination is more stable form of business as compared to the individuals units. The chances of dissolution are also less than others.

10. Division of Labour :-
The principle of division of labour is applied in combination which increases the production efficiency of combination.


Anonymous,  19 December 2013 at 06:15  

Its very helpfull......thnx

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