'Synergies' occur when the output of some units in a firm can be used as inputs to other units,lowering cost and generating profits.

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Synergies are often created within a firm when different units or departments work together in a coordinated way, combining their efforts and resources to achieve a common goal. This can result in cost savings and increased profits, as each unit can benefit from and build on the contributions of others. For example, a manufacturing company may have a logistics department that can use the production output of a factory to find more efficient ways of transporting finished goods to customers, reducing transportation costs and increasing profits. Similarly, a technology company may have a research and development department that can use the innovations of its engineering team to create new products or services, leveraging the company's resources and expertise to expand its business and grow its market share.

'Synergies' Occur When the Output of Some Units in a Firm