The elimination of overlapping functions and the meshing of two firms' strong areas or products creates the managerial incentive for mergers known as
A) horizontal integration.
B) vertical integration.
C) synergy.
D) the portfolio effect.

Question

Quizplus · Accepted Answer

The managerial incentive for mergers known as synergy refers to the creation of greater value or increased efficiency through the elimination of duplicate functions or the combination of strong areas or products of two firms. Horizontal and vertical integration refer to different types of mergers, while the portfolio effect generally refers to the diversification benefits of holding a variety of assets. Therefore, the best choice is C.

The Elimination of Overlapping Functions and the Meshing of Two