Objectives of Business Combination - QS Study
QS Study

Objectives of Business Combination

The Fundamental objective of forming a business combination is to maximize profits in one way or other ways. Moreover, there are some objectives of business combination helps to identify the business combination individual than others. In this regard, Mr. Shunil Mukharjee said that “The togetherness of the same target oriented businesses toward the achievement of the same goal and the related all consistent business practice is called the business combination.”

The Objectives of the business combination are discussed below:

Ablution of competition: A Business combination is made to maximize profit and reduce risk and unnecessary competition with the competitors. That competition creates production cont and increases the marketing cont so resources will be destroyed. So the rate of profit will be decreased. By making business combination business can about the composition.

Development of business efficiency: By forming business combination small business organizations can create combination then invest their capital and knowledge in creating large business organization. Thus the economic and technological capacity of a business will be increased.

Ensuring continuous supply of raw-materials: Continuous supply of raw materials is essential for the continuous production of goods. Some time industries create an artificial crisis of raw materials by adverse competition. By forming combination owners of industry can reduce the crisis of raw-materials by quota system so the business combination can ensure a continuous supply of raw materials.

Gaining advantages of large-scale business: It is impossible for small industries of producing large-scale production. Small business can produce large-scale production by making a business combination. Moreover in large-scale production cost will be reduced. So the profit of business combination will be increased.

Attaining highest profit: Combination is formed at the time when most of the business owner find no alternative but to carry on business sustaining loss or minimum profit. This leads the small business owner to form a group for the benefit of all and thereby helping economics and elimination wasteful competition among them.

Creating pressure on government: the Industrial sector is affected by trade policy, industrial policy and tax policy of the government. But sometimes government prepares this policy which goes against business persons. To give pressure government to prepare this policy of which help business people it is necessary to combine themselves.

Attaining benefits of monopoly business: By combining business people can create monopoly market. The capture market has many competitors that become hard to enter into this market. Then it gives extra benefit to the business.

Expansion of Market: Business combination can expand the market for goods and services to the country and outside the country. For globalization whole world becomes a global market. So to enter the international market business combination is used as a means to enter that market. It is very difficult to enter the global market as a small industry.

Developments of skill: Development of skill is possible by creating a business combination. Because of large industries or corporation can be established by business combination. By work diversification skill of the workers, will-be developed.

An economy in distribution expenses: Nowadays substantial amount of money is spent for the distribution of the commodities. Almost all the firms require spending some amount of the advertisement, salesmanship etc. which raises the costs of distribution. This can be reduced to a great extent if the advertisement is done collectively and channels of distribution one brought down to the minimum. This is possible in a combination.