Major benefits or advantages of business combination can be expressed as follows:
1. Eliminate The Competition
Business combination helps to eliminate the possibility of cut-throat competition between or among two or more than two business companies of same nature.
2. Raise Capital
Business combination helps to raise large amount of capital which helps to expand business activities by acquiring new technology and adopting improved methods of production.
8. Control Over And Under Production
3. Cost Reduction
Large volume of production is possible because of business combination. So, production cost per unit can be reduced. Similarly, administrative, distribution and management costs can be minimized.
4. Low Purchasing Cost
Large scale purchase is possible because of business combination. It helps to reduce materials costs and transportation costs per unit due to bulk purchase of goods.
5. Fair Selling Price
Company can fix fair and reasonable amount of selling price for its products and services. Because of large scale production, low purchasing costs of raw materials, and low administrative and distribution expenses selling price can be fixed at minimum level.
6. Monopoly
Business combination helps to achieve monopoly in the market by eliminating competitors.
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7. Market Control
Business combination helps to control total market by using the power of monopoly. Company can control the market price and supply of its product.
Business combination helps to control over and under production of goods and services by adjusting demand and supply.
9. Increase Reputation
Business combination helps to increase goodwill, reputation and positive image of the company.
10. Stability
Business combination ensures the stability of the business because of large capital, large scale production, monopoly, regular production and proper supply of goods and services.
