Tata was one of the low cost steel producers in the world and had self sufficiency in raw material. Corus was fighting to keep its production costs under control and was on the lookout of iron ore.

Identify the most appropriate reason for such a combination between TATA and Corus.

Operating synergy

The most appropriate reason for the merger between Tata and Corus is operating synergy.

Operating synergy occurs when two companies combine and are able to achieve lower costs or higher revenues than they could have achieved on their own. In this case, Tata was a low-cost steel producer with self-sufficiency in raw materials, while Corus was struggling to control its production costs and was looking for a source of iron ore. By merging, the two companies were able to combine Tata's low-cost production capabilities with Corus's access to iron ore. This would have allowed them to reduce their overall production costs and become more competitive in the global steel market.

The other options are not as appropriate:

• Acquiring new technology is a reason for a merger, but it is not the most appropriate reason for the merger between Tata and Corus. Tata and Corus were both well-established steel companies with their own technologies. The merger was not primarily about acquiring new technology.
• Entry into new markets is a reason for a merger, but it is not the most appropriate reason for the merger between Tata and Corus. Tata and Corus were both already operating in the same markets. The merger was not primarily about entering new markets.
• Financial synergy is a reason for a merger, but it is not the most appropriate reason for the merger between Tata and Corus. Financial synergy occurs when two companies combine and are able to achieve lower financing costs or higher stock prices than they could have achieved on their own. While the merger between Tata and Corus may have resulted in some financial synergies, the primary driver of the merger was operating synergy.