Practicing Success
Practicing Success
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| The footwear industry in India is dominated by "Comfy Footwear". "Comfy Footwear" procures 75% of its raw material from "Polimeers Ltd". The major production of "Polimeers Ltd". is plastic sole, PU foam and elastic which is used by "Comfy Footwear" in its manufacturing processes. After due diligence, they decide to merge with each other. If they merge, "Comfy Footwear" doesn't need to look for a vendor and sourcing raw materials would be seamless. On the other hand, as a result of the merger, "Polimeers Ltd. doesn't need to worry about the sales and marketing. All they need to do is to improve their processes to produce better raw materials for "Comfy Footwear". After the merger the combined entity will be known as "Comfymeers Inc". Identify the reason behind the merger between the two firms. |
Increase in market share Decrease in competition Operational synergy None of the above |
| Operational synergy |
| Explanation: Operating synergy - refers to the cost savings that come through economies of scale. |
