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BBA 3rd Year Concept Of Synergy Short Question Answer

BBA 3rd Year Concept Of Synergy Short Question Answer Study Notes Types, evaluation of synergy, Capability Profiles, synergy as a component component of strategy and its relevance. Study material Unit-wise division of the content Semester Wise Notes Book code – 602

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BBA 3rd Year Concept Of Synergy Short Question Answer
BBA 3rd Year Concept Of Synergy Short Question Answer

Section-B Short Question Answer

Q.1. Discuss the various steps for estimating the value of synergy.

Ans. We can estimate the value of synergy in three steps:

  1. We value the firms involved in the merger independently, by discounting expected cash flows to each firm at the weighted average cost of capital for that firm.
  2. We estimate the combined firm, with no synergy, by adding the values obtained for each firm in the first step.

  1. We build in the effects of synergy into expected growth rates and cash flows and we revalue the combined firm with synergy. The difference between the value of the combined firm with synergy and the value of the combined firm without synergy provides a value for synergy.

It is important at this stage that we keep the value of synergy apart from the value of control, which is the other widely cited reason for acquisitions. The value of control is the incremental value that an acquirer believes can be created by running a target firm more efficiently. To value control, we just revalue the target firm with a different and presumably better management in place and compare this value to the one we obtain with the status quo-existing management in place. While we will not consider the value of control in this paper, there is a companion paper that examines it in detail, summarises the effects of synergy and control in valuing a target firm for an acquisition.

Q.2. What is capability profile? Explain in brief.

Ans. Capability profiles: The policy capability framework has been developed for public sector policy practitioners at levels 3 to 8 and above. It details capabilities required to build the capability and capacity of our policy workforce and ensure the workforce is able to think innvovatively about the way services to the community are designed, funded, delivered and evaluated.

The human resources capability framework for the WA public sector has been developed for level 1 to 7 and above to build the capability and capacity of our human resources workforce to ensure that the profession is well positioned to support the strategic directions of the western Australia public sector now and into the future.

The leadership capability profile provides a common language to support consistent whole-of- government leadership development and is designed to help ensure that the public sector has the leadership skill and values to meet future challenges.

The leadership development profiles have been developed for jobs at Level 7 to Class 4. They provide and outline of the  expected skills and individual job requirements.

Business executives focused on company development often take a look at corporate synergy. This term refers to increasing productivity and output from existing branches, division, or units within the company by streamlining practices. For business development managers such as Misiona  patane of Pure Pasifika, increasing synergy is important to corporate growth. Pure Pasifika relies on Patane to create synergy to aid progress.

Q.3. Explain the various  types of business synergy.

Ans. The various types of business synergy are as follows:

  1. Operational synergy deals with streamlining the production aspects of the business. This branch makes sure that two divisions within a company do not work on the same product in tandem. Instead, they pool their resources to create one superior result.
  2. Financial synergy ensures that monetary resources are being properly distributed and cash is not being diverted to fund the same initiative twice. It can also guarantee that a unit in a period of growth is properly financed while other divisions with excess resources have their budget adjusted to reflect their true needs.
  3. Managerial synergy will put the proper leadership in place. Sometimes this means moving and executive from one area that is thriving to another area that in struggling.

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