BBA 3rd Year Concept Of Synergy Very Short Question Answer Study material notes Types, evaluation of synergy, operating synergy, financial synergy valuing synergy Semester Wise Topic Wise Question Answer Book Code-602
Very Short Question Answer
Q.1 What do you understand by the concept of synergy?
Ans. Synergy is the additional value that is generated by combining two firms, creating opportunities that would not have been available to these firms operating independently. Operating synergies affect the operations of the combined firm and include economies of scale, increasing pricing power and higher growth potential. They generally show up as higher expected cash flows. Financial synergies, on the other hand, are more focused and inclide tax benefits, diversification, a higher debt capacity and uses for excess cash. They sometimes show up as higher cash flows and sometimes take the form of lower discount rate.
Q.2 What do you mean by operating synergy ?
Ans. Operating synergy is the synergy that allows firms to increase their operating income from existing assets or increase their higher growth or both.
Q.3 What do you mean by financial synergy?
Ans. Financial synergy is the synergy that the payoff can take of either higher cash flow or a lower cost of capital or both.
Q.4. What do mean by valuing synergy?
Ans. The key question about synergy is not whether or not it can be valued but how it should be valued. After all firms are willing to pay billions in dollars for synergy, they have to be able to estimate a value for that synergy.
Q.5 When will the synergy start affecting cash flows?
Ans. Synergy seldom shows up instantaneously, but it is more likely to show up over time. Since th value of synergy is the present value of the cash flow created by it, the longer it takes for it to show up the lesser it values.
Q.6. Give the name of various type of synergy?
Ans. Various types of synergy are as follows:
- Operating synergy.
- Financial synergy.
- Value synergy.
Q.7 What is Corporate synergy?
Ans. A corporate synergy refers to a financial benefit that a corporation expects to realize when it mergers with or acquires another corporation.
Q.8. What is cost synergy?
Ans. A cost synergy refers to the opportunity of a combined corporate entity to reduce or eliminate expenses associated with running a business.
Q.9. What do you mean by managerial synergy?
Ans. Managerial synergy puts the proper leadership in place. Sometimes this means moving an executive from one area that is thriving to another area that is struggling.
Q.10. What do you mean by revenue synergy?
Ans. Revenue synergy refers to the opportunity of a combine corporate entity to generate more revenue than its two predecessor stand alone companies would be able to generate.
Q.11. What do you mean bu marketing synergy?
Ans. Marketing synergy refers to the use of information campaigns, studies and scientific discovery or experimentation, research or development.