“If we all together is impossible, if we are divided all will fall”
When a number of business undertakings combine together for enjoying some benefits, a business combination forms. The constituent units come into an agreement for fixing up the terms and conditions of combination. A combination can enjoy some economies and benefits by eliminating wasteful competition and partly by reducing cost of production lose their separate entity.
“Business combination is formed when two or more business undertaking units combine to carry on business together for achieving the economic benefits”
- Joining of two or more companies / institutions
- Formation of single unit
- Carrying on business together
- Achievement of economic benefits
Causes of the growth of combination
Small industrial units face various problems during the period of depression, which make business unstable. So they, setup combination in order to remove the dearth of capital and reduce the risk of business failure.
When the tendency of combination takes place in a particular industry, other industrial sectors are also affected as a result. So, they form combination for their common objective.
Deficiency of capital is a great hindrance for the expansion of business. So small units may form a combination to overcome this problem
Unnecessary competition among various industrial units is harmful for the achievement of progress. So, the industrialists feel pleasure to set up combination in order to avoid the waste of their sources in excessive competition.
Since industrial units combine together with the foreign producers not only within the country but also in international market. Therefore, the government provides tariff facilities to this industrial combination.
Developed of Means of Communication and Transport
Development of means of communication and transport has enabled the businessmen to create close contact with each other. Fast and developed means of communication and transport has a great contribution in the growth of combination.
Economy in Production
To face the competition in the internal and external market, many industrial units combine together to achieve economy in various sectors and provide quality goods at lower prices.
Control Over Excessive Production
Overproduction is the wasting of economic resources. But it is possible for the industrial combination to control production.
Growth of Big Organization
It is inconvenient to organize the large number of small size business units. But the growth of big organization (joint stock Company) das made possible for various industrial undertaking to form combination extensively.
It is not possible for small industrialists to enjoy separate laboratory and other research facilities due to their limited resources. They combine together in order to interchange their research results
New techniques of production, formulas and automatic machines have been brought a revolution in the field of commerce and industries. So, technological development has also contributed to the formation of the combination.
Represented by Seerat Francis