In business, Synergy is perhaps best described as the “2 + 2 = 5 effect”. An entity should indicate how it might expect to benefit from synergy by moving into new product-market areas. For example, instead of making just one product, making two different products with the same equipment and getting better utilization of the equipment as a result. Selling two products with the same sales force, instead of selling just one product.
Synergy can therefore provide extra benefits from making and selling two products instead of one, or making and selling a product in two different markets instead of one. This can give entity clear signals, to outsiders and to its management, about successful strategy development.
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