what is merger | advantage and disadvantage

What is meger?

Meger is the combination or coming together of two or current independent firms to form one larger firm . The old firm lose their brand while the new firm take a new name and registration.

                   Advantage of merger.

1. To reduce the overhead cost by eliminating duplication of facilities.

2. Firms may merge in order to obtain raw materials from direct source.

3. To diverse the activities of the firm's into other areas.

4. To obtain a larger share of the total market.

Disadvantage of merger.

1.  The quality may reduce since there is no competitor.

2. It can lead to monopolistic situation.

3. It doesn't appreciate specialisation in the production process

4. Merger may lead to unemployment as some employee can be laid off.