What is the cost synergy?
The cost of synergy is a term that is often used in conjunction with the merger of two or more companies. Since it concerns mergers, it has cost synergies in terms of operating costs as soon as the merger is completed. The aim is to determine the amount of savings that the newly merged entity enjoys combinations of operations in different devices, and streamlines the operating processes as a means more effectively using the resources of former separate entities. This term is often used to attract attention to a significant number of savings in operating costs, while at the same time putting the most positive rotation on the fact that the merger will lead to removal of jobs and possibly closing some devices.
cost synergy is usually achieved by identifying the most effective and effective processes of each company involved in the merger and finding ways to earn these processes. This in general means some of the functions that were once manipulated in one place owned by one of the fiRem can be moved to a place inherited from one of the other companies. Sometimes known as streamline is the idea of increasing the overall efficiency of the production process, allowing to reduce the costs and increase the newly created lower limit of the company.
One of the effects of this type of streamlining the generation of positive cost synergy is that the combined labor force of merged companies is often reduced. This may happen because of the closure of a device that basically performs the same functions and centralize these functions in one place. Other times, accepting new procedures means that certain tasks can be carried out with less work, which must be eliminated by some jobs. Changes in this type are influenced not only by workers, but can also mean a reduction in the number of supervisors, and the middle -level managers.
It is not uncommon for the terms such as the cost of synergy will be used inPress releases or even internal communication if there are plans to streamline some aspects of business operations. By focusing more on the positive aspect of improving the company's financial stability and less on the fact that jobs are eliminated, the company represents changes as the company's long -term financial stability. Usually there are some consequences that all employees who remain in society will have a higher level of job security, at least until the next round of jobs at work.