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The term synergy is used to describe the effect of multiple elements of a system working together to create the common good. An example of synergy is found when a large company buys a small company and offers the small company compensation in the form of future profits from the company. This helps both companies achieve what they desire. Another example of synergy is seen when one person is too short to reach an apple on a tree and stands on the shoulders of another person to get two apples, one for each of them.
Synergy is often one of the goals of a merger or acquisition. The two firms combined may be able to achieve higher profitability than either firm could achieve on its own. Synergy can be reflected in increased revenues and/or lower expenses.
For example, a company may acquire a similar firm, allowing it to expand its product offering and, as a result, increase its sales and revenues. This could not have been accomplished had the two firms remained independent.
In management, synergies may be created between management teams, resulting in increased capacity and workflow that was not possible when the teams were working independently
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