An effective or beneficial business synergy is any form of relationship that is mutually beneficial to two companies, most commonly manifesting as the result of a merger or acquisition. The specific details of the synergy vary between situations, but typically involve a set of related fields in which the combined efforts of the companies remove weaknesses to make for a more effective process, unit or product.
The term synergy can refer to any form of relationship wherein two parties receive mutually beneficial results from the efforts. This concept is common within the business world because many companies seek to form partnerships with other companies in order to solve problems, as this allows one or both parties to avoid the additional work of creating the solution from the ground up. For example, if one company has a weak presence within a certain country into which it wishes to increase its market share, it may merge or form a partnership with another company that does have a strong presence in that country.
The process allows both companies to earn money and leverage their existing assets while spending a minimal amount of time establishing new processes or taking risks. Synergies also frequently appear when companies merge, as this allows the new organization to pick only the strongest components of each firm. For example, if a manufacturing company merges with a distribution company, they can leverage these departments to close the loop on the process and increase revenue while lowering outsourcing costs.