Definition: Synergism is the combination of businesses or employees where combined efforts of two or more elements produces better results than the sum of their individual efforts. In other words, mixing the components all together produces a superior performance than using them separately.
What Does Synergism Mean?
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In business, the concept of synergism is commonly employed in corporate mergers. The combination of both companies creates a better business situation than the sum of their individual results. Nevertheless, merging companies to create synergy is not an easy task. Each company probably has a different corporate culture, value system, processes and procedures or corporate governance policies and this will create conflicts during the merging process.
On the other hand, the concept could also be employed to team work, since two individuals working together will probably yield a better result than the two of them working independently.
In the pharmaceutical industry, the term synergy is also used to identify the advantages of combining two or more chemical components into one single drug to improve its effectiveness. One of the components will probably release or enhance the results of the other, therefore creating a synergistic effect.
Example
Burger Queen is a fast food chain with more than 1,600 restaurants worldwide. The company recently started operating in Chile and it has to identify key suppliers for meat, bread and sauces. Since the business has a very successful history they often look for potential synergistic relationships with these suppliers to later on buy them out through a takeover.
This helps them reduce costs and creates synergism within the companies, since the combination of a meat producer and a burger restaurant is better than a burger restaurant that has to buy its meat from a third party. The company finally identified a supplier called Carnes Chilenas, a business with more than 40 years of industry experience. A few months after working with them, Burger Queen decided to buy Carnes Chilenas.
