How should a corporation attempt to achieve synergy among functions and business units?

How should a corporation attempt to achieve synergy among functions and business units?

We believe that synergy can provide a big boost to the bottom line of most large companies. The challenge is to separate the real opportunities from the illusions. With a more disciplined approach, executives can realize greater value from synergy—even while pursuing fewer initiatives.

The above statement points out that one of the goals to be achieved in strategy implementation is synergy among functions and business units. This is one reason why corporations commonly reorganize after an acquisition. If some sort of synergy cannot be achieved, there is no real reason to acquire another firm – other than trying to exit one business and enter another. The extent to which synergy should be achieved depends upon the strategy being pursued. A lot of synergy is needed in vertical and horizontal growth as well as in concentric diversification. The corporation pursues these strategies in order to achieve the benefits of efficiency coming from marketing, operating, investment, or management synergy. The firm is looking for advantages of scale or scope.