ITPEC FE Subject A April 2026 Question 49
ITPEC FE Subject A April 2026 — Question 49 of 60
Synergy effect — the combination produces more value than the two companies could generate separately.
All three actions listed are synergies of different kinds:
- •Cross-selling A's tools to B's customers — revenue synergy
- •Embedding B's algorithms in A's products — capability synergy
- •Cutting duplicated office leases — cost synergy
Answer (c)
Why not others:
- (a) Horizontal integration — describes the structure of the deal, combining firms at the same stage of an industry; the question asks for the phenomenon that creates the extra value
- (d) Vertical integration — combining different stages of a supply chain, which is not what happened here
- (b) Market penetration — selling more of an existing product in an existing market, an Ansoff growth strategy unrelated to merging two firms
Key rule: Integration terms name what kind of merger it is; synergy names why the merged whole is worth more than the parts. The phrase "greater than the sum" points at synergy every time.
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