Synergy in Business: Definition & Examples

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  • 0:01 Definition of Synergy
  • 0:52 Examples of Synergy
  • 2:17 Lesson Summary
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Lesson Transcript
Instructor: Shawn Grimsley
Businesses often try to create synergies because of the advantages they provide. In this lesson, you'll learn what a synergy is and how it works. Some examples will also be provided. You'll also have a chance to take a short quiz.

Definition of Synergy

A synergy is where the whole is greater than the sum of its parts. In other words, when two or more people or organizations combine their efforts, they can accomplish more together than they can separately. They can get more done working together than they can working apart. In mathematical terms, a synergy is when 2 + 2 = 5.

Negative synergies also exist. If there is a negative synergy, the whole is less than the sum of its parts. In other words, people can actually accomplish more by working alone rather than working together. In mathematical terms, a negative synergy is when 2 + 2 = 3. An easy example is an overly social work team that spends too much time 'team building' and not enough time working.

Examples of Synergy

There are many ways that synergies are attempted in the business world. Let's look at some examples:

Mergers
Companies often attempt to achieve synergies by merging with other companies to which they are compatible. For example, a manufacturing company may have the most up-to-date technology to make the best product of its type on the market, but has a lackluster logistics system. An older manufacturing company may have a stellar logistical system, but outdated manufacturing equipment. If the two companies merge, they can accomplish more together than they could apart.

Organizational structure
Companies can create synergies by creating or combining products or markets. For example, if a company sells consumer electronics, salespeople will be able to increase revenue by cross-selling products. If a prospect is looking for a computer, the company can also sell them their printers and wireless Internet routers.

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