Explain the meaning of synergy. Examine what sort of synergy Procter & Gamble achieved by going into the frozen orange juice business
What will be an ideal response?
Synergy refers to the combined effect of certain strengths being greater in total than the sum of their individual effects. Procter & Gamble has an established and strong retail distribution network. The orange juice entry had a synergistic effect in that there was a contribution to the current operations (from the entry), a contribution to the new entry (from the existing business), and joint opportunities (i.e., benefits that accrued to both as a result of the consolidation). The distribution strength helped in seeking distribution of the new product. The new entry opened the door for P&G in the beverages business. Together, the new product and the distribution strength increased P&G’s leverage with grocery trade.
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