INTRODUCTION
Prior to the Industrial Revolution, production was carried out in
a small scale and the number of organizations operating in a single
industry was less. The world economy was characterized by scarcity.
But the industrial revolution changed the entire business landscape.
Aided by mechanization, production began to be carried out in a
large scale basis and many new firms were set up.
Large scale production and entry of new firms led to increased
production levels. The situation of scarcity was converted into a
situation of surplus. The entry of new firms led to increased
competition. Many times the competition degenerated into unhealthy
and wasteful competition.
Firms resorted to selling their products very cheaply just to overthrow
their rivals. This behavior of firms led to reduced profits and also
losses. Industrialists began to understand the importance of
cooperation. Business organizations, mainly joint-stock companies
began to associate together by forming combinations.
MEANING OF BUSINESS COMBINATION
Business combination implies the coming together of firms, under
common control. The objective was to pool their production,
marketing, finance and profits. Combinations are formed both
nationally as well as on global levels for any of the following reasons:
a. Fixation of prices.
b. Regulation of output.
c. Eliminating competition.
d. Creating entry barriers to prevent entry of new competitors.
e. To establish monopolies.
f. Undertake joint research and development.
g. Utilization of resources.
