generate competitive advantage by creating synergistic effect.

14 Synergy ^an bedefined as follows:Synergy is the process of putting two or more elements together to achievea sum total greater than the sum total of individual elements separately. This effectis described as 2 + 2 = 5 effect.S yn e r g i s t i c e f f e c t d o e s n o t g e n e r a t e a u t o ma t i c a l l y b y p u t t i n g d i f f e r e n t elements together but depends on the complementarity of these elements. Thus,s yn e r g i s t i c e f f e c t i n t h e p r o c e s s o f s t r a t e g y f o r mu l a t i o n r e f e r s t o t h e d e g r e e o f complementarity between present skills and resources and the future skills and r e s o u r c e s wh i c h wo u l d b e r e q u i r e d f o r a s t r a t e g y. Th e h i g h e r t h e degree of c o m p l e m e n t a r i t y t h a t e x i s t s b e t w e e n t h e p r e s e n t s t r a t e g i c p o s t u r e a n d t h e contemplated posture, the greater is the opportunity for realising positive synergy.A simple example of synergistic effect may be of opening of a restaurant by motelowner in side-by area. In this case, the joint income of motel and restaurant may bemuch more than what they can earn individually if located at different places. Areas of Synergistic Effect There may be many possible areas of synergistic effect of an organisationdepending on its strengths and weaknesses. Since the synergy depends on thec o m p l e m e n t a r i l y o f p r e s e n t a n d f u t u r e s t r a t e g i c p o s t u r e s , t h i s c a n b e s t b e understood by analyzing an organisation's strengths and taking suitable strategicactions in order to effect the result of the strengths. For this purpose, different typesof synergistic effects in various functional areas of operations may be analyzed. 1. Production Synergy Production synergy can be achieved if the present producti o n f a c i l i t i e s , processes, and skills can be used to produce the contemplated products. In thissituation, some existing excess capacity can obviously result in decreased unitproduction costs because factory overhead will be spread over a larger volume.Moreover, the quality and efficiency will not be hampered as the existing work-forcei s c a p a b l e o f handling new product because of transferability of skills from t h e existing product to new one.T h e p r o d u c t i o n s y n e r g y m a y b e s t b e a c h i e v e d b y m e r g i n

g t h e f i r m s manufacturing same or substantially similar products. For example, many textileunits have merged other textile units in order to take advantages of productionsynergy. The merger of Sidhpur Textiles with Reliance Textiles is a case in thiscontext. In the case of internal growth, production synergy will occur to the extent the new products developed are compatible with existing skills and resources. For e x a mp l e , p r o d u c t i o n s yn e r g y c a n b e s t b e i d e n t i f i e d i n t h e c e r e o f As s o c i a t e d Cement Company which operates many cement plants in the country using similar t e c h n o l o g y wh i c h p r o v i d e s t h e c o mp a n y g r e a t e r f l e x i b i l i t y i n u s i n g i t s p r e s e n t capabilities. On the other hand, there is little chance for production synergy, if the.organisation takes over dissimilar product because the present production strengthdoes not contribute in any way in the future product. For example, taking up of production of bearings by Metal Box which was primarily known as metal packagingma n u f a c t u r e r c o u l d n o t g e n e r a t e a n y s yn e r g i s t i c e f f e c t . T h e r e s u l t i s t h a t t h e c o mp a n y h a s l o s t s u b s t a n t i a l a mo u n t i n i t s b e a r i n g d i v i s i o n . Th u s , i t c a n b e emphasised that production synergy can occur only when some 'common thread'b e t w e e n t w o o p e r a t i o n s c a n b e f o u n d r e g a r d l e s s o f t h e d e g r e e o f m a r k e t congruence in so far as end uses of products are concerned. For example, this is

reflected in the product range of an electronic manufacturing unit which produceselectronic goods for entertainment as well as for commerical purpose. Though inb o t l i t h e s e c a s e s t h e e n d u s e r s a r e q u i t e d i f f e r e n t a n d i n c o mp l e me n t a r y, t h e company enjoys the common threads of production facilities. 2.Marketing Synergy Marketing synergy refers to the situation when the organisation can take theadvantages of its present marketing facilities sales force, distribution channel,p h ys i c a l ' f a c i l i t i e s , p r o mo t i o n a l t e c h n i q u e s f o r t h e e n s u in g p r o d u c t t h o u gh t h e product may be substantially different from the present one. For example, a soapmanufacturer may take the marketing of hair oil. In this case, the company can takethe advantages of its present marketing facilities because, in both the cases, thesame type of marketing facilities will be required although there is no productions y n e r g y if the production of hair oil is taken up because of the diff e r e n c e i n p r o d u c t i o n p r o c e s s a n d c o n s e q u e n t l y t h e r e q u i r e me n t o f d i f f e r e n t p r o d u ct i o n facilities.Th u s , i n t h i s c a s e , t h e r e i s ma r k e t i n g s yn e r g y b e c a u s e o f t h e o v e r l a p i n ma r k e t i n g e f f o r t s b u t t h e s a me o v e r l a p i s n o t a v a i l a b l e s o f a r a s p r o d uc t i o n i s concerned. In order to take the advantages of marketing synergy, Colgate PalmoliveIndia Limited decided to enter the new field of toilet soap though it is better known for toothpaste, toothbrush, shaving cream, and shampoo. Since the company can utiliseits present marketing facilities for soaps, it can take the advantage of its marketing,synergy. 3. Research and Development Synergy The research and\ development synergy will be achieved if the company'stechnologies supporting the development of both the present and the contemplatedproduct lines are substantially similar. The potential in this area usually emanateseither from similar research skills or from similar functional characteristics of theproducts. For example, the research and development at Hindustan Lever Limitedo f f e r s u n i q u e s y n e r g y b e c a u s e i t c o n t r i b u t e s t o t h e d e v e l o p m e n t o f c h e m i c a l products of different types for different end users. It has discovered the raw materialsfrom minor seed oils for synthetic detergent which is claimed to be much cheaper a n d e f f e c t i v e t h a n t h e p r e s e n t r a w m a t e r i a l l i n e a r a l k y l b e n z e n e ( L A B ) . I n i t s r e s e a r c h a n d d e v e l o p me n t e f f o r t s , t h e

c o mp a n y h a s u n d e r t a k e n s i mu l t a n e o u s functions of developing hea\y chemicals also which has enabled the company toe n t e r i n t h i s f i e l d t o o . S i n c e t h e b a s i c r e s e a r c h a n d d e v e l o p me n t f a c i l i t i e s a r e c o mmo n f o r b o mi n o r s e e d o i l s a n d h e a v y c h e mi c a l s , t h e c o mp a n y e n jo ys t h e research and development synergy. 4.Financial Synergy The financial synergy is virtually unrelated to the degree of similarity between thepresent and the contemplated strategic postures because the skills and techniquesof financial management have a high degree of transferability across both industryand organisational lines. The possible synergy which lies in this area is the extentto which the organisation can raise the funds for investment througn larger capitalbase, increased borrowing power, and greater earning through the spreading of administration overheads over a larger volume of operations. In fact, this synergyhas been used by several companies to take over other companies or diversify inthose areas which were unknown to them. However, the success of such strategymay be doubtful if other considerations are not taken into account.

5 .G e n e r a l Ma n a g e me n t S y n e r g y General management synergy occurs when the skills, experience, and knowledge of managers are transferable from the present strategy to the contemplated one. Thetransferability of these elements of management depends on how these elementsa r e a c q u ir e d . B a s i c a l l y k n o wl e d g e r e q u i r e me n t s f o r ma n a g e r s a r e t wo f o l d : ( i ) general knowledge of the processes and techniques of management which can belearned through management education; and (ii) technical knowledge about thes p e c i f i c i n d u s tr y o r o r g a n i s a t i o n wh i c h c a n b e learned through experience in ap a r t i c u l a r i n d u s t r y o r o r g a n i s a t i o n . T h e f i r s t c a t e g o r y o f k n o w l e d g e i s e a s i l y transferable to all types of organisations and industries as these are methodological.The second type of knowledge, however, is not as freely transferable because itrequires certain learning period on the part of the managers, Thus, while movingfrom one organisation to another or from one industry to another, managers have todevote time for learning the requirements of those which may be different from whatthey must have learned previously. Thus, if the movement is from one organisationto another which is similar, the knowledge can be transferred easily. However, if themo v e me n t i s f r o m o n e i n d u s t r y t o a n o t h e r , t h e t r a n s f e r a b i l i t y i s l i mi t e d i n t h a t i t requires more time in understanding the requirements of the new industry. Thus, further away a manager moves in terms of organisation and industry characteristics,t h e l o n g e r i s t h e l e a r n i n g p e r i o d a n d l o w e r i s t h e s yn e r g y. T h i s a s p e c t i s v e r yimportant for achieving growth through CRITICAL SUCCESS FACTORS APPROACH In order to understand how critical success factors (CSFs) approa c h i s applied to generate competitive advantage and the concept of CSFs, let us takefew examples. A good academician can be successful in teaching and researcha n d n o t n e c e s s a r i l y , h e s u c c e e d s a s a b u s i n e s s m a n . A p l a y e r h a v i n g h i g h competence in a particular game, say lawn tennis, and is successful is unlikely tos u c c e e d i n c r i c k e t . E v e n i n t h e s a m e g a m e , a p l a y e r c a n n o t s u c c e e d i n a l l positions, for example, a good wicket keeper cannot be a good bowler too. Theq u e s t i o n i s : w h y d o e s t h i s h a p p e n ? T h e a n s w e r i s : e a c h a c t i v i t y h a s u n i q u e requirement, and a single person cannot meet the requirement of all activities.

Hec a n b e s u c c e s s f u l o n l y i n t h a t f o r w h i c h h e h a s c o m p e t e n c e t o m e e t i t s requirement. {Success is defined in terms of objective achievement.) This social