Sales Enhancement and Operating Economic Economies of scale the benefits of size n which the average unit cost falls as volume increases o Horizontal merger: best chance for economies n Vertical merger: may lead to economies n Conglomerate merger: few operating economies o Divestiture: reverse synergy may occur 23-623-6 Sales Enhancement and Operating Economies Horizontal merger: best chance for economies Vertical merger: may lead to economies Conglomerate merger: few operating economies Divestiture: reverse synergy may occur Economies of scale -- The benefits of size in which the average unit cost falls as volume increases