Question

While we covered mergers and acquisitions in this unit, let’s turn our focus to strategic alliances. what are the three types of strategic alliances? what are the advantages/disadvantages of each?

Answer 1

The three types of strategic alliances are Joint ventures, Equity Strategic alliances, and Non-Equity Strategic alliances. The advantages and disadvantages of strategic alliances are reduced costs & risks and potential competitors respectively.

There are three types of strategic alliances. A joint venture is a corporation that was created by two parent companies. It is kept up by distributing assets and equity according to a legal contract.

When one corporation buys shares in another company, a strategic equity partnership results. An agreement to share resources without forming a separate firm or allocating equity is called a non-equity strategic partnership.

Partners may grow up quickly, create cutting-edge customer solutions, break into new markets, and pool important resources and experience through strategic alliances. And this is a game-changer in a business environment that prizes speed and creativity.

Its drawbacks include a lack of managerial engagement or equity interest, apprehension about market insulation because a local partner is present, ineffective communication, and inefficient resource allocation.

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