Question

It deployment strategies fall into two broad categories, which are ________:

Answer 1

Alliances fall into two broad categories: contractual (non-equity) and equity-based. projects, strategic suppliers, strategic distributors, and licensing/franchising (see Chapter 6 for definitions). These are also limited in scope and duration. Equity-based alliances call for a higher level of commitment. Examples include strategic investment (one partner invests in another as a strategic investor) and cross shareholding (both partners invest in each other). A joint venture is a special case of equity-based alliance that establishes a new legally independent entity (in other words, a new firm which is the JV) whose equity is provided by two (or more) alliance partners. Although JVs are often used as examples of strategic alliances, not all strategic alliances are JVs. Essentially, a JV is a “corporate child” given birth by two (or more) parent firms, such as SonyEricsson’s set up by Sony and Ericsson. A non-JV, equity-based alliance can be regarded as two firms “getting married,” but not having “children.” The Renault-Nissan alliance is such an example. Networks are also a form of strategic alliance. For the purposes of this chapter, we define strategic networks as strategic alliances formed by multiple firms to compete against other such groups and against traditional single firms