strategic alliance types of strategic alliance advantages and disadvantages merger and acquisition strategy types of mergers advantages and disadvantages

1. Strategic Alliances……
• Strategic alliances are agreements between two or more
independent companies to cooperate in the manufacturing,
development, or sale of products and services or other
business objectives.
• Combine their respective resources
• Capabilities
• Core competencies
• to generate mutual interests in designing, manufacturing,
or distributing of goods or services.

2. Motives to enter a alliance
• Gaining access to new technologies
• Learning new organisational skills
• Diversifying into new businesses
• Restructuring
• Improving performance
• Cost sharing, pooling of resources,
• Risk reduction and diversification
• Co-specialisation and following
industry trends
• Achieving competitive advantage
• Complementary of goods and
services to markets

3. • Joint Venture - Company A and Company B
can form a joint venture by creating Company C
• Equity Strategic Alliance - Company A
purchases 40% of the equity in Company B, an
equity strategic alliance would be formed
• Non-equity Strategic Alliance - when two or
more companies sign a contractual relationship
to pool their resources and capabilities together
Types of Strategic Alliances

4. Advantages
• Allowing each partner to concentrate on activities
that best match their capabilities.
• Learning from partners & developing competencies
that may be more widely exploited elsewhere
• Adequate suitability of the resources &
competencies of an organisation for it to survive.
• Share risk between the companies.

5. Disadvantages
• Significant differences between the objectives
• Irreconcilable differences in business culture and
management styles.
• Opportunistic participant behaviour by any
participant
• Loss of control over such important issues as
product quality, operating costs, employees, etc.

6. Challenges in a Strategic
Alliance
• Low commitment
• Hidden agenda leading to distrust
• Unrealistic expectations
• Complex to manage
• Over dependence
• Lack of understanding

7. Merger and Acquisition
Strategies
Corporate strategies that deal with buying,
selling or combining different companies
with a goal to achieve rapid growth…
Diversify or to expand in a specific field
of business
Strengthen their research facilities

8. MERGER
A merger is a strategy through which two
firms agree to integrate their operations
on a relatively coequal basis..

9. ACQUISITION
An acquisition is a strategy through which
one firm buys a controlling, or 100 percent,
interest in another firm with the intent of
making the acquired firm a subsidiary
business within its portfolio..

11. Types of Mergers and
Acquisition
• Horizontal
• Vertical
• Conglomerate
- Pure
- Mixed

12. Reasons for M and A
• Future Goals
• Mutual Benefits
• Maximising Profits
• Expansion of Business
• Increase Market share
• Diversification of risk
• Good will
• Product Improvement

13. Advantages
• Reducing your costs and overheads
• Reducing competition
• Accessing a wider customer base and increasing your market share
• Obtaining quality staff or additional skills,
knowledge of your industry or sector and other business intelligence.

14. Disadvantages
• The Target Business Does Not Do As Well As Expected
• The Costs You Expected To Save Do Not Materialise
• Key People Leave
• Incompatible Business Cultures
• Resources Being Diverted From Your Business' Main Aims

15. Thank You