Joint Ventures, Strategic Alliances and Mergers & Acquisitions

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Joint Ventures, Strategic Alliances, Collaborations and Merger and Acquisitions Questions | Q1. Why is a Joint Venture (JV) preferable to more general collaboration form of the Strategic Alliance? Q2. What are the relative merits and weaknesses of JVs and SAs? Q3. Why would company seek M&A as a market entry strategy? What are the advantages and disadvantages of M&A? why might a merger fail and what might be the outcome? Q4. What are the relative merits/ disadvantages of JVs, SAs, and M&As Collaboration | Cooperation between two or more firms can take many forms, such as cross- licensing of proprietary technology, sharing of production facilities, co-funding of research projects and marketing of each other’s products…show more content…
Advantages of SA * Can build close contacts with the partner * Uses joint expertise and commitment * Allows potential partners to learn about each other * Locks out competition Disadvantages of SA * Disagreements about objectives * Slow * Needs to be worked to maintain relationship * Lack of commitment * Competition between partners * Differences in organizational culture * Unbalanced relationship * Lack of formal management structure (controls/ accountability) International businesses may realize four benefits from SA and JV. 1. Ease of market entry: Firms entering a new market may face obstacles such as entrenched competition or hostile government regulations. Partnering with a local firm may help it navigate around such barriers. In other cases, economies of scale and scope in marketing and distribution confer benefits on firms that aggressively and quickly enter numerous markets, usually beyond the capabilities of a single firm. Strategic alliances help keep cost down. Example Warner Brothers JV with Hutchison Whampoa Ltd to sell movie-related merchandise in China. Regulations imposed by national governments also influence the formation of JV. Many countries are concerned about the influence of foreign firms on their economies that they require MNC’s to work with local partner if they want to operate

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