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  • There are three main governing mechanisms for strategic alliances (non-equity, equity, and joint venture). What are the benefits and downsides for each of the mechanisms?
  • Why do firms form alliances? Alliances are often used to pursue business-level goals, but they may be managed at the corporate level. Explain why this portfolio approach to alliance management would make sense.
  • What is a strategic alliance and what are the differences between equity and nonequity alliances?
  • What are vertical and horizontal business-level alliances? What are corporate-level strategic alliances?
  • What are the major risks involved in forming strategic alliances? Can you give an recent example from the news of a strategic alliance gone wrong?

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Discussions 1. 1.Strategy Lecture 13- Borrow- Alliances: 2. 2. Strategy Lecture 14- Buy: Mergers and Acquisitions: 3. 3. Strategy Lecture 15- International: 4. Example 4:
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Running head: STRATEGIC ALLIANCES

1

Strategic Alliances
Name
Institutional Affiliation

STRATEGIC ALLIANCES

2
Strategic Alliances

None equity alliance
Non-equity is a type of strategic alliance formed to increase the competitive advantage of the
companies. Companies sign contracts without creating a separate company; thus they do not take
equity shares.
Advantages
If things don’t work out, companies have an easy way to sign out of the agreement since there
are no losses to be accrued.
Compared to equity partners, firms have a guaranteed salary; hence their risk of not earning is
evaded.
One firm could test the partner level and give them a direct admission into the alliance without
committing to equity.
Disadvantages
Confusion may arise once the compensation program of the other partner is not spelled out from
the beginning.
Non-equity partners may opt not to commit to full partnerships due to the differences in their
income.
Equity partnerships
Equity Al...


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