Chapter 8: Strategic Alliances Part 1 Flashcards
1
Q
Strategic Alliance
def
A
- When two or more businesses form a partnership for a business venture or a project for mutual benefits
- Share resources, customers and knowledge on technology to gain competitive advantage
2
Q
Advantage
Easily Enter a New Market
A
- Share exposure and customer and spend less on marketing their presence
- Have access to supplier
3
Q
Advantage
Reduce Number of Competitors
A
- Work alongside rather than against
- Become less vulnerable especially when they are new in the market
4
Q
Disadvantage
Take on weakness of partner
A
- Lack of management expertise, unmotivated staff or high costs
5
Q
Disadvantage
Increased conflict over decisions making
A
- Decision over allocation of business resources
6
Q
Outsourcing
A
- The practice of hiring a third party to perform some business functions
7
Q
Acquisition
A
- Is a corporate action where a company buys most of another firm’s ownership stakes to assume control of it
8
Q
Hostile Acquisition
A
- Purchase attempted without the consent of existing directors and management
9
Q
Tender Offer
A
- Propose to buy at a fixed price higher than the market rate to motivate shareholders to sell their share
10
Q
Buy Through Stock Market
A
- Buy enough shares through the stock market to control the company
11
Q
Proxy Fight
A
- Persuade enough shareholders to vote to replace the management with one that will approve the acquisition
12
Q
Bear Hug
A
- Make an offer through public announcement to buy company’s board and take over the company without approaching the board of directors first
- This is to force the board of directors to accept offers they may not like through pressure and media
13
Q
Friendly Acquisition
A
- Purchase of majority of shares is part of an agreed and consented negotiation of board of directors, and full disclosure to existing shareholders
14
Q
Joint Venture
A
- Businesses involved form a new independent company using resources from all alliance partners and each partner owns a percentage of the new merged company
- New company for joint venture or a short term project
- Partner with local partner of target country: knowledge of culture, consumers preferences, laws and regulations
15
Q
Merger
A
- When shareholders of two companies becomes shareholder of a new merged company
H - When 2 companies produces similar goods in the same industry merges
V - When 2 firms of different stages produces the same good merges
Conglomerate - When 2 firms that operates in different industry merges
