Corporate Strategy: Strategic Alliances, Mergers and Acquisitions

These flashcards cover essential concepts from the lecture on corporate strategy, focusing on strategic alliances, mergers, and acquisitions.

What are the three options for growth in the Build-Borrow-Buy framework?

Build (internal growth), Borrow (external growth through alliances), Buy (acquisitions).

What is a Strategic Alliance?

A voluntary arrangement between firms that involves sharing knowledge, resources, and capabilities.

Why do firms enter into strategic alliances?

To strengthen competitive position, enter new markets, hedge against uncertainty, access critical complementary assets, and learn new capabilities.

What is the primary challenge with mergers and acquisitions (M&A)?

Integration difficulties, evaluating targets inadequately, and achieving synergy.

Define a merger.

The joining of two independent companies to form a combined entity.

What does horizontal integration involve?

Merging with a competitor, leading to industry consolidation.

What are the benefits of mergers and acquisitions?

Reduction in competitive intensity, lower costs through economies of scale, and increased differentiation.

What percentage of mergers and acquisitions are considered successful?

Research suggests that only 20% of all mergers and acquisitions are successful.

What is a key reason many alliances fail to deliver expected benefits?

30%-70% of alliances fail due to lack of effective alliance management.

What are relation-specific investments in the context of alliances?

Investments made that are tailored specifically for the alliance to ensure its success.