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Illustrate the difference between a merger and a strategic alliance. - Leaving Cert Business - Question 5 - 2015
Question 5
Illustrate the difference between a merger and a strategic alliance.
Worked Solution & Example Answer:Illustrate the difference between a merger and a strategic alliance. - Leaving Cert Business - Question 5 - 2015
Step 1
Definition of a Merger
Answer
A merger is a friendly or voluntary amalgamation of two or more businesses for their mutual benefit. In this process, a single new legal entity is formed that combines the assets, liabilities, and operations of the merging companies. An example of a merger is Glanbia plc, which was formed in 1997 out of the merger of Avonmore Foods plc and Waterford Foods plc.
Step 2
Definition of a Strategic Alliance
Answer
A strategic alliance occurs when two or more independent firms agree to co-operate and share resources and expertise for the mutual benefit of all parties involved. It is important to note that the firms maintain their independent legal identities and do not form a new legal entity. For instance, Starbucks partnered with Barnes and Noble bookstores in 1993 to provide in-house coffee shops, benefiting both retailers. Another example includes Mazda and Toyota sharing technology resources.