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Int. Business Ch. 11

by: Anna Notetaker

Int. Business Ch. 11 MGMT 4710

Anna Notetaker
GPA 3.62

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Chapter 11 Acquisitions and Alliances
International Business
Cheryl Ward
Class Notes
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This 3 page Class Notes was uploaded by Anna Notetaker on Thursday October 13, 2016. The Class Notes belongs to MGMT 4710 at Middle Tennessee State University taught by Cheryl Ward in Fall 2016. Since its upload, it has received 10 views. For similar materials see International Business in Management at Middle Tennessee State University.

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Date Created: 10/13/16
IB Chapter 11  Strategic Alliances, also known as Contractual Agreements, are  voluntary agreements of cooperation between firms.   Contractual Alliances, also known as Non­Equity Based, is an  association between firms that is based on a contract and does not  involve the sharing of ownership. They include co­marketing,  research and development, and contracts.   Mergers are 3%, while Acquisitions are 97% in dominance.   An acquisition is a transfer of the control of operations and  managements from one firm (target) to another (acquirer), the  former becoming a unit of the latter.   A merger is the combination of operations and management of two firms to establish a new legal entity.   Antitrust authorities suspect at least some tacit collusion when  competitors cooperate. However, because integration within  alliances is usually not as tight as acquisitions.   Governments discourage or simply ban acquisitions to establish  wholly owned subsidiaries, thereby leaving some sort of alliances  with local firms as the only entry choice for FDI.   US regulations limit foreign carriers to a maximum 25% of the  equity in any US airline, and EU regulations limit non­EU  ownership of EU­based airlines to 49%.   Strategic Alliances Advantage:  o Reduce costs, risks, and uncertainties o Access complementary assets and learning opportunities o Possibility to use alliances as real options  Strategic Alliances Disadvantages: o Choosing wrong partners o Potential partner opportunities o Risk of helping nurturing competitors (learning race)  Rarity – the firm must have rare skills to make the acquisition  work  Imitability – possess hard­to­imitate capabilities  Organization – firms are organized to take advantage of the  benefits while minimizing the costs  Nearly all 70% of acquisitions fail.   Dissolution of Alliances:  o The first phase Initiation, it can go either to reconciliation or  going public. The second phase is going public, it can be  mediation by 3  parties or by uncoupling. The third phase is  uncoupling, it can be last­minute salvage or the aftermath.  The final phase is the aftermath, which results in going alone  or new relationships. 


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