Insights

A Global Strategic Alliance Is Not an Acquisition

  • March 24, 2020
  • George Molakal
Strategic Alliance

A global strategic alliance is established when a company wishes to edge into a related business: new geographic market – particularly one where the government avoids imports from protecting the domestic industry. Typically, associations are formed between two or more corporations. Each based in their home country for a specified period. Their purpose is to share in the ownership of a newly formed venture and maximize competitive advantages.

The cost of a global strategic alliance usually equally shares the corporations involved and is generally inexpensive. On the other hand, an acquisition offers a faster start in exploiting an overseas market; however, it tends to be much more expensive though it helps for the acquiring company, one that is likely to be well out of the reach of a solo operator. For More Information, Stay tuned with ALCOR MNA!

Benefits of Strategic Alliance

While a global work for the strategic alliance well for core business expansion and utilizing existing geographic markets, an acquisition works better for immediate penetration to new geographic regions. Hence, an association provides an excellent solution to global marketers that lack the required distribution to get into foreign markets. A comprehensive strategic alliance is much more flexible than an acquisition concerning the degree of control enjoyed, for each party. Depending on your resources, you can structure equity or non-equity partnership.

Within an equity partnership, you can hold a minority, majority, or equal stake. When it gets down to business, you want a partner who will have an active contribution to make, and who is flexible and able to resolve conflicts as the alliance evolves. Even more important, however, is that you keep clearly in mind what you are seeking to gain from the partnership and that you choose a partner whose contribution will enable you to achieve those goals.

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