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1 The organization uses strategic alliance based on either formal or informal agreements with other organizations Organizations in a strategic alliance use shared vision and mission Agreements layout rule of conduct responsibilities financial commitment etc Challenging part of using a strategic alliance is aligning with different cultures and to commit leadership and resources In contrast to acquisitions alliance renegotiate or end if partners do not agree thus alliance requires less commitment and flexibility Organizations enter into strategic alliance to increase their operational and technical capabilities The downside of this includes loss of complete control divulging proprietary information and underperforming possible negative elements Strategic alliance can suffer from the allocation of resources authority and profits but when all these negative effects are properly controlled strategic alliance is successful Firms that enter into strategic alliance often overlook the cost involved in the formation and maintenance of alliances Strategic alliances complement each others capabilities and supplement critical skills which can improve the competitive place in the marketplaceOn the other hand organization uses Merger Acquisition MA by combining two separate companies into one company In MA integration of two legal entities will have an equal relationship or one firm will dominate over the other Because of the inflexible nature and greater need of resources organization faces potential losses or failure As opposed to alliance if the merging firms are similar MA provide benefits of economies of scope or scale In an acquisition the firm requires integration of operations so that synergies exist while alliance does not offer the same The values involved in MA are market penetration distribution of products and services Strategic alliances play a major role in the formation of MA Organization or group of organizations considering MA has to first develop a strategic alliance to understand the core strengths weakness and the organizations culture MA require the highest level of commitment and biggest level of investment as there is no testing period of evaluation
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