C. You have decided to set up your own business together and have approached the bank for advice. They have asked you to prepare a business plan.

 

 

 

Module 2 Alliances

Strategic alliances enable companies to share resources. This creates synergies or advantages and leads to increased market share and greater competitiveness. Public companies hope to increase shareholder value when they form alliances. There are many kinds of corporate alliances. Corporate partnerships or joint ventures are formed when two or more companies decide to cooperate on one particular projector mission. When companies join together it is called a merger. When one company makes a successful takeover bid to buy another one, it is referred to as an acquisition.

Reading 1: Mergers and Acquisitions

 

One plus one makes three: this equation is the main idea of a merger or an acquisition. The key principle behind buying a company is to create shareholder value over and above that of the sum of the two companies. Strong companies will act to buy other companies to create a more competitive, cost-efficient company. The companies will come together hoping to gain a greater market share or to achieve greater efficiency. Because of these potential benefits, target companies will often agree to be purchased when they know they cannot survive alone.