ITPEC IP April 2020 Question 80
ITPEC IP April 2020 — Question 80 of 100
Only II is a general disadvantage of an alliance compared with an acquisition. Because the partner remains independent, participation in its decisions about resources is limited and cooperation depends on negotiated agreement.
Answer (d)
Why not others:
- reforming the acquired company's organization may be required after an acquisition, not generally in an alliance
- large investment and major balance-sheet impact are more characteristic acquisition disadvantages
- alliances usually require less capital and are easier to form or end
Key rule: Alliances preserve independence and reduce investment, but provide less ownership control over the partner's decisions and resources.
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