ITPEC IP April 2022 Question 81
ITPEC IP April 2022 — Question 81 of 100
Only statement II is a general disadvantage of an alliance compared with an acquisition. Alliance partners remain independent, so one company has limited authority over the other company's decisions about shared resources. An acquisition gives the buyer ownership and stronger control.
Answer (d)
Why not others:
- I organizational or process reform is more likely to be required after an acquisition integrates the acquired company
- III a large investment and significant financial impact are typical acquisition disadvantages; an alliance usually requires less capital
- options containing I or III therefore attribute acquisition burdens to an alliance
Key rule: Alliances are flexible and less capital-intensive but provide weaker control; acquisitions provide control but require more investment and integration.
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