CA Intermediate · Financial Management and Strategic Management · Strategic Choices
A Mumbai bank and an Indian insurance company enter an agreement in which the insurer's products are sold through the bank's branches. Each firm remains independent and they share the revenue, without forming a new entity. In strategic management terms, this is best classified as:
This is a strategic alliance. The bank and the insurer cooperate to distribute products and share revenue while remaining independent, with no change in ownership. A merger or takeover would involve combining or acquiring control of a company, and divestment involves selling a business.
- AA merger
- BA takeover
- CA strategic allianceCorrect
- DA divestment
Explanation
Two independent firms cooperating for mutual benefit and sharing the gains, without combining ownership or creating a new company, form a strategic alliance. A merger would combine the firms into one, and a takeover would involve acquiring control. Divestment means selling off a business, which does not happen here.
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