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ACCA Strategic Professional · Advanced Financial Management · Acquisitions and mergers versus other growth strategies

A strategic alliance differs from a joint venture mainly because in a strategic alliance:

A strategic alliance is a contractual cooperation between independent firms, and it does not necessarily create a new jointly owned entity. A joint venture normally sets up a separate entity. Acquiring majority shares or combining balance sheets describes acquisitions or mergers rather than alliances.

  1. AA new separate legal entity is always created and jointly owned
  2. BThe parties cooperate under a contractual agreement without necessarily forming a new jointly owned entityCorrect
  3. COne party always acquires a majority shareholding in the other
  4. DThe parties must merge their balance sheets

Explanation

Alliances are typically contractual cooperation arrangements, such as shared distribution or research, with each party staying independent and no new entity needed. A joint venture normally creates a separate jointly owned entity. Share acquisition or merging balance sheets describes takeover or merger.

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