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CA Intermediate · Financial Management and Strategic Management · Strategic Choices

Two Indian cement companies agree to share costs of a new logistics platform and a joint R&D facility, but each continues to operate independently and no new entity is formed. Which type of strategic alliance-based approach best describes this arrangement?

The arrangement is a cooperation or strategic alliance without a new entity. The two cement companies share logistics and R&D costs while remaining independent. A merger or acquisition would change ownership or combine the firms, and a divestiture would involve selling a unit.

  1. AMerger
  2. BAcquisition
  3. CCooperation/strategic alliance without a new entityCorrect
  4. DDivestiture

Explanation

Firms that collaborate on shared activities while staying independent and without creating a merged entity are in a cooperative or strategic alliance arrangement. A merger combines the firms, an acquisition transfers control, and a divestiture is a sale of a unit, none of which occurred here.

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