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CS Executive · Setting Up of Business, Industrial and Labour Laws · Business Collaborations

Which of the following is a common advantage of choosing a strategic alliance over a full merger for entering a new market?

The main advantage is lower commitment and greater flexibility, since each partner stays independent and can share resources, risk and market access without combining entities. Control over assets, assumption of liabilities and removal of a competitor are features of a merger, not an alliance.

  1. ALower commitment and greater flexibility, as partners retain independenceCorrect
  2. BComplete control over the partner's assets
  3. CAutomatic transfer of the partner's liabilities
  4. DElimination of the partner as a competitor in all markets

Explanation

Alliances need less capital and permit exit more easily because partners remain independent. A merger gives control over assets and takes on liabilities, and neither is a feature of an alliance. An alliance also does not eliminate the partner as a competitor.

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