alleryStart learning →What is a strategic alliance?
AA cooperative agreement between business firms
BA merger in which one firm buys out the assets of another
CA group of rival firms that agree to fix a common price
DA government body that regulates competition in an industry
Answer & Solution
Correct answer: A. A cooperative agreement between business firms
1. A strategic alliance is a cooperative agreement between business firms.
2. It is sometimes called a strategic partnership instead.
3. The trend towards these agreements is accelerating rapidly, particularly among high-tech firms.
4. Some companies form alliances with suppliers who take over much of their actual production and manufacturing.
5. A merger creates one firm out of two, and an agreement among rivals to fix prices is illegal coordination rather than an alliance.
_Source: OpenStax Introduction to Business (CC BY 4.0), Ch 1 "Understanding Economic Systems and Business", section 1.8 Trends in the Business Environment and Competition_
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