CA designed to take advantage of market opportunities by combining partner firms' assets in complementary ways to create a new value. These include distribution, supplier or outsourcing alliances where firms rely on upstream or downstream partners to build competitive advantage.
It is formed between partners who agree to combine their resources and skills to create value in the same stage of the value chain. Focus is on long-term product development and distribution opportunities. Partners may become competitors and requires a great deal of trust between them.
It is used to hedge against risk and uncertainty and it is most noticed in fast-cycle markets. Alliance may be formed to reduce the uncertainty associated with developing new product or technology standards.
Allows a firm to expand into new product or market areas without completing a merger or an acquisition, it also provides some of the potential synergistic benefits of a merger or acquisition, but with less risk and greater levels of flexibility. Permits a test of whether a future merger between the partners would benefit both parties.
The main purpose of Franchising is to spreads risks and uses resources, capabilities, and competencies without merging or acquiring another company. Contractual relationship concerning the franchise is developed between two parties, the franchisee and the franchisor, an alternative to pursuing growth through mergers and acquisitions. http://academic.cengage.com/resource_uploads/downloads/0324316941_57293.ppt
Despite of providing benefits to the firms, cooperative strategies can be