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Mergers and Acquisitions:

Mergers and acquisitions (M&A) are more popular form of partnerships which is simpler to understand.
Two companies together are more valuable than two separate companies - at least, that's the reasoning
behind M&A. A merger happens when two firms, often of about the same size, agree to go forward as a
single new company rather than remain separately owned and operated. This kind of action is more
precisely referred to as a "merger of equals." Both companies' stocks are surrendered and new company
stock is issued in its place. When one company takes over another and clearly established itself as the
new owner, the purchase is called an acquisition. From a legal point of view, the target company ceases
to exist and the buyer takes over its business.

Partnerships and Joint Ventures:

Partnerships and joint ventures can offer both partners significant benefits, including sharing experience,
skills, people, equipment and customer bases. Through a partnership or joint venture arrangement with
a complementary, non-competitive business, you may be able to open new markets or improve your
offer to existing ones. It's important to be very careful who you link up with. An agreement defining the
terms of the partnership or joint venture is essential and further legal protection is advisable. Teaming
up must be a win-win situation for both parties. Businesses involved with complementary activities or
skills are usually the most appropriate candidates. For example, a group of sole traders - a carpenter,
builder and electrician - could form a company, which could increase their credibility in the construction
trade and allow them to bid for larger contracts. A group like this also represents greater customer
appeal, as it's a one-stop shop.

A joint venture (JV) is a legal partnership between two (or more) companies wherein they both make a
new (third) entity for competitive advantage. With a JV you will have something more than simple
governance; you'll have a completely new entity with a board, officers, and an executive team. Effectively
a JV is a completely new organization, but owned by the founding participants. The board of directors
generally is comprised of representatives of the founding organizations.

Strategic Alliance:

A strategic alliance is a kind of partnership between two entities in which they take advantage of each
other’s core strengths like proprietary processes, intellectual capital, research, market penetration,
manufacturing and/or distribution capabilities etc. They share their core strengths with each other. They
will have an open door relationship with another entity and will mostly retain control. The length of
agreement could have a sunset date or could be open-ended with regular performance reviews.
However, they simply would want to work with the other organizations on a contractual basis, and not as
a legal partnership.

To choose the best strategy for growth, you'll need to undertake an analysis of your business' current
performance. Once you have carried out the review, focus on the option that looks the most logical.
Next, make sure this option is also the most practical. Check that the strategy reflects the things your
business does well. You'll also need to assess whether you have resources and capacity to make the
strategy work.

Contract Manufacturing Defined

Contract manufacturing is the outsourcing of part of the manufacturing process of a product to a third-
party. More specifically, contract manufacturing is an outsourcing of certain production activities that
were previously performed by the manufacturer to a third-party. A company may outsource the
manufacture of certain components for the product or outsource the assembly of the product.
Nowadays, outsourcing companies have become specialists in a multitude of services for manufacturers
including design, production, assembly, and distribution.

Franchising is the practice of the right to use a firm's business model and brand for a prescribed period
of time. The word "franchise" is of Anglo-French derivation—from franc, meaning free—and is used both
as a noun and as a (transitive) verb.[1] For the franchisor, the franchise is an alternative to building
"chain stores" to distribute goods that avoids the investments and liability of a chain. The franchisor's
success depends on the success of the franchisees. The franchisee is said to have a greater incentive
than a direct employee because they have a direct stake in the business.

Thirty-three countries have laws that explicitly regulate franchising, with the majority of all other
countries having laws which have a direct or indirect effect on franchising.[2] Franchising is also used as a
foreign market entry mode.

Production sharing

An agreement to share the production or extraction costs between two governments, a government and
a corporation, or a corporation and an individual. This can be accomplished when two countries agree to
allow certain raw materials to be shipped tariff free from the first country to the second country where
the materials are manufactured into a finished product. That product is then shipped back, tariff free, to
the original country. In oil or mineral extraction, the company doing the extraction is paid in oil or
minerals as compensation for business costs as well as a share of the profit.

A management contract is a legal agreement that grants operational control of a business initiative to a
separate group. The managerial group executes the necessary tasks in exchange for a negotiated fee.
Management contracts can involve the accomplishment of business tasks as well as the outsourcing of
such tasks to subcontractors. These tasks can include technical support, personnel management,
marketing, sales training and accounting.

Hotel Management Contracts

A hotel management contract details the agreement between the owner of a hotel and its operating
company. The agreement allows the operating company to provide accommodations and other services
to guests, conduct routine maintenance and carry out the marketing and promotion tasks for the hotel.
The operators can also establish policies and handle the hiring and firing of employees. Hotel
management contracts are often long-term agreements, often up to 25 years or more, and favor the
operators.

Construction Management Contracts

Property owners, businesses and public facilities often hire construction firms to erect new buildings and
expand existing structures. A construction management contract outlines the relationship between the
property owner and the construction firm. It lets the owners know the tasks the construction firm are
expected to accomplish and the timeline for these tasks. These contracts also spell out the
compensation structure for the project, such as whether the firm will be paid in a lump sum or according
to project milestones.

Property Management Contracts

A property management contract outsources the management tasks of a business or residential


property. Employees of the property management firm handle many of the routine tasks, such as
maintenance, rent collection and background checks on potential tenants. The property owner must
make sure not to use another management firm on the same property, as this can be seen as a conflict
of interest. Also, the owner waives the right to enter the property unannounced, as this can disrupt
businesses on the property and constitute a violation of a tenant's rights.
Artist Management Contracts

Actors, athletes, musicians and other performers are often too busy with their practices, performances
and tours to handle their routine business tasks. Most of the major stars pass these tasks on to an
experienced manager. Talent managers take care of paying the utilities, car payments and other monthly
expenses for their clients. In exchange, managers receive commissions on the artist's compensation,
ranging from 10 to 25 percent. Although some artist management contracts are short term, many artists
stay with a trusted manager for their entire careers.

Outsourcing

Advantages and disadvantages of outsourcing

Outsourcing is a common practice of contracting out business functions and processes to third party
providers. The benefits of outsourcing can be substantial - from cost savings and efficiency gains to
greater competitive advantage.

On the other hand, loss of control over the outsourced function is often a potential business risk. You
should consider carefully the advantages and disadvantages of outsourcing before deciding to contract
out any activities or business operations.

Advantages of outsourcing

There are many reasons why a business may choose to outsource a particular task, job or a process. For
example, some of the recognised benefits of outsourcing include:

improved focus on core business activities - outsourcing can free up your business to focus on its
strengths, allowing your staff to concentrate on their main tasks and on the future strategy

increased efficiency - choosing an outsourcing company that specialises in the process or service you
want them to carry out for you can help you achieve a more productive, efficient service, often of greater
quality

controlled costs - cost-savings achieved by outsourcing can help you release capital for investment in
other areas of your business
increased reach - outsourcing can give you access to capabilities and facilities otherwise not accessible or
affordable

greater competitive advantage - outsourcing can help you leverage knowledge and skills along your
complete supply chain

Outsourcing can also help to make your business more flexible and agile, able to adapt to changing
market conditions and challenges, while providing cost savings and service level improvements.

Disadvantages of outsourcing

Outsourcing involves handing over direct control over a business function or process to a third party. As
such, it comes with certain risks. For example, when outsourcing, you may experience problems with:

service delivery - which may fall behind time or below expectation

confidentiality and security - which may be at risk

lack of flexibility - contract could prove too rigid to accommodate change

management difficulties - changes at the outsourcing company could lead to friction

instability - the outsourcing company could go out of business

Offshore outsourcing, although potentially more cost-effective, may present additional challenges such
as hidden costs of provider selection or handover, severance and costs related to layoffs of local
employees who will not be relocated internationally, etc. Even simply managing the offshore relationship
can prove challenging due to time zones, different languages or cultural preferences.

You should examine carefully all the pros and cons of outsourcing to make sure that the benefits
outweigh the risks. Before deciding on your strategy, it may be worth looking at some common
outsourcing considerations.