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An organization substantially broadens the scope of one or more of its business in terms of their respective customer group, customer

functions and alternative technologies to improve its overall performance.

Merger Acquisition

Joint Venture Strategic Alliance

In merger two firms, agree to move ahead and exist as a single new company. Merger of equals both companies are of equal sizes. Merger of unequal's large company merge with smaller one. Merger of unequal's large company merge with smaller one. Merger is the voluntary process with the consent of both companies. Name of new merged entity is usually a combination of both parent companies. Mergers are mostly financed by a swap stock. Both companies surrender their stocks and stock of the new company is issued as a replacement.

Horizontal merger when two merging companies are of the same industry and produce similar products. Vertical merger when two merging companies are producing the same goods, but are at different stages. Concentric merger when two companies are related to each other in terms of customer functions or customer groups. Conglomerate merger when two companies operate in different industries.

Acquisition is a deal one company takes over another company and buyer becomes sole proprietor.

At times takeover occurs when the target doest not want to be purchased. However with better offerings of process shareholder are attracted by acquirer.
In legal terms, the target ceases to survive. The buyer swallows the company and the buyers stock continues to be traded. Unlike mergers which are friendly, acquisitions can be friendly and unfriendly.

to reduce competition. to raise growth rate & capture greater market share. to improve value of organizations stock. to acquire a needed resource quickly. to take advantage of synergy. to acquire resources to stabilize operations. to achieve economies of scale.

reduce competition may even facilitate monopolistic or oligopoly tendencies among firms.

increase of prices.
job losses for employees. difficulties in cultural integration of the merging firms. interest of minority shareholders is not protected.

A entity formed between two or more parties to undertake a specified activity together. Parties agree to create a new entity by both contributing equity and they then share revenue, expenses and control of the enterprise.

Unlike mergers and acquisitions, in joint venture the parent companies does not cease to exist.

Is a form of affiliation that involves a mutual sharing of resources or partnering to improve efficiency. In strategic alliances, the focus is on sharing of resources rather than seeking change in control. Equity in each others company is not any focus.
Pre competitive alliance vertical value chain alliances. Non competitive alliance intra industry partnerships. Competitive alliance partnership between rivals.

Lack of trust & commitment. perceived misunderstanding among partners.

conflicting goals and interests.