Strategic Alliances, Mergers & Acquisitions in Global Strategy

This essay critically evaluates the role of strategic alliances, mergers, and acquisitions in enabling corporations to achieve sustained growth and corporate profitability in both domestic and international markets, using Unilever plc as an example. It discusses various types of strategic alliances, including joint ventures, equity strategic alliances, and non-equity strategic alliances, highlighting their advantages and disadvantages. Furthermore, it examines the concept of mergers, their necessity for resource acquisition and tax benefits, and their impact on market share and operational costs. The essay also touches upon the drawbacks of mergers, such as reduced competition and potential price increases. Additionally, the essay distinguishes between external and internal economies of scale, using these concepts to explain intra-industry trade, particularly between the UK and the EU, and considers the implications for UK external trade policy post-Brexit.

Global Strategy
and
International
Trade

Table of Contents
Part-A...............................................................................................................................................3
Introduction .....................................................................................................................................3
Question-1 Critically evaluate the role of the strategic alliance, mergers, and acquisitions in
enabling the corporation to achieve sustained growth and corporate profitability in both the
domestic and international markets........................................................................................5
Conclusion ....................................................................................................................................14
PART B..........................................................................................................................................14
Introduction ...................................................................................................................................14
Question 3: Distinguish between external and internal economies of scale and use these
concepts to explain the phenomenon of intra-industry trade. Illustrate your answer by
examining the extent of intra-industry trade between the UK and the EU in recent years. What
are the implications of your results for the UK external trade policy and strategy after Brexit?
..............................................................................................................................................15
CONCLUSION .............................................................................................................................20
REFERENCES..............................................................................................................................21

Part-A
Introduction
It is very important for the success of organisation in the market that they try to achieve
the growth in their business. The growth of the business are depend upon the expansion of
business ion national and international market (Abeliansky, Martínez-Zarzoso, and Prettner,
2020). It is not easy for the management of organisation that they expand their business in
domestic or in international market because they have to face many problems and crunches in
this process such as financial crunches, cultural problems and many more. There are many
companies are present in the world which achieves considerable growth in their business with
their international expansion plan. The managers of the organisation has to conduct deep market
research under which they consider different internal and external factors so that their negative
impact can be minimised. The organisation which is chosen here is Unilever plc. This section
provides brief discussion related to the role of strategic alliance,mergers and acquisitions.

About the company
Unilever plc is a British multinational organisation which deals in the retail industry of
United Kingdom. All the important decision of the company are taken from their headquater
whichb is situated in London United Kingdom. This organisation was established in the year
1929. The management of thje Unilever has provide diversified product under which they offer
home care products, health care and skin care product. The management of Unilever has
different dedicated and experienced executives which always think about the growth of the
organisation and always analyse different ways to achieve growth in business.

Question-1 Critically evaluate the role of the strategic alliance, mergers, and acquisitions in
enabling the corporation to achieve sustained growth and corporate profitability in both the
domestic and international markets
It is very important for the managers of the organisation that they consider different types
different types of strategic tool if they want to achieve effective growth in their business. There
are different types of strategic tools are present in the market which can be used by the
management of the organisation to established effective relationships with other companies of
the world (Akerman, 2018). The main reason for the success of Unilever is the use of effective
strategic tools in the organisation which helps them to develop effective relationship with the
management of other organisations. The management of Unilever has conducted their business
in more than 150 countries of the world and it can only be possible on the basis of collective
decision of the company. The brief discussion related to the different strategic tools are given
below:
Strategic alliance
It refers to those process under which the two companies came together to conduct any specific
business or projects and both the companies remains independent. These resources are available
with other company so it develop strategic alliance with them so that the project can be
completed and after the achievement of their goals they becomes separated and conduct their
separate business (Du, Yu, and Li, 2020).. I personally recommend to the management of the
Unilever that they develop effective strategic alliance with different types business organisation
so that the sustainable development can be take place in the organisation. There are different
types of strategic alliance are present in the market which helps the organisation to achieve their
growth in market. These tools are Joint ventures, equity alliance and non equity alliance. These
tools enables the management of organisation a specific area or tool to uses in their business. The
brief discussion related to these tools are given below:
Joint venture
It is one of the most commonly uses strategic-alliance tool which is used by many companies in
the market. Under this arrangement of strategic-alliance two companies mixed up all their
resources and formed one child company. This child organisation working on the new project or

task. One of the most unique feature of this type of alliance is that companies which work jointly
are separated when their objective is over. It is very important for the management of the
organisation that they develop effective contract with the other organisation so that the chances
of misconceptions can be reduced.
Advantages of Joint venture
Joint is one of the successful method and tool of strategic alliance which is used by many
organisations. The main reason for the popularity and choice of this method is their advantages
and benefits (Friel, Schram, and Townsend, 2020). There are many advantages of this project are
present in the market and the brief discussion related to the same are given below:
 The most important advantage of this method is that it helps the organisation to develop
new capacity and expertise in the management.
Disadvantages of Joint venture
It is nor possible for any concept that they only has positive aspect, every methods has its
negative side effective. Joint venture also has some disadvantages and it depends upon the
management of the organisation that how they manage the situations and the brief discussion
related to the same are give below:
 If the level of creativity and intelligence are not matched by both the organisation then
the chances of dispute will increase and becomes harmful for the business.
 If the task and the resources of the joint venture are not distributed properly in the
organisation then its a great disadvantage for the management of organisation.
Equity strategic alliance
It is related to those tool of the strategic alliance under which one company holds the equities of
the other company and if both the company purchase the share of each organisation. One of the
important feature of Equity strategic alliance is that the controlling power of the company are in
the hands of other company if they holds major shares (Ganne, 2018). If the company has
purchased less share then they have right to use the company resource and also have voting
rights in the company.
Advantages of Equity strategic alliance
There are different types of advantages are present in Equity strategic alliance because of their
systematic approach. The brief discussion related to the same are given below:

 One of the most important advantage of Equity strategic alliance is that It helps the
partners of the organisation to achieve their growth fast.
Disadvantages of Equity strategic alliance
 The loss of stake in the company is the biggest threat in this type of strategic alliance.
Under this arrangement if the company holds major share then the old management lost
the control from the company.
 If the management of the those company which purchase the shares of other company are
not good and not having creative mindset. It is great threat for the subsidiary company
because the risk of management failure are very high.
Non- Equity strategic alliance
Under this type of strategic alliance, both the organisation only develops agreement for the
sharing of their resources for common goals. In this type of strategic alliance, the organisations
does not develops any separate entity not to purchase the shares of the company. Only the
agreement are sufficient for the business (Gruszczynski, L., 2020). This agreement contains all
the terms and conditions of the business and only the document are considered at the time of
dispute between the business partners.
It is one of those tool of strategic alliance which is used by many organisation of world. It
is something informal so that there are not so many difficulties finds by the organisation to
develop these type of strategic alliance. It is one of the most important method for the business
organisation because it saves the time of the company. The main purpose of the organisation in
this type of alliance is to .gain marketing, sales, production and development in the organisation.

Advantages of Non- Equity strategic alliance
As many organisation has used this method of business alliance. The main reason for the
popularity of this method is their advantages and importance and the brief discussion related to
the same are given below:
 The main advantage of the Non equity strategic alliance is that it protect the existing
management of the organisation to lost the control from the organisation because the
transfer of stake are not involved in this type of project.
Disadvantages of Non- Equity strategic alliance
 The chances of conflicts and disputes are very high in this type of business alliance
because of their informal style.
 If those companies which agreed to conduct their business collectively has different
management then the chances of success are very less for joint venture.

Mergers
Merger is related to those tool of the strategic alliance under which two or more
companies merges to one another and a new organisation are formed. There may be many
reasons for the merger such as to increase the reach of the company, increases customer base and
also to gain considerable market share (Hayakawa, and Mukunoki, 2021). Unilever is also a
merger of two companies such as Dutch margarine produce margarine Unie and the British soap
maker Lever Brothers as it is one of the most successful merger of world because Unilever has
achieved huge success in their market and spread their business in all over the world.
There are many feature of mergers are present in the market which differs the mergers from
other forms of business alliances. The first feature is that the organisation which merges together
don't have any existence individually after the merger. The share capital of the company are also
combined and the company listed on the security exchange combine. This method enables the
company to promote innovation in the organisation.
Need of mergers
Merger is a great tool for the management of the organisation if they want to expand their
business and the scope of need of Merger are very big. The brief discussion related to the need
of the merger in the organisation are given below:
 One of the most important need of the merger by the business organisation is the need of
resources which is not present with the company but it is available with other
organisation. If both the companies becomes merge then their resources are combined
and be used by all the management as a whole.
 It is beneficial for any type of organisation which are having huge tax liability to merge
with those organisation having significant tax loss forward. It is beneficial for the
organisation for the organisation because their tax liability becomes decreases.
Advantages
There are many advantages of mergers are present in the market which makes the concept of
Merger very superior and the brief discussion related to the same are given below:
 If one organisation merges with the other then the major effect of their merger are put on
the market share of the organisation. The market share of the organisation are increased
by the huge number.

 One of the most important benefit of this type of business alliance is that the cost of
operations of the company can be increased. In the merger of two companies all the
resources and technologies are combine and becomes beneficial for the organisation by
saving their cost of business.
Disadvantages of Merger
 One of the most biggest disadvantage of the Merger is that the competition becomes less
in the organisation then the new company can increase prices in the industry which is not
beneficial for the buyers (Hoskins, Finn, and McFadyen, 2022). In this type of market the
risk of monopoly of one company are increases very high.
 The cultural problem is one of the most biggest problem faced by the organisation in their
Merger with another company. If the culture of both the organisation are not similar with
other's organisation then both the companies has to deal with many problems in their
business. It is the duty of the managers of the organisation that they try to solve these
problems.
Strategic alliance is an approach that includes tow or more organisations to be agreed to pool out
their organisational resources altogether in order to create a combined force within the market
place. While merger is considered as an agreement that helps in uniting two current organisations
into one new business. Strategic alliance and merger are both different concepts and
differentiation between them is described as below:
Basis of differentiation Strategic alliance Merger
Meaning It is an agreement between the
two or more businesses in order
to cooperate particular activities
of the business so that each
company gains advantage from
the strengths of the other
organisations and chase
competitive benefits.
It is a single agreement that
facilitates in combining two
separate existing organisations
into a new larger one for
expanding the market segments
or gain market share.
Objective The objective of strategic
alliance is to create a
The objective of merger is to
generate a stronger and a single

competitive benefit and lessen
the rivalries from moving in on
the market.
organisation.
Benefits and drawbacks This helps in speeding up the
entry within a new market
which is an advantage of
strategic alliance. The limitation
of strategic alliance is that in
this process there is poor
communication between the
involved companies because of
lack of bonding.
Merger helps in lowering the
price from efficiency of synergy
as well as scale which is a
benefit that is gained by the
companies. The major drawback
of merger is that it creates less
choices for the customer base
that results in reducing the
volume of business operations
within company.
Acquisitions
The acquisitions are also known as takeovers as in this approach they include more
negative connotation than mergers. It is also one of the major role of a company to consider
various factors which are appropriate for the business in order to lead at the marketplace. In the
recent times, it is important for a company to focus on various factors that are important for
business development on the basis of acquisition. All major companies in the international and
national marketplace focus on key aspects of acquisition in order to achieve organisational goals
and objectives. All major companies should also develop a major practices related to acquisitions
for overall growth of the organisation. In the corporate world, major practices based on
acquisitions are formulated by a company in order to make company successful in a set period of
time. Main companies should focus on development of risk eliminating strategy in order to
develop at the marketplace. All major companies in the international marketplace, it is essential
for a company to deliver best practices which are required to gather information about a subject
matter.
Key benefits and limitations of merger and acquisitions for profit growth in both global and
national marketplace
The key benefits should be considered by a company when it is about to internationalised
marketplace in a precise manner. Many companies develop a major planning framework which is

essential for business growth in an advanced manner. Main limitations prevents a company to
increase its profitability in order to develop sales and turnover. Expansion and growth are also
two major outcomes which should be kept in mind by the company in order to expand business
development (Nathaniel, Murshed, and Bassim, 2021). Also the company should focus on
analysing major environmental factors that are associated with business. Another major
limitation of merging or acquiring a company in the foreign marketplace is related to culture.
The development of internal environment is majorly dependent upon different practices which
are based on cultural goals. Traditions and culture of employees basically change when a
company is performing international operations. Traditions are also major element