<Dt> Alliance as an alternative to merger </Dt> <Dd> Some industry sectors have constraints to cross-border mergers and acquisitions, strategic alliances prove to be an excellent alternative to bypass these constraints . Alliances often lead to full - scale integration if restrictions are lifted by one or both countries . </Dd> <P> Some strategic alliances involve firms that are in fierce competition outside the specific scope of the alliance . This creates the risk that one or both partners will try to use the alliance to create an advantage over the other . The benefits of this alliance may cause unbalance between the parties, there are several factors that may cause this asymmetry: </P> <Ul> <Li> The partnership may be forged to exchange resources and capabilities such as technology . This may cause one partner to obtain the desired technology and abandon the other partner, effectively appropriating all the benefits of the alliance . </Li> <Li> Using investment initiative to erode the other partners competitive position . This is a situation where one partner makes and keeps control of critical resources . This creates the threat that the stronger partner may strip the other of the necessary infrastructure . </Li> <Li> Strengths gained by learning from one company can be used against the other . As companies learn from the other, usually by task sharing, their capabilities become strengthened, sometimes this strength exceeds the scope of the venture and a company can use it to gain a competitive advantage against the company they may be working with . </Li> <Li> Firms may use alliances to acquire its partner . One firm may target a firm and ally with them to use the knowledge gained and trust built in the alliance to take over the other . </Li> </Ul>

Key differences between different international market entry modes