Final answer:
Outsourcing is the practice where one firm handles another firm's manufacturing or part of it without equity sharing. It aims to streamline production by focusing on core competencies and is different from strategic alliances, joint ventures, and franchise agreements.
Step-by-step explanation:
The type of alliance in question, where one firm handles another firm's manufacturing or some aspect of the manufacturing process without an equity stake, is known as outsourcing. This business practice allows the firm to focus on its core competencies while another company handles the production. It is distinct from a strategic alliance, which typically involves some level of collaboration on core business activities, a joint venture, where two or more firms create a new business entity together sharing equity and profits, and a franchise agreement, where a franchisor allows a franchisee to use its brand and business model.
Outsourcing can streamline the manufacturing process, similar to a vertical merger, although the firms remain separate entities. It differs from a general partnership since the relationship does not usually involve sharing profits or business ownership. The concept of outsourcing is important in various forms of business organizations, and it affects the competitive landscape of the free market economy by changing how companies manage labor and production costs.