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Which of the following best illustrates a non-equity alliance?

1) Joint venture between two companies
2) Merger between two companies
3) Licensing agreement between two companies
4) Acquisition of one company by another

User Philm
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1 Answer

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Final answer:

A licensing agreement between two companies best illustrates a non-equity alliance because it involves a cooperation without creating a new entity or exchanging ownership stakes, unlike joint ventures, mergers, or acquisitions.

Step-by-step explanation:

To identify which of the provided options best illustrates a non-equity alliance, we must understand what a non-equity alliance is. A non-equity alliance occurs when companies cooperate for a specific purpose or project without forming a separate entity or exchanging ownership stakes. Therefore, the answer is a licensing agreement between two companies. Here's why the other options do not fit as non-equity alliances:

  • Joint venture between two companies typically involves creating a new entity, which is an equity alliance.
  • A merger between two companies results in one combined entity, which is also an equity alliance.
  • An acquisition of one company by another is not an alliance but a complete takeover, resulting in one company owning the other.

The remaining option, a licensing agreement, allows one company to use the intellectual property of another company in exchange for a fee or royalty without any transfer of ownership stakes, fitting the description of a non-equity alliance.

User Aquinq
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