Final answer:
A functional arrangement where firms share marketing expertise is known as cooperative marketing, which allows them to combine resources, reduce risk, and potentially achieve greater market impact against competitors. Firms may also form associations for strength in numbers, to address common issues, or influence governmental policies, but collusive behavior such as cartels is illegal in many parts of the world.
Step-by-step explanation:
A functional arrangement in which two or more firms share marketing expertise is known as cooperative marketing. This concept applies when businesses jointly contribute to marketing efforts, seeking to achieve results and brand recognition that might be too challenging for an individual entity, especially when up against established competitors like Coca-Cola or Pepsi. Cooperative marketing is a strategic decision that helps sharing responsibility, reduce risk, and benefit from combined resources.
Competing corporations may join together in an association for several reasons: strength in numbers, addressing common industry-related issues, and influencing governmental policies that affect the entire industry. However, when firms collude to produce the monopoly output and sell at the monopoly price, such behavior is called a cartel, and in many jurisdictions, this is illegal under antitrust laws.
Businesses can also enter into a general partnership, which involves two or more people working together to own and run a business. This form of organization allows for shared decision-making and leveraging complementary skills but also requires the sharing of profits and responsibilities.