Merger: Two firms combine to form a single new organization

Takeover: One firm buys a controlling interest in another

Strategic Alliance: Two firms work together in a business venture but remain independent firms

Joint Venture: A strategic alliance, but within a separate legal entity formed by the participating companies

Franchise: One company (franchisor) allows another company (franchisee) to use its name, brand, products, etc. in return for a license fee and royalties

External Growth Strategies

A BC

(a+b)

A BA

B

A B

A BJV

A B

Franchise

A has some control over procedures, quality, advertising, etc., but no ownership of Franchise.