During a firm's planning process, the plans of the company must be made in advance in order to lay down the strategic methods to be employed to achieve set goals and objectives. There are various ways through which a firm can achieve these objectives, a firm can participate in a joint ventures or can decide to use the various existing strategic alliances that it finds most applicable and in line with its set goals. There are various routes that can be embraced by a firm in achieving set goals than carrying out individual investment in human and financial resources independently. As an alternative to the firm, it can decide to go ahead independently and achieve its goals without the involvement of an external party or can involve a number of parties.
Similarly, the firm can decide to buy and acquire resources from outside sources, this is commonly termed to as outsourcing. Mergers and acquisitions have been considered very favorable when it comes to change of ownership; a number of tedious and cumbersome procedures that involve change of ownership are avoided thus channeling this time and resources to more profitable activities. Such a move is evidenced in the recent acquisition of Bulgari (Emperor Watch & Jewellery 2010).
Duncan (2001) asserts that a number of businesses especially those that are new entrants will be more willing to form alliances with firms that are stronger and better than them. The motive behind this is to be assisted in breaking into the market easily and faster with less expense incurred than it would have been if they were to do it by themselves such an alliance is evidenced in LVHM joining Emperor Group. Initially the issue of joint venture entirely gave a lot of focus on the representation that existed of firms in foreign markets, however, currently, the joint venture phenomenon has been redefined and it has become a little prevalent. An alliance helps an entity learn a business environment faster and it also provides compliment to the firm especially regarding to those areas that it may be lacking expertise (Yoshimo, 2006).
In strategic alliance, there is an agreement by at least two firms of agreeing to combine the resources at hand either economical, financial, materials or know how in a contractual form with the objective of being able to achieve the strategic objectives that have been predefined (Yoshimo, 2006). There exist a number of alliances that a firm can be involved in with another firm. The simplest one is license granting. A company can decide to allow another firm to use its technology and provide it with know -how and the company provided with this has to pay royalties to the provider either by cash or in form of equities. The other set up involves a firm having an investment agreement in another firm (Duncan, 2001). In return the other firm is supposed to allot equity as a consideration for the technology and know-how provided and the investment incorporated into the firm. Such can be seen by the various alliances LVMH has made with a number of companies such as in sponsors L Capital Asia and in L.L.C.
A number of arrangements which include investments in equities have become very common in the current days. These investments as a result have led to long term co-operations and alliances by a number of entities. LVHM has not been left behind and it has taken a similar step so as to rule the market. Being a luxury firm, the entity tries to penetrate the market as much as possible. The firm is armed with the necessary resources and skills and it uses this advantage to lure other firms that lack the resources it has. There are numerous advantages that are bestowed to both the parties in the alliances such as mergers and acquisitions. For instance the headache and expenses that have to be undergone so as to change the ownership of the company is avoided and the premiums are used in other profitable activities (Emperor Watch & Jewellery 2010). In addition, the firm has not managed to exploit market within the industry.