Term
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Definition
| Specifies actions a firm takes to gain a competitive advantage by selecting and managing a group of different businesses competing in different product markets. |
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Term
| Single-business diversification strategy |
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Definition
| Corporate-level strategy wherein the firm generates 95% or more of its sales revenue from its core business area. Low level of diversification. |
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Term
| Dominant-business diversification strategy |
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Definition
| The firm generates between 70% and 95% of its total revenue within a single business area. Low level of diversification. |
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Term
| Related constrained diversification strategy |
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Definition
| A firm generating less than 70% of its revenue outside a dominant business and whose businesses are related to each other in some manner. Moderate to high level of diversification. |
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Term
| Related linked diversification strategy |
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Definition
| Less than 70% of revenue comes from the dominant business, and there are only limited links between businesses. Moderate to High level of diversification. |
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Term
| Unrelated diversification strategy |
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Definition
| Less than 70% of revenue comes from the dominant business, and there are no common links between businesses. This is very high levels of diversification and these are called conglomerates. |
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Term
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Definition
| Cost savings that the firm creates by successfully sharing some of its resources and capabilites or transferring one or more corporate-level core competencies that were developed in one of its businesses to another of its businesses. |
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Term
| Corporate-level core competencies |
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Definition
| Complex sets of resources and capabilities that link different businesses, primarily through managerial and technological knowledge, experience, and expertise. |
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Term
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Definition
| Exists when a firm is able to sell its products above the existing competitive level or to reduce the costs of its primary and support activities below the competitive level, or both. |
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Term
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Definition
| Exists when two or more diversified firms simultaneously compete in the same product areas or geographical markets. |
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Term
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Definition
| Exists when a company produces its own inputs (backward integration) or owns its own source of output distribution (forward integration). |
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Term
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Definition
| Cost savings realized through improved allocations of financial resources based on investments inside or outside the firm. |
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Term
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Definition
| Strategy through which two firms agree to integrate their operations a relatively coequal basis. |
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Term
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Definition
| Strategy through which one firm buys a controlling, or 100%, interest in another firm with the intent of making the acquired firm a subsidiary business within its portfolio. |
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Term
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Definition
| Special type of acquisition wherein the target firm does not solicit the acquiring firm's bid; thus, takeovers are unfriendly acquisitions. |
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Term
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Definition
| Strategy through which a firm changes its set of businesses or its financial structure. |
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Term
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Definition
| Strategy in which firms work together to achieve a shared objective. |
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Term
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Definition
| Cooperative strategy in whihc firms combine some of their resources and capabilities to create a competitive advantage |
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Term
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Definition
| Strategic alliance in which two or more firms create a legally independent company to share some of their resources and capabilities to develop a competitive advantage. |
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Term
| Equity strategic alliance |
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Definition
| Alliance in which two or more firms own different percentages of the company they have formed by combining some of their resources and capabilities to create a competitive advantage. |
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Term
| Non-equity strategic alliance |
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Definition
| Alliance in which two or more firms develop a contractual relationship to share some of their unique resources and capabilities to create a competitive advantage. |
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Term
| Business-level cooperative strategy |
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Definition
| A firm uses this to grow and improve its performance in individual product markets |
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Term
| Complementary strategic alliances |
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Definition
| Business-level alliances in which firms share some of their resources and capabilities in complementary ways to develop competitive advantages. |
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Term
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Definition
| Establishment of a new wholly owned subsidiary |
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Term
| International diversification |
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Definition
| Strategy through which a firm expands the sales of its goods or services across the borders of global regions and countries into different geographic locations or markets. |
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Term
| Strategic entrepreneurship |
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Definition
| Taking entrepreneurial actions using a strategic perspective |
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Term
| Corporate entrepreneurship |
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Definition
| The use or application of entrepreneurship within an established firm. |
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Term
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Definition
| The process by which individuals, teams, or organizations identify and pursue entrepreneurial opportunities without being immediately constrained by the resources they currently control. |
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Term
| Entrepreneurial opportunities |
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Definition
| Conditions in which new goods or services can satisfy a need in the market. |
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Term
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Definition
| The act of creating or developing a new product or process |
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Term
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Definition
| The process of creating a commercial product from an invention |
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Term
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Definition
| The adoption of a similar innovation by different firms. |
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Term
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Definition
| Individuals acting independently or as a part of an organization, who perceive an entrepreneurial opportunity and then take risks to develop an innovation to exploit it |
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Term
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Definition
| Values uncertainty in the marketplace and seeks to continuously identify opportunities with the potential to lead to important innovations. |
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Term
| International entrepreneurship |
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Definition
| A process in which firms creatively discover and exploit opportunities that are outside their domestic markets in order to develop a competitive advantage. |
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Term
| Autonomous strategic behavior |
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Definition
| Bottom-up process in which product champions pursue new ideas, often through a political process, by means of which they develop and coordinate the commercialization of a new good or service until it achieves success in the marketplace. |
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Term
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Definition
| Organizational member with an entrepreneurial vision of a new good or service who seeks to create support for its commercialization. |
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Term
| Induced strategic behavior |
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Definition
| Top-down process whereby the firm's current strategy and structure foster innovations that are closely associated with that strategy and structure. |
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Term
| Reasons for Diversification |
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Definition
| Value-creating (economies of scope, market power, financial economies), value-neutral (Antitrust regulation, tax laws, low performance, uncertain future cash flows, risk reduction for firm, tangible and intangible resources), and value-reducing (diversifying managerial employment risk or increasing managerial compensation) |
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Term
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Definition
| Share activities to create value |
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Term
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Definition
| Transfer core competencies to create value |
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Term
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Definition
| Exists when the value created by business units working together exceeds the value that those same units create working independently. |
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Term
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Definition
| Exists when the value created by business units working together exceeds the value that those same units create working independently. |
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Term
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Definition
| Acquisition of a company competing in the same industry as the acquiring firm. These increase a firm's market power by exploiting cost-based and revenue-based synergies. These result in higher performance when the firms have similar characteristics such as strategy, managerial styles, and resource allocation patterns. |
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Term
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Definition
| A firm acquiring a supplier or distributor of one or more of its goods or services. |
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Term
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Definition
| Acquisition made between companies with headquarter in different countries |
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Term
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Definition
| Exporting (high cost, low control), Licensing (Low cost, low risk, little control, low returns), Strategic alliances (Shared costs, shared resources, shared risks, problems of integration), Acquisition (Quick access to new market, high cost, complex negotiations, problems of merging with domestic operations), New wholly owned subsidiary (Complex, often costly, time consuming, high risk, max control, potential above-average returns) |
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