Glossary

When one firm, usually the larger one, buys another firm

When the interests of the individuals that manage the company (agents such as the CEO) may not align with the interest of the owners (such as stockholders)

Moving back along the value chain and entering a supplier’s business

Focuses on controlling the actions of individuals through rules and procedures

A strategy where the firm attempts to offer a hybrid of both lower cost and differentiated products or services, combining the two basic strategies

Creating a new, untapped market rather than competing with rivals in an existing market

A strategy that offers the lowest price in the market for that product or service

A strategy that offers something unique that differentiates their product or service from others

The reason for achieving a competitive advantage is not apparent, and therefore difficult to imitate

Relies on shared traditions, expectations, values, and norms to lead people to work toward the good of their organization

When the economic value creation of a firm is greater than its competitors.

When a person could receive personal benefit from decisions they make in their official capacity

Provide exclusive rights to the creators of original artistic works such as books, movies, songs, and screenplays

A skill set that is difficult for competitors to imitate

The important guiding principles of an organization, that every employee should embrace

Measuring the impact of a firm’s activities in corporate social responsibility

Efforts by a firm to be socially accountable by contributing to community and/or societal goals through philanthropic, activist, or charitable activities

Specifies actions taken by the firm to gain a competitive advantage by selecting and managing a group of different businesses in several industries and/or product markets

A legal business entity that separates the owners from the liabilities of the business. Owners are issued stock, and profits are taxed twice, at the corporate and individual owner levels

A business model whereby society’s needs and challenges are addressed as a firm prospers achieving its mission

The potential for a company’s operations in a country to struggle because of differences in language, customs, norms, and customer preferences

When the value of a conglomerate is less than the value of the sum of its business units

The potential for a country’s economic conditions and policies, property rights protections, and currency exchange rates to harm a firm’s operations within a country

Created when the unit cost of goods and services decreases as a firm is able to produce and sell more items

An unplanned strategy that arises in response to unexpected opportunities and challenges

The processes, practices, and decision-making styles of organizations that act entrepreneurially

A lower-end brand that a firm introduces to try to protect the firm’s market share without damaging the firm’s existing brands

A strategy that attempts to provide the lowest cost to a narrow, niche target market

A strategy that provides unique or differentiated products or services to a narrow, niche target market

A small position that a firm intentionally establishes within a market in which it does not yet compete

Moving further down the value chain to enter a buyer’s business

Expanding geographically into different markets

The chain of command that shows who reports to whom

Pursuing a diversification strategy by acquiring or merging with a rival company

The tendency to pursue creativity and experimentation aimed at developing new products, services, and processes

Resources that are not physical, like a firm’s reputation, a patent, or employee knowledge

Creations of the mind, such as inventions, artistic products, and symbols.

The strategy that an organization hopes to execute

Adding new capabilities or products and services using a firm’s resources or hiring those resources

How a firm conducts its business outside the borders of its home country

Methods that prevent a competitor from imitating the resource or capability that provides a competitive advantage

A cooperative arrangement that involves two or more organizations each contributing to the creation of a jointly owned, new company

A limited liability company with some of the ease of operation of a sole proprietorship or partnership but owners are separated from the liabilities of the business

Two firms, usually similar in size, combine into one entity, often gaining strength in the market

An organization’s purpose, why it exists, beyond making a profit

A firm that has operations in more than one country

Relocating a business activity to another country, such as manufacturing or a call center

Quantitative measures that indicate how an organization performs in comparison to historical trends and/or competitors.

Focuses on measurable results within an organization

A business that is not incorporated with two or more owners/partners, personally responsible for the liabilities of the business

Legal decrees that protect inventions from direct imitation for a limited period of time

The historical path a firm takes over time, including the decisions, accumulated learning, and experience gained along the historical path are not easily duplicated.

Reference points that a firm can use to compare its performance against others.

Quantitative measures that indicate how an organization performs in comparison to historical trends and/or competitors.

Evaluation of six forces in an industry's macro-environment: political, economic, socio-cultural, technological, environmental, and legal.

The potential for government upheaval or interference with business to harm an operation within a country

The tendency to anticipate and act on future needs rather than reacting to events after they unfold

The strategy that an organization actually follows

When a firm moves into a new industry that has important similarities with the firm’s existing industry or industries

Returning offshored jobs and activities back to the home country

A special form of a corporation for smaller companies, with a limited number of owners/stock holders who are separated from the liabilities of the business. Profits are only taxed at the individual owners level.

Federal legislation in 2002 that reformed financial regulations, in the wake of multiple corporate scandals

Goals that are specific, measurable, attainable, realistic, and time-bound

The interrelationships within a firm, along with relationships within or across a business process, that are difficult for competitors to imitate.

The simplest form of business, with only one owner who is personally responsible for the liabilities of the business, whereby the owner and the business are considered one and the same

A cooperative arrangement governed by contract between two or more organizations for their mutual benefit.

The primary matter faced by an organization that must be addressed for the organization to survive, excel, or achieve a major strategic initiative

An ongoing process used by firms to set an organizational vision, analyze the external, competitive, and internal environments, and develop strategies for success

Resources that provide an organization with an opportunity to develop competitive advantages over its rivals

A broad goal that an organization needs to achieve to be successful in the marketplace

Firms that attempt a hybrid, best cost strategy of low cost and differentiation, but are not able to achieve either effectively

In the business context means the cooperation or interaction of two or more busi - ness units so that they perform more effectively together than they would if independent

Resources that can be readily seen, touched, and quantified, such as cash or equipment

Measuring a firm’s overall success based on People, Planet, and Profit, instead of the traditional view of only profit.

Refer to formulas, practices, and designs that are central to a firm’s business and that remain unknown to competitors

Phrases, pictures, names, or symbols used to identify a particular organization

A strategy that was developed but not accomplished

When a firm enters an industry that lacks any important similarities with the firm’s existing industry or industries

The path and steps by which products and services are created and eventually sold to customers, including supporting activities

The principles that are important to an organization, that all employees should adopt and live by

Diversifying by entering an industry in the firm’s value chain, such as a supplier upstream or a buyer downstream

What the organization hopes to become, its aspirational goal for the future

A tool used to assess if a firm’s resource or capability is Valuable, Rare, Difficult to Imitate, and Organized to create value, and therefore what type of competitive advantage it provides.