Innovation, Platforms, Corporate Strategy, Strategic Alliances, Mergers and Acquisitions

Disruptive Innovation

Leveraging new technologies in existing markets to attack existing market

Dominant Business

70-90% revenues from primary business, dominant and minor business share competencies

Related Constrained Diversification

<70% revenues from primary business, businesses generally share competencies

Unrelated Diversification (Conglomerate)

<70% revenues from primary business, businesses share few, if any, competencies

Related-Linked Diversification

<70% revenues from primary business, some but not all businesses share competencies

Single Business

>95% revenues from primary business, leverages it's competencies

Competitive Advantage

Ability to outperform competitors in the market

Takeover

Acquisition bid that is not solicited by the target firm

Social Entrepreneurship

Applying start-up principles to generate social change or impact a social cause

Asset Specificity

Aspect or feature of an asset that makes it useful for specific purposes

Synergies

Benefits gained from combining two firms, such as revenue synergies, cost synergies, and intellectual property

New Market/New Competence

Building new core competencies to create and compete in future markets

Existing Market/New Competence

Building new core competencies to protect and extend current market position

Pipeline Business

Business model with a linear value chain from suppliers to producers to consumers

Bidding War

Competitive process where multiple firms bid to acquire a target firm, potentially resulting in overpriced deals

Platform Strategy

Creating matches and governing interactions, relying on network effects, and not owning the product

Invention

Discovery of a new product, process, or modification of existing ones

Divestiture

Disposing of a business unit through sale, spinoff, or bankruptcy as part of corporate restructuring

Diversification

Expanding into new products, geographic regions, or both

Decline Stage

Final stage of the industry life cycle characterized by falling demand, market size decrease, and firms exiting

Vertical Integration

Firm's ownership of its production of inputs or distribution channels

Introduction Stage

First stage of the industry life cycle characterized by the inception of an industry and high entry barriers

Maturity Stage

Fourth stage of the industry life cycle characterized by a market reaching maximum size and few large firms remaining

S-Curve of Adoption Rate

Graphical representation of the rate at which a new product is adopted by consumers over time

Incremental Innovation

Improvement of existing products/processes using existing technology

Entrepreneurs

Individuals who undertake risk and bring new and uncertain ideas to the market

Architectural Innovation

Innovation that changes the way components of a product are linked together while leaving the core design concepts untouched

Backward Integration

Integrating towards raw materials

Forward Integration

Integrating towards the consumer

Transaction Costs

Internal and external costs associated with economic exchanges within a firm or in markets

Mergers

Joining of two independent companies to enhance a firm's position in the industry

Existing Market/Existing Competence

Leveraging core competencies to improve current market position

Real Options

Management's right, but not obligation, to undertake certain business opportunities or investments

Radical Innovation

New to the world, novel combination of distant knowledge

Innovation

Novel and useful idea that can be implemented to product or process

Acquisitions

One firm buying a controlling interest in another firm

Taper Integration

Partial reliance on outside firms such as suppliers or distributors

Commercialization

Process of bringing a novel idea to market

Creative Destruction

Process of revolutionizing the economic structure by destroying the old and creating the new

New Market/Existing Competence

Redeploying and recombining core competencies to compete in future markets

Growth Stage

Second stage of the industry life cycle characterized by rapid demand increase and emergence of dominant design

Industry Life Cycle

Stages of an industry's existence determined by technological change, revenues/sales, number of firms, and regulation

Mode of Governance

The way in which a strategic alliance is governed, such as through contracts or joint ventures

Shakeout Stage

Third stage of the industry life cycle characterized by declining industry growth and intense competition for market share

Strategic Alliances

Voluntary arrangements between firms that involve sharing knowledge, resources, and capabilities