Word Meaning

Vertical Vertical integration is a strategy whereby a company owns or controls its

integration suppliers, distributors, or retail locations to control its value or supply
chain. Vertical integration benefits companies by allowing them to control
the process, reduce costs, and improve efficiencies. However, vertical
integration has its disadvantages, including the significant amounts of
capital investment required.

Netflix is a prime example of vertical integration whereby the company

started as a DVD rental company supplying film and TV content. The
company's executive management realized they could generate more
revenue by shifting to original content creation. Today, Netflix uses its
distribution model to promote their original content alongside films from
major studios.
Offensive An offensive competitive strategy is a type of corporate strategy that
Strategy consists of actively trying to pursue changes within the industry.
Companies that go on the offensive generally invest heavily in research
and development (R&D) and technology in an effort to stay ahead of the
competition.
Blue-Ocean A yet-to-be “blue ocean” market space with no rivals and a wide-open
Strategy long-term growth and profit potential for a firm with the right strategy and
(Special type product.
of Blue
Ocean
Strategy)
Defensive Protecting market position and competitive advantage.
Strategies
Horizontal Is the range of product and service segments that a firm serves within its
Scope focal market.
Vertical Is the extent to which a firm’s internal activities encompass one, some,
Scope many, or all of the activities that make up an industry’s entire value chain
system, ranging from raw material production to final sales and service
activities.
Vertically Is one that participates in multiple segments or stages of an industry’s
Integrated overall value chain
Firm
Vertical Can expand the firm’s range of activities backward into its sources of
Integration supply and/or forward toward end users of its products.
Strategy
Full A firm participates in all stages of the vertical activity chain.
Integration
Partial A firm builds positions only in selected stages of the vertical chain.
Integration
Tapered Involves a mix of in-house and outsourced activity in any stage of the
Integration vertical chain.
Backward Backward integration is a form of vertical integration in which a
integration company expands its role to fulfill tasks formerly completed by
businesses up the supply chain.
Forward Forward integration is a business strategy that involves a form of vertical
integration integration whereby business activities are expanded to include control of
 the direct distribution or supply of a company's products.
Multidomesti Exists when competition in each country market is localized and not
c Competition closely connected to competition in other country markets.

Global Exists when competitive conditions and prices are strongly linked across
Competition many different national markets.

Transnationa Is a think-global, act-local approach that incorporates

l Strategy elements of both multidomestic and global strategies
Profit Are country markets (or geographic regions) in which a firm derives
Sanctuaries substantial profits because of its protected market position or its
competitive advantage.
Cross-Market Is the diversion of resources and profits from one market to support
Subsidization competitive offensives in another different market.
Dumping Selling goods in foreign markets at prices that are either below normal
home market prices or below the full costs per unit.
Economies of Economies of scope describe situations in which the long-run average and
scope marginal cost of a company, organization, or economy decreases, due to
the production of some complementary goods and services.
Dominant- Have a major “core” firm that accounts for 50 to 80% of total revenues
Business and a collection of small related or unrelated firms that accounts for the
Enterprises remainder
Narrowly Are comprised of a few related or unrelated businesses
Diversified
Firms
Broadly Have a wide-ranging collection of related businesses, unrelated
Diversified businesses, or a mixture of both.
Firms
Multibusiness Have a business portfolio consisting of several unrelated groups of related
Enterprises businesses.