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86 Cards in this Set
- Front
- Back
Three Basic Questions
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Where are we competitively, where do we want to be in 3-5 years, and how do we get there
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Business Strategy
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View of just the business and not the entire operation
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Corporate Strategy
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Arching over everything and all divisions
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Competitors
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Business entity that competes against another
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Competitive Advantage
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The purpose of strategic planning. Build, Structure, and Expand. Anything that will cause something to buy your product over another
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Distinctive Competence
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Similar to competitive advantage but applied to manufacturing firms
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Strategic Management Process
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Mission, Vision, Goals, Strategies, Structure, People
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Operational Planning (1 year or less)
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focus on current performance
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Strategic Planning (3-5-10 years)
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Focus on long term and competitive positioning.
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Four Stages of Strategy Development
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Analysis (where do we want/need to be), Formulation (Develop strategies, form the plan), Implementation (Start the plan, announce to shareholders/employees), Evaluate and Adjustment
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Analytical Tools
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Methods used in analyzing the competitive position of the firm
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Strategy Diamond
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Arenas (Where?), Vehicles (how?), Differentiators (Why?), Staging (sequence or speed), Economic Logic (How are profits achieved)
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SWOT Analysis
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Strengths (internal), Weaknesses (internal), Opportunities (external), Threats (external)
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Strategic Imperatives
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Goals which must be achieved in the company is to survive. Typical in every organizations strategic plan, which is critical for the organizations future existence
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Internal Growth "Build It"
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Focuses on growing through penetration, new products, new markets, etc.
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Acquisition/Merger "Buy It"
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Focuses on growing through buying or merging with other companies
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Effectiveness (goal achievement)
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A firm that accomplishes their goals
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Efficiency (cost, productivity, overhead)
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how well resources are utilized
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Resources
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The inputs that a firm uses to create goods and services
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Tangible
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perceptible by touch.
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Intangible
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unable to be touched or grasped; not having physical presence.
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Capabilities (transformation)
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Skill in using resources to create goods and services. The combination of procedures and expertise that a firm relies on to engage in distinct activities in the process of producing goods and services.
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Distinctive Competencies
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A competency unique to a business organization. The basis for the development of an unassailable competitive advantage.
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Value Chain
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The totality of a firms activities from the securing of raw materials through the transformation process (core competencies) to the delivery of finished goods through distribution channels
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Value Added Concept
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Value can be added in each step of the value chain.
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Core Competencies
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Activities a firm must do, which provide the fundamental basis for the provision of added value
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Inbound Logistics (upstream functions)
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Involves all aspects of securing raw materials and working with suppliers to secure inputs
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Outbound Logistics (downstream functions)
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Involves distribution channels and all actives post transformation for ultimately getting products/services to customers.
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Primary Activities
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Line Functions
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Support Activities
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Staff Functions
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Distribution Channels
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The chain of businesses or intermediaries through which a good or service passes until it reaches the end consumer.
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Vertical Integration
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Opposite of outsourcing. When a company buys out a supplier and naturally, enlarges the company and expands core competencies.
or The process of a firm to assume activities previously performed by suppliers or distributors |
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Outsourcing
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Process of moving an activity previously performed as a core competency to another firm which can perform the activity more effectively and/or efficiently
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Offshoring
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Process of moving an activity outside the US while retaining the activity as a core competency of the firm.
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Economies of Scale
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Concept that unit price declines with increased volume
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Economies of Experience
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Concept that the more an activity is performed, the more efficiently it is achieved. The inverse of "learning curve"
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Benchmarketing
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Process of comparing activities to competitors to determine the "best practices"
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Financial Analysis
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Most valuable type of analysis
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VRINE Model
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Value, Rarity, Inimitability, Non-substitutability, Exploitability
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Three Environmental Levels
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Tool for external assessment that has 3 layers of analysis: Macro (external environment), industry or Competitive Environment, Strategic Group Environment
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Strategic Groupings
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Subset of firms which, because of similar strategies, resources, and capabilities, compete against each other more intensely than with other firms in an industry.
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PESTEL Analysis
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Tool of assessing the political, economic, sociocultural, technological, environmental, and legal contents in which a firm operates
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Competitive Intelligence
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Method whereby firms are able to gather information about their competitors
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Industry Concentration Vs. Fragmentation
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Fragmented markets are believed to be more competitive than concentrated markets, whereas concentrated markets are more difficult to enter.
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Porters 5 Forces
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“Attractiveness” suggests the industry’s potential for profitability. Originally intended to evaluate entry into “new” industry; now used to evaluate whether to remain in an “existing” industry based on projected attractiveness in 3-5 years.
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5 Forces
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Threat of New Entrants, Power of Buyers, Power of Suppliers, Intensity of Industry Rivalry, Threat of Substitutes
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Complementor Firm
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Any firm of industry, which through its success and growth, benefits another firm or industry
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Concept of Industry Life Cycle
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Pattern of evolution followed by an industry inception to current and future states
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Commoditization (Undifferentiated price competition)
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Competitive market environment in which, products/services are "undifferentiated" and competition is based solely on price
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Market/Industry Consolidation
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Reduction in the number of competitors in a market. Result of a market becoming "concentrated"
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Product Life Cycle
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Introduction, Growth, Mature, Decline
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Re-invigoration, Reinvention, Restarting
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As industries mature, certain segments may emerge to reinvigorate them, sometimes even resorting their growth industries.
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Strategic Positioning
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Means by which managers situate a firm relative to its rivals
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Low Cost Leadership
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Based on producing a good or offering a service while maintaining total costs that are lower than what it takes competitors
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Differentiation
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Based on products or offering services with quality, reliability, or prestige that is discernibly higher than that of competitors and for which customers are willing to pay
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Focus Low Cost Leadership
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Based on being a low-cost leader in a narrow market segment
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Focus Differentiation
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Based on targeting products to relatively small segments
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Market Segmentation
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ways that a market cant be split up and categorized
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Economies of Scale
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unit prices of production typically decreases with increased volume. Concept is also applied to purchasing power
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Diseconomies of Scale
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average total cost per unit of production increases at higher levels of output
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Minimum Efficient Scale
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The output level that delivers that lowest total average cost
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Learning Curve (economies of experience)
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With any new activity there will be a period of inefficiency until experience provides efficiency and greater proficiency at the task
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Branding
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One of the principal forms of differentiation of products and services.
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Strategy Evaluation Criteria
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Does your strategy exploit your key resources?, Does your strategy fit with current industry
conditions?, Will your differentiators be sustainable?, Are the elements of your strategy consistent and aligned with your strategic position? Can your strategy be implemented? |
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Industry Evolution
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Differentiated markets become undifferentiated (commoditized) as products or services are imitated/replicated by competitors thus minimizing/eliminating competitive advantage
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Commoditization
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Industries evolve over time from differentiated competition to undifferentiated competition
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Technological Change/Disruption
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Technological change is disruptive when change is discontinuous, so that it does not sustain existing lenders advantage.
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Speed of Change
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Critical factor in keeping up with the basis of competition in an industry.
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High End Disruption
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Creation of new markets and/or redefining bases of competition. May result in huge new markets in which, new players redefine industry rules to unseat the largest incumbents.
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Low End Disruption
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Targets low end of markets/ least desirable customers.
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Hybrid Disruption
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Most newcomers adopt some combination of new-market strategies
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First Mover Advantage
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The firm that is the first to offer a new product/service in a market
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Second Mover Advantage (fast follower)
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Second significant company to move into a market quickly following the first mover.
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Containment
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Limit the extent to which the new entrant's innovation impacts your business
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Neutralization
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Try to short-circuit the moves of innovations or new entrants before they make them
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Shaping
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Shape the innovation so it becomes something the incumbent can live with or even benefit from
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Absorption
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Minimize the risks entitled by being either a first mover or an initiator
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Annulment
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Improve incumbent products and services to annul an innovation or new entrants offering
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Portfolio Planning
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practice of mapping diversified business or products based on their relative strengths and market attractiveness
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Vertical Scope
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(Level of Diversification along the Value Chain), The extent to which a firm is vertically integrated
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Horizontal Scope
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(Level of Related Diversification), Extent to which a firm participates in related market segments or industries outside its existing value-chain activities
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Economy of Scope
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(Lower cost as a result of sharing resources to produce more than one product), condition under which lower total average costs result from sharing resources to product more than one product or service.
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Coevolution
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Concept of diversification in which two or more interdependent businesses adapt to each other
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Boston Consulting Model
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Stars, Cash Cows, Problem Children, Dogs
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Synergy
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Condition under which the combined benefits of activities in two or more areas are greater than the simple sum or those benefits.
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Strategic Options
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Related Diversification, Unrelated Diversification (Conglomerate Concept), Vertical Integration, Outsourcing, Off-shoring, Horizontal Integration, Strategic Alliances, Corporate Refocus/Strategic Audit
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