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Strategic Positioning in a Turbulent Environment: An Empirical Study of Determinants of Performance in the North American Forest Industry

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This paper investigates the extent to which geographical and product diversification provide firms in the forest products industry of North America with means for coping with a turbulent environment. A turbulent environment is one where there is a high degree of uncertainty and sharp discontinuities; hence it is an unpredictable environment. The relationship between the firm's strategic positioning and performance is investigated. Six models relating various attributes of performance, including measures of risk, returns, and growth, to strategic positioning and other attributes of firms were estimated using regression equations. The results indicate that unrelated-product diversification and geographical diversification reduce risk, but at a significant cost in terms of performance, notably rate of return. Opportunities for related-product diversification that reduce risk are limited. Product differentiation and investment in new technology provide opportunities for increased returns and risk reduction. For. Sci. 37(3):903-923.
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Keywords: Unrelated and related product diversification; geographical diversification; risk

Document Type: Journal Article

Affiliations: Forest Economics and Policy Analysis Research Unit, The University of British Columbia, Vancouver, B.C., Canada V6T 1Z3

Publication date: 01 August 1991

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