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ArcMap has a utility that projects data on the fly, which allows ArcMap to display data stored in one projection as if it were in another projection without altering the data. This occurs when the data has a layer with a different coordinate system definition than the coordinate system of the data frame. ArcMap will not project data on the fly if the coordinate system for the data set has not been defined.
ArcMap expects coordinate system information to be stored with the data source.
Define a projection for the dataset.