Business Key Terms Theme 3

Sets out the purpose of a business, to guide their actions and acts as a basis for their aims and objectives.

Quantifiable medium to long term goals normally set by management to help an organisation achieve it's coporate vision

Objectives set by each business department so that they flow from current coporate objectives already in place.

A plan or approach used to achieve an overall objective.

A growth strategy consisting of 4 cells that provide a company with a range of options on strategic choices, each cell having a different degree of risk.

The aspect of Ansoff's growth strategy that consists of marketing an existing product in an existing market.

The aspect of Ansoff's growth strategy that consists of marketing an existing product in a new market.

The aspect of Ansoff's growth strategy that consists of marketing a new product into an existing market.

The aspect of Ansoff's growth strategy that consists of marketing a completely new product into a completely new market.

These consist of 3/4 generic strategies, cost leadership, differentiation, and focus/niche, that encourage a business to achieve a competitive advantage.

Means making products at the lowest cost possible, may include through outsourcing or lean management, so this tends to be for businesses with standard no frills no cost products.

Means the product or service is unique, thus it's USP can add value to it.

Means the product or service will serve a very small specific niche market segment, thus high costs can be passed on to customers as their tendes to be no close subsititutes.

4 quadrants to allow a business to view their products by their market share and market growth, in order to help managers plan for a balanced product portfolio.

This means that the product has high market share in a high growth market, usually meaning there is positive cash flow but prices tend to be competitive with rival businesses.

This means that the product has high market share in a low growth market, usually meaning there is positive cash flow and a likelihood for the business to be market leader.

This means that the product has low market share in a high growth market, thus the business has to decide to invest in order to follow suit with a growing market, but with the risk of no sucess.

This means that the product has low market share in a low growth market, thus the product is likely to be a drain on resources and is most often discountinued in the production process by a business.

Kay's idea of 3 characterisitics that can add value and give competitive advantage.

The idea that strong relationships with employees, suppliers and customers can add value and give competitive advantage.

The idea that bringing innovations to market can add value and gain competitive advantage.

The idea that good customer service and experience can add value and gain competitive advantage.

Medium term to long term direction of the business that indicate what the business will do to meet it's aims and objectives, so is pro-active decision making and is forward thinking.

Short term decisions of how the business will implement it's strategy, often reactive to competitior actions and focuses on present day thinking of current matters to be dealt with.

A tool used by businesses to identify internal strengths and weaknesses as well as external oppourtunities and threats. From this, a business may be able to create strategies.

Helpful to the business and are of internal origin; these could be financial, marketing aspects or aspects of human resources.

Harmful to the business and are of internal origin; these could be financial, aspects of marketing or aspects of human resources.

Helpful to the business and are of external origin, these could be political, economic or social aspects.

Harmful to the business and are of external origin, these could be political, economic or social aspects.

Factors that are outside of a businesses control.

Business analysis tool that aims to look at external factors and how they may have an impact on the business. This could aid strategical and tactical decision making and objective setting.

An activity related to government policy and its administrative practices that can have an effect on a business. This could be new legislation or regulatory shifts that could have a substantial impact on company operations.

A consideration regarding how a consumer's disposable income and other financial resources tend to impact their buying activities. This could be the current stage in the economic cycle it is currently or whether interest rates are up or down.

The facts and experiences that influence individuals' personality, attitudes and lifestyle. This could be the various social characteristics of the consumer that could influence a product's appeal.

Influences that have an impact on how an organization operates that are related to the equipment used within the organization's environment. With increased reliance on equipment, technological factors can exert a considerably more important effect on the success of a business.

Powers and limitations that arise from legislation and interpretation of laws, and which impel or restrain individual or organizational activities. Such as restrictions on the likes of penetration pricing or the national minimum wage being enforced.

An identifiable element in the physical, cultural, demographic, economic, political, regulatory, or technological environment that affects the survival, operations, and growth of an organization, such as the climate.

Porter identified five factors that act together to determine the nature of competition within an industry. These are the threat of new entrants to a market, bargaining power of suppliers, bargaining power of customers, threat of substitute products, degree of competitive rivalry.

A threat as competition is now able to gain market share, gain brand strength and access to suppliers and so becomes an alternative for the customer.

Depending on the uniqueness of the supplier and the size or number of firms they provide for, they could be able to drive up prices or recuce supply.

Extent of this depends on the number of customers in the market but the size of the orders can mean they have 'bulk buying' power which could impact profit, and they could seek alternatives instead of the company in question.

This depends on how effectively a company can meet or beat industry performance, but a well differentiatied company can mean customers go elsewhere due to their USP adding value to the product/service.

This depends on the number of firms and how differentiated they are, but brand loyalty elsewhere could make it difficult for customers to shift their attention away from a company.

The process of a business increasing in size, market power of market share in order to reach a larger market or gain more market power.

Occurs when unit costs or average costs fall as a result of an increase in the level of output of the business.

This is the most efficient level of output, where average unit costs are at their lowest point.

Reduced costs for larger businesses in buying inputs, such as raw materials and parts, or of borrowing money because of a larger discount given to a larger purchase than smaller businesses can make, like buying in bulk.

A large firm can spread its advertising and marketing budget over a large output and it can purchase its inputs in bulk at negotiated discounted prices if it has sufficient negotiation power in the market.

Large-scale businesses can afford to invest in expensive and specialist capital machinery. Advatage to the firm primarily in the production process.

Larger businesses split complex production processes into separate tasks to boost productivity. By specialising in certain tasks or processes, the workforce is able to produce more output in the same time.

Larger businesses often with more product line are able to spread risk across their various products. For example through diversification.

Larger businesses with greater output may present to be of less risk to lenders and so are able to gain better interest rates of choose from a larger array of lenders.

This coours when output grows beyond the minimum efficient scale and unit costs start to rise.

When two businesses mutually agree to join forces to create one new company and operate as one.

When one business acquires another through buying the majority share of 51% or higher.

Where the sum of the whole is greater than the sum of the parts; so in a merger or takeover a business could be more profitable or efficient together that as seperate entities.

Where businesses extract raw materials or they farm.

Where businesses manufacture goods.

Where businesses provide services.

Acquiring a business in the same industries but at a different stage in the production chain.

Means you acquire closer to the customer, such as manufacturer buying a retailer.

Means you acquire closer to the raw materials in the supply chain, such as a manufcaturer buying a raw material farm.

Two businesses integrating when they are in the same industry at the same stage of prodiction. Like an oil company merging with an oil company.

Money invested in a business venture with an expectation of income, and recovered through earnings generated by the business over several years. It is generally understood to be used for capital expenditure rather than for day-to-day operations (working capital) or other expenses.