BU111 Final Exam concept review

Ansoff Matrix

A strategic planning tool used to identify and analyze growth opportunities by categorizing four expansion modes: Market Penetration, Market Development, Product Development, and Diversification.

Market Penetration

A growth strategy that focuses on increasing sales of existing products to the current market, often involving tactics like cutting prices or increasing advertising.

Market Development

A growth strategy that involves selling existing products to new markets, which may require creating customer awareness in these new segments.

Product Development

A growth strategy that entails developing new products for existing customers, leveraging brand equity and existing distribution channels.

Diversification

A growth strategy that involves entering new markets with new products, typically associated with higher risks and the need for new capabilities.

Risk Assessment

The evaluation of potential risks associated with each growth strategy, including factors that may increase or decrease the likelihood of success.

Diamond-E Framework

A tool used to analyze the relationship between a firm's resources, capabilities, and environmental factors, aiding in strategic decision-making.

Porter's Five Forces

A framework for analyzing the competitive forces in an industry, including the threat of new entrants, bargaining power of suppliers and customers, threat of substitutes, and industry rivalry.

Forcefield Analysis

A method used to identify and analyze the forces that influence a situation, aiding in decision-making about expansion strategies.

Competitive Advantage

An attribute that allows an organization to outperform its competitors, often through superior resources, capabilities, or brand strength.

Economies of Scale

Cost advantages that a business obtains due to the scale of operation, often resulting in reduced costs per unit as production increases.

Cannibalization

The negative impact on a company’s existing products' sales when a new product is introduced, potentially taking market share away from them.

Brand Image

The perception of a brand in the minds of consumers, which can be affected by marketing strategies and product changes.

Tactical Strategies

Specific actions or plans implemented to achieve broader strategic objectives, particularly in the context of market entry and expansion.

Market Share

The portion of a market controlled by a particular company or product, often a key indicator of competitive performance.

ROI (Return on Investment)

A financial metric used to evaluate the profitability or efficiency of an investment relative to its cost.

Liability of Foreignness

The inherent disadvantage that foreign companies experience when entering a new market, which can include cultural differences and regulatory barriers.

Political-Legal Factors

Elements that involve laws, regulations, and conditions affecting the business environment, including taxation and trade agreements.

PEST Analysis

A strategic tool used to analyze the Political, Economic, Social, and Technological factors affecting an organization.

Lobbying

The act of hired representatives advocating for a company's or group's interests in the government.

Sole Proprietorship

A business owned and operated by a single individual who has complete control over profits and decision-making.

Partnership

A business structure where two or more individuals share ownership and responsibility.

General Partnership

A partnership where all partners have joint and several liability for the business debts.

Limited Partnership

A partnership where at least one partner has limited liability and cannot be involved in management.

Corporation

A legal entity that is separate from its owners, offering limited liability to its shareholders.

Double Taxation

The taxation of corporate profits once at the corporate level and again as dividends on personal income tax returns.

Social Enterprise

A business model that focuses on generating social value while maintaining financial sustainability.

Licensing

An agreement where one company allows another to use its intellectual property in exchange for royalties.

Joint Venture

A strategic alliance where two or more parties collaborate for mutual benefit while retaining their individual identities.

Entry Strategies

Approaches that businesses use to enter into international markets, including exporting, franchising, and establishing subsidiaries.

Trade Barriers

Government-imposed restrictions like tariffs, quotas, and regulations that hinder international trade.

Porter's Five Forces

A framework for analyzing the competitive forces within an industry to determine the potential for profitability.

Market Segmentation

The process of dividing a market into distinct groups of buyers with differing needs, characteristics, or behaviors.

Globalization

The process of developing an international influence and operating across national boundaries.

Consumer Protection Laws

Regulations aimed at ensuring the rights and safety of consumers, influencing business practices.

Barrier to Entry

Obstacles that make it difficult for new competitors to enter a market.

Intellectual Property (IP)

Creations of the mind, such as inventions and artistic works, which can be legally protected.

Inflation

A general increase in prices and fall in the purchasing value of money.

Deflation

A reduction in the general level of prices in an economy.

Interest Rates

The amount charged, expressed as a percentage of principal, by a lender to a borrower for the use of assets.

Exchange Rates

The value of one currency for the purpose of conversion to another.

PEST Analysis

A strategic management tool used to analyze Political, Economic, Social, and Technological factors that may impact an organization.

Debt Financing

When a company raises money for working capital or capital expenses by selling bonds, bills, or notes to individuals or institutional investors.

Equity Financing

The method of raising capital by selling company stock to investors.

Bonds

Fixed income instruments that represent a loan made by an investor to a borrower, typically corporate or governmental.

Stocks

Securities that represent an ownership share in a company.

Yield

The income return on an investment, usually expressed as a percentage.

Time Value of Money

The principle that money available now is worth more than the same amount in the future due to its potential earning capacity.

Present Value (PV)

The current worth of a cash flow or series of cash flows expected in the future, discounted at a specific interest rate.

Future Value (FV)

The value of a current asset at a specified date in the future based on an assumed rate of growth.

Annuity

A series of equal payments made at regular intervals, such as monthly or annually.

Amortization

The process of gradually paying off a debt over a period through regular payments.

Net Present Value (NPV)

A valuation method used to determine the attractiveness of an investment or project by calculating the present value of future cash flows minus the initial investment.

Capital Gain

The increase in the value of an asset or investment over time, realized when the asset is sold.

Margin Buying

Purchasing stocks by borrowing money from a broker to buy more stock than you could with your own available cash.

Risk-Return Trade-off

The principle that potential return rises with an increase in risk.

Social Factors

Elements that affect customer preferences, worker attitudes, business conduct, and corporate social responsibility, including customs, habits, and values.

Cohorts

Homogeneous groups within a larger population, used to predict behavior and trends.

Demographics

The study of human populations, including size, characteristics, and participation rates.

Baby Boomers

Individuals born between 1946 and 1964, known for their long work hours and brand loyalty.

Generation X

Individuals born between 1965 and 1979, characterized by frugality and flexibility in work.

Millennials (Gen Y)

Individuals born between 1980 and 1994, seeking authenticity and customization in products.

Generation Z

Individuals born from 1995 onward, described as digital natives who prioritize meaningful work.

Market Segmentation

The process of distinguishing market segments based on psychological, demographic, and lifestyle characteristics.

Customer Preferences

The specific likes and dislikes that influence customers' buying behavior.

Worker Attitudes

The mental state of employees that influences their job performance and satisfaction.

Psychographics

The study of consumers based on psychological characteristics, including attitudes, values, and interests.

Economic Factors

Elements that relate to the economy and its impact on consumer behavior and business decisions.

Corporate Social Responsibility (CSR)

The concept that businesses should act ethically and consider their impact on society.

Digital Natives

Individuals born into the digital age, comfortable with technology and digital communication.

Labor Force Dynamics

Changes in the workforce size and composition that affect employment and economic health.

Urban Concentration

The trend of populations moving to urban areas, impacting demographic characteristics and service access.

Aging Population

The increasing number of older individuals in the population, resulting in various social and economic implications.

Estimation Brain Teaser

A problem-solving exercise where assumptions and variables are used to derive an estimated answer.

Total Addressable Market (TAM)

The total revenue opportunity available for a product or service, often expressed as a percentage of market share.

Serviceable Available Market (SAM)

The segment of the TAM that is targeted by a company's products or services.

Serviceable Obtainable Market (SOM)

The portion of the SAM that a company realistically expects to capture.

Assumptions Refinement

The process of adjusting initial assumptions to enhance the accuracy of estimates.

Market Size Calculation

The method of estimating the total potential for sales in a given market.

Consideration of Proxies

Using alternative indicators or metrics in estimation when direct data is unavailable.

Population Segmentation

The categorization of a population into segments to analyze market characteristics and potentials.

Profit Framework

A structured approach to assessing a company's profitability using price, revenue, quantity, and costs.

Breakdown of Problems

The practice of dividing a complex issue into manageable parts for simpler analysis and estimation.

Median Household Income

The middle income value of households in a defined area, used for economic analysis.

Replacement Frequency

The rate at which a product needs to be replaced, influencing market demand estimations.

Demographic Analysis

The examination of statistical data relating to the population and particular groups within it.

Estimation Techniques

Methods employed to arrive at approximate values for various business metrics.

Revenue Impact

The potential effect that a product or service can have on total revenue across a market.

Fixed Costs

Expenses that do not change with an increase or decrease in sales or production volume.

Variable Costs

Costs that vary directly with the level of production or sales.

Profitability Analysis

Assessment of the financial performance of a company to determine its ability to generate profit.

Technological Factors

The elements of technology that influence business operations and strategies, including advancements in equipment, information technology, and processes.

Disruptive Innovation

An innovation that creates a new market and value network, often displacing established market-leading firms, products, and alliances.

Sustaining Innovation

Improvements or enhancements made to existing products that attract mainstream customers and help established firms maintain competitiveness.

Lock-in

The extent to which customers are committed to a product or service, making it difficult for them to switch to alternatives.

Network Effect

A phenomenon where a product or service gains additional value as more people use it, leading to increased customer retention and market share.

PEST Analysis

A strategic tool used to analyze the external factors (Political, Economic, Social, and Technological) that can affect an organization.

Vicious Cycle

A situation where negative feedback leads to further negative outcomes, often hindering a company's ability to innovate or adapt.

Virtuous Cycle

A situation where positive feedback leads to further positive outcomes, enhancing a company's growth and innovation potential.

Competitive Advantage

The attributes that allow an organization to outperform its competitors, often due to superior technology or operational efficiencies.