Business Fundamentals and External Environment Vocabulary

A collection of key vocabulary terms and definitions covering general business concepts, product development stages, market dynamics, competition, barriers to entry, and external environment factors.

Business

An organization or entity that produces and distributes goods and services.

Customer

An individual or business that purchases a good or service.

Consumer

An individual who uses a good or service, whether or not they are the buyer.

Value

The worth or benefit of a product to a customer.

Value Creation

When businesses create products to address customer needs, wants, or problems

Value Capture

When businesses can charge more than the production cost for a product.

Entrepreneur

An individual who develops a new business and assumes the risks and potential rewards.

Identify

Observing, interviewing, and surveying potential customers to find a problem.

Develop

Develop a potential solution by brainstorming, sketching, or prototyping.

Validate

Validate the solution by gathering feedback on an MVP.

MVP (Minimum Viable Product)

The simplest version of the idea for a good or service.

Pain Point

Something that causes frustration or inconvenience.

Need

Essential or functional things customers rely on.

Want

Desires or extras that make life easier or more enjoyable.

Market Opportunity

An unsatisfied or newly emerging customer problem, need, or want, or when businesses create products to address customer needs, wants, or problems.

Product-Market Fit

How well a product solution fits a problem.

Market

A place where buyers and sellers interact, in person or online.

Commodity

A product that is largely undifferentiated and very similar to others.

Commodity Competition

A form of competition where buyers focus mostly on price, sellers have little control over pricing, profits tend to be lower, and prices cluster closely together.

Differentiation

When businesses make their products different in the eyes of customers.

Competitive Advantage

The ability to outperform rivals in the same market, leading to increased market share and potentially increased profits based on rivals' distinguishing features.

Barriers to Entry

Stopping the competition by making it difficult for new rivals to enter.

Monopoly

A business operating with no competition, protected by maintaining barriers to entry.

PESTEL Framework

External factors that shape the business landscape and impact the types of businesses that are viable in a market.

PESTEL: Political Factors

Political policies and political dynamics that affect market activity.

PESTEL: Economic Factors

Economic aspects of the economy that affect market stability.

PESTEL: Social Factors

Social trends in society and culture that affect consumers.

PESTEL: Technological Factors

Features related to the availability of technology for market activity.

PESTEL: Environmental Factors

External environmental conditions that promote or limit market activity.

PESTEL: Legal Factors

Laws, rules, or regulations that impact market activity.