Competitive Strategy and Business Structures Overview

Barrier to Entry

Factors that prevent or hinder new competitors from entering an industry, such as high startup costs, government regulations, brand loyalty, or economies of scale.

Competitive Analysis

The process of evaluating competitors' strengths, weaknesses, opportunities, and threats (SWOT) to develop a business strategy.

Declining Industry

An industry experiencing reduced demand, revenue, and profitability due to technological advancements, market saturation, or shifting consumer preferences.

Economies of Scale

Cost advantages gained as production volume increases, leading to lower per-unit costs.

First-Mover Advantage

The benefit gained by a company that enters a market first, often allowing for brand recognition, customer loyalty, and control over key resources.

Fragmented Industry

An industry with many small players and no dominant firm, often leading to price competition and low entry barriers.

Cost Reduction

Focusing on minimizing operational costs to offer lower prices.

Geographic Roll-up

Expanding by acquiring similar businesses in different regions.

Global Strategy

Competing in multiple international markets with a standardized approach.

Leadership Strategy

Aiming to be the dominant player in an industry.

Multi-Domestic Strategy

Customizing products/services for different local markets.

Niche Strategy

Targeting a specific market segment with specialized offerings.

Closely Held

A corporation with a small number of shareholders, often family-owned.

Private

A corporation not publicly traded, limiting share sales.

Public

A corporation with shares traded on a stock exchange.

C Corporation (C Corp)

A legal entity separate from its owners, subject to corporate taxation.

Subchapter S Corporation (S Corp)

Similar to a C Corp but avoids double taxation by passing income/losses to shareholders.

Double Taxation

The taxation of corporate profits at both the corporate level and when dividends are distributed to shareholders.

Limited Liability Company (LLC)

A hybrid business structure offering liability protection like a corporation but with pass-through taxation.

Liquidity

The ease with which an asset (e.g., stock, real estate) can be converted into cash without affecting its price.

Noncompete Agreement

A contract restricting an individual from working for or starting a competing business within a specific timeframe and region.

Non-Disclosure Agreement (NDA)

A legal contract preventing parties from disclosing confidential information.

Piercing the Corporate Veil

Holding shareholders personally liable for a corporation's debts if the company is used to commit fraud or lacks separation from personal finances.

General Partnership

All partners share management and liability.

Limited Partnership

At least one partner has unlimited liability, while others have limited liability based on their investment.

Copyright

Legal protection for original works of authorship (books, music, software, etc.).

Copyright Infringement

Unauthorized use of copyrighted material.

Design Patents

Protect the ornamental design of a functional item.

Economic Espionage Act

A U.S. law that criminalizes stealing trade secrets for economic benefit.

Fair Use

A legal doctrine allowing limited use of copyrighted material without permission for purposes like criticism, news, teaching, or research.

Intellectual Property (IP)

Creations of the mind (patents, trademarks, copyrights, and trade secrets) legally protected from unauthorized use.

Intellectual Property Audit

A review of a company's IP assets to assess legal protection and risks.

Lanham Act

U.S. trademark law that governs registration and protection of trademarks.

Utility Patent

Protects new inventions or processes.

Provisional Patent

A temporary, less expensive patent that allows inventors to establish an early filing date.

Patent Infringement

Unauthorized use of a patented invention.

Trademark

A recognizable sign, design, or expression that differentiates a company's products/services.

Trade Secret

Confidential business information (e.g., formulas, processes) that provides a competitive edge.

Agency Theory

The study of conflicts between business owners (principals) and managers (agents) regarding decision-making and incentives.

Fiduciary Obligation

A legal duty requiring one party (e.g., business executives) to act in the best interest of another (e.g., shareholders).

Franchise Agreement

A legal contract between a franchisor (brand owner) and a franchisee (operator) detailing rights, obligations, and fees.

Franchise Disclosure Document (FDD)

A mandatory legal document in the U.S. providing key details about a franchise opportunity.

Franchisee

An individual/business purchasing the rights to operate under a franchisor's brand.

Franchisor

A company granting rights to others to operate under its brand.