theme 1 key terms

Entrepreneur

An entrepreneur takes a restless look at and finds the business opportunities that exist and then turns the business idea into action.They do this using the factors of production; land, labour, capital, enterprise

Entrepreneurial motives

The reasons or driving forces behind why an entrepreneur starts and operates a business, often including profit, independence, and personal fulfillment.

Profit maximisation

The process of increasing a firm's earnings to the highest possible level by optimizing revenues and minimizing costs.

Profit satisficing

An approach where a firm seeks to achieve a satisfactory level of profit rather than maximizing it, balancing the interests of various stakeholders.

Social entrepreneurship

Involves creating social change through entrepreneurial principles, focusing on solving social issues while achieving financial sustainability.

Intrapreneurship

The practice of fostering entrepreneurial behaviors within an established organization, allowing employees to act like entrepreneurs while still being part of the larger company.

Mission statement

A short declaration of an organization's core purpose, goals, and values, guiding its strategies and decision-making.

Corporate objectives

The targets a company makes to achieve it’s mission statement

Corporate strategy

The overall plan that outlines how a company will achieve its corporate objectives

Business tactics

The specific actions and short-term steps taken to implement a corporate strategy and achieve corporate objectives.

Leader

A person who influences and guides individuals or groups towards achieving goals, often through vision, motivation, and support.

Private sector

The part of the economy that is run by individuals and companies for profit, as opposed to the government or public sector.

Public sector

The portion of the economy that is controlled and operated by the government, providing services and goods to the public.

Mixed market

An economic system that combines elements of both private and public sector participation.

Liability

Legal responsibility for debts or obligations, which can result in financial loss.

Unlimited liability

A legal condition where business owners are personally responsible for all debts and obligations of their business, exposing their personal assets to risk.

Limited liability

A legal condition that limits a business owner’s financial risk to the amount they invested in the company.

Incorporation

The process of legally forming a separate legal identity for the organisation so that the owner and the business are not the same entity

Bankrupt

A legal status of a person or organization that cannot repay the debts they owe.

Liquidation

The process of selling your business when you cannot afford it.

Creditors

Individuals or institutions to whom money is owed.

Registrar of companies

An official body responsible for the registration and regulation of companies, ensuring compliance with corporate laws and maintaining public records.

Sole trader

A business structure where an individual operates and owns a business independently, bearing all profits and liabilities.

Partnership

A business arrangement in which two or more individuals share ownership and management responsibilities, as well as profits and losses.

Private limited company

A type of business entity that limits the liability of its shareholders to the amount they have invested. Shares are not publicly traded, and ownership is restricted to a certain number of shareholders.

Public limited company

A type of company whose shares can be traded publicly on a stock exchange, allowing for broader ownership and increased capital. Shareholder liability is limited to their investment.

Franchising

A business model in which a franchisor grants the right to operate a business using their brand and business system to a franchisee, who pays fees and royalties.

Franchisor

The party that licenses its trademark and business model to a franchisee, enabling them to operate a business under the franchisor's brand.

Franchisee

An individual or company that purchases the rights to operate a franchise from the franchisor, following the established brand and business system.

Lifestyle business

A business focused set up by an entrepreneur based on their own family/life style needs

Online business

A business that operates primarily on the internet, providing goods or services to customers via online platforms.

Stakeholders

Individuals or groups that have a direct interest in the success and operations of a business and can be influenced by their decisions

Shareholders

Individuals or entities that own shares in a company.

Opportunity cost

The value of the next best alternative forgone when making a decision, representing the benefits that could have been received.

Trade offs

When a business accepts less of one thing to achieve more of another.

Mass market

The largest part of a market, where there are many similar products offered by competitors and customers are less specific about their needs and wants

Niche market

A smaller segment of a larger market where customers have more specific needs and wants

Local businesses

Small scale enterprises that operate in a specific geographical location, often a town or city

National businesses

A business that operates on a nation-wide scale

International businesses

A business that operates in multiple countries worldwide.

Dynamic markets

A market which is subject to constant and rapid change.

Market size

The total sales generated by selling a product

Market growth

The percentage change in market size over time

Market share

The percentage of total shares generated by a company in a specific market compared to its competitors.

Adding value

Stretching the difference between the costof producing a product and its selling price, enhancing product appeal.

Differentiation

The process of distinguishing a product or service from others, often through unique features or branding to attract consumers.

Competitive advantage

The attribute that allows a company to outperform its competitors, often due to superior quality, pricing, or customer service.

Porter’s generic strategy

A framework that outlines how businesses can gain competitive advantage through cost leadership, differentiation, or focus strategies.

Product orientation

An inward looking approach to product development where they are mainly focused on the product itslef and the production process

Market orientation

An outward looking approach to product development where they are mainly focused on the needs and wants of the customer

Market research

The process of gathering, analyzing, and interpreting information about a market.

Quantitative data

Numerical information that can be measured and analyzed statistically.

Qualitative data

Descriptive information that captures qualities and characteristics based on thoughts and opinions

Primary research

Gathering data first hand directly from consumers

Surveys

A method of data collection that involves asking respondents questions to gather information.

Observation

Hiring someone to study consumer behaviour at a particular location

Interviews

A qualitative research method where respondents are asked open-ended questions to gain insights into their thoughts, feelings, and behaviors.

Test marketing

A method used to gauge the viability of a product or service by introducing it to a limited market before a broader launch.

Focus groups

A qualitative research method that gathers a small group of people to discuss a product or idea, providing insights through group interaction.

Secondary data

Collecting and compiling pre-existing data to analyse

Market reports

Documents that provide detailed analyses of market conditions, trends, and consumer behavior.

Trade and industry associations

Organizations that represent businesses in specific sectors, providing resources, advocacy, and networking opportunities.

Sales transactions

Records of sales between buyers and sellers, detailing quantities, prices, and transaction dates.

Big data

Extensive datasets that can be analyzed to reveal patterns, trends, and associations, especially relating to human behavior and interactions.

Analytics

Quantitative data that helps solve problems

Sampling

The process of selecting a subset of individuals or items from a larger population to estimate characteristics of the whole group.

Market mapping

The process of analyzing and visualizing the competitive landscape of a market to identify opportunities and strategies for businesses.

Market segmentation

The practice of dividing a market into distinct groups of buyers with different needs, characteristics, or behaviors to tailor marketing efforts effectively.

Demand

The amount of consumers that are able and willing to buy at a set price at a given point in time

Law of demand

The higher the price, the lower the demand

Supply

The amount of goods/services that a producer is willing and able to supply to consumers at a certain price at a given point in time

Law of supply

The higher the price, the higher the supply of goods/services available to consumers.

Market equillibrium

A situation where quantity supplied equals quantity demanded, leading to a stable market price.

Price elasticity of demand

The degree to which the quantity demanded of a good/service changes in response to a change in its price.

Price elastic demand

When the percentage change in quantity demanded is greater than the percentage change in price

Price inelastic demand

When the percentage change in price is greater than the percentage change in quantity of demand.

Income elasticity of demand

The responsiveness of quantity demanded to a change in consumer income.

Income elastic demand

When the percentage change in quantity demanded is greater than the percentage change in income.

Income inelastic demand

When the percentage change in quantity demanded is less than the percentage change in income.

Marketing

The action or business of promoting and selling products or services.

Market analysis

The process of assessing market conditions, including size, competition, and consumer behavior, to inform marketing strategies and business decisions.

Market strategy

A plan to achieve marketing objectives through targeted actions and resources in a competitive market.

Marketing mix

The combination of product, price, place, and promotion strategies used to effectively market a product or service.

Product

The good or service that the firm provides

Price

The amount of money a customer pays for a product or service.

Promotion

The methods and activities used to communicate the benefits of a product or service to potential customers, aiming to increase awareness and sales.

Place

The location where a product or service is made available to consumers, including distribution channels and logistics.

The design mix

Three fundamental elements of product or service design that must be taken into account during the research and development stage

Function

The purpose or role that a product or service fulfills for consumers, including its features and usability.

Aesthetics

The visual appeal and sensory characteristics of a product or service, including its shape, color, and style.

Cost

Whether or not it is possible to provide the good or service within a budget or at a cost point that will still allow the business to make a profit.

The product life cycle

The stages a product goes through in its useful life

Extension strategies

Techniques used to prolong a product's life cycle by increasing sales or reaching new markets.

Development stage

The phase in the product life cycle where a product is developed, tested, and introduced to the market before its launch.

Introduction stage

The phase in the product life cycle during which a product is launched and first made available to consumers, focusing on building awareness and initial sales.

Growth stage

The phase in the product life cycle where product sales begin to increase rapidly as the market becomes more familiar with the product.

Maturity stage

The phase in the product life cycle where the product is very well known in the market and there is little to no potential for market growth

Decline stage

The phase in the product life cycle where sales and market share begin to decrease as the product loses popularity or becomes outdated.

Boston matrix

A strategic tool used to analyze a company's product portfolio based on market growth and market share, categorizing products into four quadrants: Stars, Cash Cows, Question Marks, and Dogs.

Price skimming

A pricing strategy that involves setting a high initial price for a new product in order to regain costs of production