Business Foundations Exam 2

Business Model

describes how a new venture creates, delivers, and captures value

Distributors

buys goods from manufacturers and sells them to retailers or the public

Retailer

business that sells goods directly to the public from a physical store or website

Franchising

license to operate a turnkey business

Subscription

users pay a fee for magazines, newspapers, streaming services

Aggregation

platform that connects buyers and sellers online, the aggregator charges a fee or commission on each side

Advertising

businesses paid to advertise their goods and services in magazines, newspapers, on the radio and on tv

Data Licensing/Selling

businesses that collect and analyze data and sell it to their customers

Software as a Service (SaaS)

software tools available online for a fee

Utility and Usage

phone service, electricity, natural gas, hotels, and rental cars

Professional

accountant, lawyer, dentist, archietect

Licensing

software, intellectual property, some products

Freemium

offers a free basic model and charges a fee for the premium version

Services

oil change, barber, or hair salon

Mission

the purpose of the organization, what does the organization exist to do

Vision

foward looking view of what the organization wants to become

Strategy

supports the organizations mission, vision, and goals. its the “how”

Competitive Advantage

refers to the factors that help a business outperform its rivals

Porters Generic Strategy

1. Cost Leadership (EDLP)

2. Differentiation (products different from competition)

3. Cost Focus (Keep cost low)

4. Differentiation Focus

PESTLE

political, economical, social, technological, legal, environment

Scenario Planning

for managing uncertainty that makes assumptions and predictions about different future scenarios, creates contingency plans

SWOT

strengths, weaknesses, opportunities, threats

Strengths and weaknesses

internal

Opportunities and threats

external

Resource Based VRIO Framework

If you answer “yes” to everything you will have sustained competitive advantage

Marketing Mix - The 4 P’s

product, price, promotion, place

Cost Plus

determine the cost to ake the product and add markup to set the selling price

Competitive Pricing

setting prices based on what the competition is charging

Value Based Pricing

setting the prices based on the customers perceived value of the product or service

Price Skimming

setting a high price when a new product is introduced and gradually lowering. can be helpful when manufacturing capacity is limited.

Penetration Pricing

setting a low price when a new product is introduced as a way to quickly fain market share

Psychological Pricing

includes odd number pricing, EDLP, multiple unit pricing, bundle pricing

Promotion

refers to marketing communication and tactics aimed at information target customers about products and/or service

Advertising

online, broadcast, print, outdoor, product

Advertising is

paid media

Promotion is

earned media

Sales Promotion Tools

coupons, mystery offers, clearance, gift, bogo, rebates

Content Marketing Methods

social media, infographic, blog, podcast, video, mission driven

Intensive Distribution

the use of all available outlets for a production, usually inexpensive, everyday items

Selective Distribution

the use of only portion of the available outlets for a product in each geographic area (furniture, appliance, clothing, shoes)

Exclusive Distribution

the use of only a single retail for a product in a large geographic area (luxury goods)

SPIN

situation, problem, implication, need

SNAP

simple, invaluable, align, priorities

NEAT

needs, economic impact, authority, timeline

Inbound Selling

customers come to you instead of you pushing your products to potential customers

Marketing =

strategic

Sales =

tactical

Emotional Value

how does the product make the customer feel, think about customer identity

Functional Value

what problem does the product or service solve

End Users

people who actually use the product, understanding their needs and motivations is essential to success

Influencers

celebrities, journalist, industry analyst, and bloggers can reach large groups through various media channels

Economic Buyers

who pays for the product

Decision Maker

who authorizes the purchase of a product. may or not may be the person who pays for the product

Saboteurs

anyone who can veto or slow down a purchase decision

Buyer Process

need recognition, information search, evaluation, decisions, post purchase evaluation

Buyers Remorse

feeling of regret or dissatisfaction with a product

Technology Adaptation Lifecycle

innovators, early adopters, early majority, late majority, laggards

Market Segmentation

process of dividing a target market into segments based on similar wants, needs, interests and behaviors (demographic, geographic, psychographic, behavioral)

Benefits of Market Segmentation

1. increases brand loyalty

2. stronger and clear marketing messages

3. differentiate the brand from competition

4. identify opportunities

5. enhanced profits

Brand Loyalty

the extent to which a customer prefers a particular brand, ranges form brand recognition to preference, the strongest from a brand loyalty when the customer will accept no substitutes

Centralized Decision Making

from the top

Decentralized Decision Making

is shared

Chain of Command

the flow of authority from the highest to the lowest levels of the organization

Authority

the right to give orders and make decisions

Responsiblity

personal obligations to perform tasks and reach certain goods

Accountability

obligation of a worker to accomplish an assigned task

Delegation

the process of transferring authority and responsibility to a subordinate to carry out certain tasks and authorities

Can accountability be delegated?

No

Can responsibility be delegated?

Yes, if you delegate it then you need to delegate authority

Departmentalization

grouping similar activities

Functional

marketing, sales, HR, operations

Geography

by world, US, state region

Product

men’s, women’s, kid’s

Customer

retail, grocery, wholesale, hospitality

Combination

some will use multiple methods

Vertical Structures

hierarchical, clear chain of command, narrow span of control, highly centralized decision making

Horizontal Structures

flat structures, fewer layers of management, wide span of control, decentralized decision making

Span of Control

number of people a manager supervises

Organizational Lifecycle - Stage 1

birth, start up (non bureaucratic)

Organizational Lifecycle - Stage 2

youth, growing (pre-bureaucratic)

Organizational Lifecycle - Stage 3

midlife, increasing (bureaucratic)

Organizational Lifecycle - Stage 4

maturity (very bureaucratic)

Organizational Culture

a pattern of shared norms, rules, values, and beliefs that guide that attitudes and behaviors of its employees

Competing Value Framework (CVF)

Internal and External

Clan

Internal, values stability (teamwork)

Hierarchy

internal, values stability (highly structures)

Market

external, values stability and control (competition)

Adhocracy

external, values flexibility (innovative)

Positive Organizational Culture

supports employee strengths, rewards good work, active in decisions, low turnover and reduces stress

Communal Cultures

share knowledge freely among employees, are sociable, responsible and work together to achieve goals

Fragmented Cultures

avoid socializing, work as individuals rather than as a team

Mercenary Culture

making money is the top priority, high pressure environment, cut throat culture

Organization Culture Clues

symbols, practices, rituals, and myths