Business Management Tool Kit Review Guide

A comprehensive set of vocabulary flashcards covering the Business Management Tool Kit, including SWOT, Ansoff, BCG, CBMs, Porter's Generic Strategies, and quantitative tools.

SWOT Analysis

A situational tool used to assess a business's internal strengths and weaknesses and its external opportunities and threats.

Strengths

Internal factors that are favorable compared with competitors, such as strong brand loyalty or highly skilled workers, which help achieve organizational objectives.

Weaknesses

Internal factors that are unfavorable compared to rivals, creating competitive disadvantages that may prevent the business from achieving its goals.

Opportunities

External possibilities for future development created by changes in the environment, such as rapid economic growth in new markets.

Threats

External factors that hinder an organization's prospects, such as technological breakdowns, price wars, or economic recessions.

Offensive strategies

A strategic response in SWOT analysis where an internal strength meets an external opportunity to gain maximum benefit.

Defensive strategies

A SWOT-based strategy where a strength meets an external threat, requiring a business to defend itself and its market share.

Reorientation strategies

A SWOT-based strategy used when an internal weakness correlates to an external opportunity, requiring adjusted policies to remain competitive.

Survival strategies

A SWOT-based strategy used in the undesirable situation where a weakness meets an external threat, aimed at minimizing adverse effects.

Ansoff Matrix

An analytical tool that helps managers choose and devise various product and market growth strategies through four growth options.

Market Penetration

A growth strategy involving selling existing products in existing markets to increase market share.

Product Development

A growth strategy that involves selling new products in existing markets, often relying on product extension and brand development.

Market Development

A growth strategy that involves selling existing products in new markets by targeting a new set of customers or geographical regions.

Diversification

A high-risk growth strategy involving selling new products in new markets to spread risks or seek new opportunities for growth.

Holding Company

A business that owns or holds a controlling interest in other diverse companies, also known as a parent company.

Related Diversification

Occurs when a business caters to new customers within the broader confines of the same industry.

Unrelated Diversification

Refers to growth by selling completely new products in untapped markets, often requiring new distribution channels.

STEEPLE Analysis

A framework used to analyze the impact of external Social, Technological, Economic, Ethical, Political, Legal, and Ecological environments on a business.

BCG Matrix

A situational tool devised by Bruce D. Henderson that helps managers plan a balanced product portfolio based on market share and market growth.

Strategic Business Units (SBUs)

Divisions of an organization, such as individual brands or departments, assessed within a product portfolio.

Stars

Products in the BCG matrix that operate in high-growth markets and have high market share, generating high amounts of cash.

Question Marks

Products in high-growth markets with low market share, also known as problem children or wild cards, representing the main users of cash.

Cash Cows

Well-established products with high market share in low-growth markets that generate remarkable net cash flow.

Dogs

Products with low market share in low-growth markets that do not generate much cash and may face withdrawal.

Build Strategy

A BCG strategy used to turn question marks into stars by investing necessary resources to increase market share.

Harvest Strategy

A BCG strategy, also known as milking, which involves reaping the profits of a product to turn stars into cash cows.

Divest Strategy

A BCG strategy involving phasing out or selling off dog products to free up resources for other areas.

Business Plan

A formal report detailing the key aspects of a business idea and the roadmap of how the organization sets out to achieve its objectives.

Executive Summary

A concise summary placed at the front of a business plan highlighting key points and conclusions for stakeholders.

Decision Tree

A quantitative diagrammatic tool representing different options and their probable outcomes to calculate the expected value of decisions.

Expected Value

The average outcome if a decision was made many times, calculated as $\text{Net Value} \times \text{Probability}$.

Net Gain

The value to be gained from a decision, calculated by adding the expected values of outcomes and deducting associated costs.

Interquartile range

A measure of the spread of data representing the middle spread, calculated as $Q3 - Q1$.

Standard Deviation

A statistical tool representing the spread of data around the mean, or the average distance from the mean.

Circular Business Models (CBMs)

Decision-making tools focusing on environmental impact and sustainability by emphasizing reduce, reuse, repair, and recycling waste.

Circular Supply Models

CBMs that focus on replacing finite natural resources with renewable, recyclable, and biodegradable resources.

Resource Recovery Models

CBMs aiming to reuse resource outputs by reprocessing waste materials into new and usable resources.

Cradle to cradle

A specific resource recovery model where materials are reprocessed at the end of their life cycle to remain in the economy.

Sharing Models

A CBM where customers share products rather than owning them, increasing the usage of underused items.

Servitization

A Product Service System model where businesses offer the function of a product through leasing or renting instead of the physical ownership.

Force field analysis (FFA)

A situational tool developed by Kurt Lewin that weighs the driving forces in favor of change against the restraining forces against change.

Driving forces

Forces identified in a Force Field Analysis that push for and favor a proposed change.

Restraining forces

Factors or forces identified in a Force Field Analysis that restrict or act against a proposed change.

Gantt Chart

A visual management tool used to schedule projects by plotting tasks against a timescale to identify the minimum time for completion.

Dependency

A relationship in project management where an activity cannot start until the completion of preceding tasks.

Power distance

One of Hofstede's dimensions measuring the extent to which less powerful members of a society accept that power is distributed unequally.

Individualism vs. Collectivism

A cultural dimension measuring the degree to which people are integrated into groups versus having loose ties.

Uncertainty avoidance

A society's tolerance for ambiguity and whether it relies on stiff codes of behavior or accepts differing thoughts.

Porter’s Generic Strategies

A decision-making tool identifying three ways to gain competitive advantage: cost leadership, differentiation, and focus.

Cost leadership

Becoming the lowest-cost organization in an industry through minimizing production costs to achieve higher margins.

Differentiation

Making goods or services distinct from competitors to appeal to customers through quality, branding, or design.

Focus strategy

A strategy involving a business concentrating on a narrow or niche segment of the market using cost or differentiation advantages.

Stuck in the middle

A term describing firms that lack a clear business strategy and do not have a sustainable competitive advantage.

Cost Parity

A form of cost leadership involving charging the same price as competitors for similar goods while maintaining lower internal costs.

Unit Contribution

The difference between sales revenue from a product and the variable costs of producing it, calculated as $P - AVC$.

Absorption costing

An extension of contribution costing that apportions a firm's indirect or fixed costs to different products or departments.

Marginal cost

The additional cost of producing one extra unit of output.

Critical Path Analysis (CPA)

A project management planning tool that identify the minimum time needed to complete a complex set of tasks.

Earliest start time (EST)

The time an activity can begin based on the duration of previous activities in a critical path diagram.

Latest finishing time (LFT)

The deadline for a particular activity to be completed so the entire project finishes in minimal time.

Total Float

The amount of spare time available to an activity without delaying the overall project, calculated as $LFT - \text{Duration} - EST$.

Dummy activity

A dotted arrow in a network diagram representing a logical dependency between tasks without consuming time.

Simple linear regression

A statistical tool studying the relationship between an independent predictor variable and a dependent variable.

Line of best fit

A regression line drawn through the middle of points on a scatter diagram to express the relationship between two variables.

Extrapolation

A statistical technique of extending a line of best fit beyond the original data set to predict future outcomes.