Business definitions

Internal growth

when a business does not require a partner organisation to expand. Instead, it uses its own resources to expand

external growth

when a business requires the support of a partner organisation for growth

acquisition

occurs when a business buys a controlling interest in another company. This means that the buyer has bought enough shares of the target company to own more shares than any other shareholder, leading to a change in ownership

Merger

occurs when 2 companies agree to form a large singular firm , thereby benefitting from operating at a larger scale

horizontal merger

when a firm integrates with a firm operating in the same industry at the same stage of production

vertical merger

when a firm integrates with a firm of the same industry but at a different stage of production

backward vertical merger

when a firm integrates with a firm in the previous stage of production , with its existing suppliers, but in the same industry

forward vertical merger

when a firm integrates with a firm that operates in the next stage of production ,with its existing customers , but in the same industry

lateral integration

when a firm merges with another firm operating in related industries with similar operations but are not in direct competition with each other

conglomerate integration

when a firm merges with another firm operating in a completely different industry

joint venture

an agreement between 2 organisation to undertake a business activity. the joint venture becomes a separate legal entity and all organisation share profits and losses of the enterprise and also share investment

Synergy

created when shared resources , skills and experiences of the businesses collaborating far exceed those of the businesses operating independently

strategic alliance

a collaborative agreement between 2 or more firms to pursue the same set of agreed goals. the firm remains a completely independent organisation and once the goal have been reached , the alliacjne comes to an end

franchising

a form of business ownership whereby an organisation or an individual buys a listen to trade using another firms logo, brand, name and trademark. In return , the franchisor receives royalties payments and licensing fee

marketing

management process involved in predicting , identifying and managing the needs and wants of consumers a profitable manner

product oriented approach

inward looking and is focused on making the product first then selling it

market oriented approach

outward looking and is focused on carrying out market research first then making the product that can sell

STEEPLE

strategic management tool that examines the external factors affecting the business growth and performance

Stakeholders

any group or organisation who are directly interested in the business and involved in its operations because they are directly affected by the business performance

internal stakeholders

any group or people who own or work for the business. They can be affected by and therefore directly interested in the business actions

external stakeholders

any group or people who are outside of the interest. They can be affected by and therefore interested in the business activities

shareholders/owner

risk takers of the business. they are liable to a share in profits earned by the business and they invest capital to set up and expand the business

employees

employed by the business and are directly involved in the business operations

managers

employees that control the work of others , they oversee making key business decisions

customers

purchase and consume goods and services produced by the business

suppliers

provide finished goods, components or resources to the business

banks

provides financial support for the business

government

protect customers and employees from business activities by safeguarding their interest

local community

includes all stakeholders, especially the third party who are affected by the business activities

ethics

relate to the right and wrongs of making a strategic decision that is beyond legal requirements

setting ethical objectives

process by which organisation apply ethical values to their targets and actions to which they will achieve them

CSR

goes beyond legal compliances and strives for companies to actively contribute to societal well being and sustainable development and act in a socially responsible manner

SWOT

useful analysis tool that helps analyse what the business is best at now and devise a strategic plan for the future

strengths

internal factors that are favourable compared to their competitors

weakness

internal factors that are unfavourable compared to its competitors, acting as a competitive disadvantage

opportunities

external possibilities for development in the future

threat

external factors that hinder the prospects of the business

market share

the percentage of one firm’s shares of the total market sales

marketing mix (price)

the amount of money customers must pay to acquire the good. determined by production costs , desired profit margins

marketing mix (promotion)

the strategies sued to attract customers inti purchasing the product (through social media / blogs)

marketing mix (product)

the type of goods and services being offered to the product , this could be an existing product or an adaptation of an existing product or a newly developed one

marketing mix (place)

how the product is distributed (large retail stores, online stores)

market segmentation

dividing the market into distinct consumer groups to further understand their needs

market segment

distinct group of consumers with similar characteristics and needs and wants

demographic factors

characteristics of population

psychographic factors

consider emotion and lifestyle of consumers

consumer profile

refers to the demographic and psychographic characteristic of consumers in different markets

target market

a group of consumers with common needs and wants that a business provides goods and services to

niche market

defined as a group of consumers with distinctive traits and unique needs and wants

niche marketing

a marketing strategy based on identifying and serving a relatively small group of consumers in the market

mass market

those which provide goods and services to an extensive number of customers

mass marketing

a marketing strategy aimed at all consumers in the market without trying to differentiate them into separate market segments

unique selling point

any aspect of a business brand or product that sets them aside from the competitors (linked to differentiation +niche )

product life cycle

the course that a product takes from development to its decline in a market

extension strategies

marketing techniques that prolong the period of a products life cycle

market research

market action designed to discover the belief , preferences and opinions of existing and potential customers

primary research

involves the collection of first hand data, that is , data that is directly collected from the firms for the first time for their specific needs

secondary research

the use and analysis of data that already exists . it is data that has been previously collected and already analysed

surveys

involves directly asking existing consumers and potential consumers , through questionaries, for their opinions and preferences

questionnaires

a document with a series of questions used to collect data for a specific purpose

observations

involved watching how consumers responf and behave to different situations

focus group

a group of consumers with similar consumer profiles who are asked about their attitudes and behaviours

cost plus pricing

involves adding a percentage of the profits to the cost per unit of output to determine the selling price

penetration pricing

involves setting a low initial price in order to attract customers to purchase the goods and gain a higher market share. As firms gain market share, they can start to slowly increase their price

the loss leader

refers to setting a price lower than the costs of production to attract customers to purchase the products and increase profit margins.

predatory pricing

refers to setting a price lower than the business competitors , potentially lower than their COP, with the aim of driving out competitors of the market

premium pricing

refers to a business permanently setting high price for its products because of the associated image, reputation or status with its high quality