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， including development , introduction , growth , maturity , decline

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

Interviews

Involve 1 on 1 discussion with an interviewer and interviewee, normally a customer, to investigate their personal circumstances and opinions

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

private sector

sector of an economy where private individuals own and control the resources and the business , with the main goal being profits

public sector

the sector of an economy where the government owns and control the businesses and resources, with the main goal being social welfare

sole trader

commercial for profit business owned and controlled by a single individual who invests all capital , bears all losses and takes all profits

unlimited liability

when the business owners are personally responsible for the business debts and may lose personal assets and capital to settle the debts

unincorporated business

business is not a separate legal entity

partnership

a form of business in which 2 or more people agree to jointly own a business

companies

commercial for profit businesses owned by shareholders

private limited companies

incorporated business entity owned by a relatively small number of shareholders. It has limited liability which means the owners are not personally responsible for the business debts and will not risk losing personal assets or capital to settle them

publicly held companies

incorporated business entity that can sell shares to the general public via stock exchange and has limited liability

social enterprise

revenue generating business with a primary mission to achieve social and environmental goals rather than maximising profits for shareholders

for profit social enterprise

revenue generating business entities that aim to achieve environmental and social objectives while generating revenue. they reinvest the profit earned in to the business

cooperatives

for profit social enterprise owned and run by their members such as employees or customers with the common goals of creating value for their members by operating in a socially responsible way

non profit social enterprise

pursuing a social or environmental mission while using business strategies to generate revenue and achieve financial stability. they do not generate any revenue but if they do it gets re invested back into the business

promotion

is concerned with giving information about a firm’s products to consumers and raising their awareness and interest in a product or brand to generate sales

below the line promotion

 the use of non-mass media promotional activities that the business has direct control over

direct marketing promotion

the promotional activities that aim to sell a product directly to customers instead of using an intermediary ( middle man)

personal selling

Face to face technique where a sales representative approaches a potential customer personally to sell a product or service

Public relations

the process of promoting a business and its products by getting media coverage without directly paying for it

Sponsorship

• nvolves a business providing financial funds and resources to support an event or another organisation in return for publicity and prime advertising space

sales promotion

•  short term incentives provided to increase sales and attract new buyers

money off coupons , BOGOF , free samples , loyalty cards , lucky draws

Point of sales promotion

refers to the marketing of goods in stores where customers can purchase the good

• at check out / impulse buy/ convenience

Above the line promotion

 a form of paid-for marketing communication via independent mass media (eg , advertising on television or in national newspaper)

promotional mix

the range of ATL and BTL promotional methods used to market a product as part of the marketing mix

through the line promotion

an aspect of promotion that relies on the use of combining both APL and BTL promotional strategies

place

refers to the distribution of products. It is the process of getting the right product to the right customer at the right time and in the most cost effective way

distribution channel

the way a product gets from the manufacturer to the consumer

intermediary

such as an agent or wholesaler or retailer , is a third party business that offers distribution services between 2 trading partners

wholesalers

buy large quantities of a product from a manufacturer and then “break” the bulk into smaller quantities for resale , mainly to retailers

retailers

sellers of products to consumers in outlets

Zero level distribution channel

does not use any intermediaries , known as direct distribution where the producer sells its goods directly to the consumer

One level distribution channel

involves the use or a single intermediary such as an agent or retailer

• manufacturer sells goods to a retailer who then sells them to the consumers

two level distribution channel

involves the use of 2 intermediaries , usually wholesalers and retailers. The wholesalers buy goods from the manufacturers and sells them to the retailer which then sells them to the consumers