2.1.1 - 2.1.5 Flashcards
Economies of Scale
Rises when unit costs fall as output increases
Internal economies of scale
Output of the business itself
External economies of scale
Output outside of the business
Minimum efficient scale
The lowest point where the factory can produce such that it’s long term average costs are minimised
Monopsony
A market situation where there is only 1 buyer
Brand recognition
The ability of a consumer to recognise a brand over other brands
Diseconomies of scale
Cost disadvantages that firms and governments accrue due to an increase in firm size/output
Corporate culture
Beliefs and behaviours of employees and management outside of business interaction
Capacity utilisation
(actual level of output ÷ maximum possible output) × 100
Organic growth
Internal growth of a business
Usually slow
Inorganic growth
External growth of a business perhaps by takeovers and mergers
(Sudden)
Conglomerate
A company with a large number of diversified businesses
R&D
Research and Development
Researching and developing of new technologies to be ahead of the market
Product innovation
Changes to goods/services which make it better than the predecessor
Process innovation
Changes to the production processes which improves speed/cost efficiency
Product life cycle
Graph showing:
- Product development
- Introduction
- Growth
- Maturity
- Decline
Extension strategy
Trying to stop decline stage by reaching out to other areas with advertising, price reduction, adding value
Asymmetric information
When sellers are well informed about the product whereas buyers are not
Viral marketing
Consumers are encouraged to share information about company’s goods/services via the internet
e-commerce
Commercial transactions conducted electronically on the internet
e-retailing
Sale of goods/services through the internet
Micromarketing
Advertising is focussed on a small group of consumers
Long-tail
Large number of products that sell in small quantities
USP
Unique Selling Point
Unique propositions set forward by a company
