Chapter 3 - Small Business Strategy

Question 1

What is a goal?

Answer 1

an intended outcome for your business.

Question 2

What is a magic number?

Answer 2

The post-tax income the entrepreneur personally seeks from the business.

Question 3

What is industry?

Answer 3

the general name for the line of product or service being sold, or the firms in that line of business.

Question 4

What is a competitor?

Answer 4

any other business in the same industry as yours.

Question 5

What is imitative strategy?

Answer 5

an overall startegic approach in which the entrepreneur does more or less what others are already doing

Question 6

What is innovative startegy

Answer 6

An overall startegic approach in which a firm seeks to do something that is very different from what others in the industry are doing.

Question 7

What is degree of similarity?

Answer 7

The extent to which a product or service is like another.

Question 8

What is parallel competition?

Answer 8

An imitative business that competes locally with others in the same industry.

Question 9

What is incremental inoovation?

Answer 9

an overall strategic approach in which a firm patterns itself on other firms, with the exception of one or two key areas.

Question 10

What is pure innovation?

Answer 10

The process of creating new products or services, which results in a previously unseen product or service.

Question 11

What is blue ocean strategy?

Answer 11

A strategy based on creating a new product or service which has no competitors.

Question 12

What is a market?

Answer 12

the business term for the population of customers for your product or service.

Question 13

What is scale?

Answer 13

A characteristic of a market that describes the size of the market a mass market or a niche market.

Question 14

What is scope?

Answer 14

a characteristic of a market that defines the geographi crange covered by the market from local to global.

Question 15

What is mass market?

Answer 15

A customer group that involves large portions of the population

Question 16

What is niche market?

Answer 16

A narrowly defined segment of the population that is likely to share interests or concerns.

Question 17

What are four types of customers?

Answer 17

corporate, loyal, local, passionate

Question 18

What is a perceptual map?

Answer 18

A graphic display which positions products, services, brands or companies according to their scores or important strategic dimensions.

Question 19

What are industry dynamics?

Answer 19

Changes in competitors, sales and profits in an industry over time.

Question 20

What is the introduction stage?

Answer 20

the life cycle stage in which the product or service is being invented and initially developed.

Question 21

What is the growth stage?

Answer 21

An industry life cycle stage in which customer purchases increase at a dramatic rate.

Question 22

What is a boom?

Answer 22

A type of life cycle growth stage marked by a very rapid increase in sales in a relatively short time.

Question 23

What is a shake-out?

Answer 23

A type of life cycle stage following a boom in which there is a rapid decrease in the number of firms in an industry.

Question 24

What is the maturity stage.

Answer 24

the third life cycle stage, marked by a stabilization of demand, with firms in the industry moving to stabilize or improve profits through cost strategies.

Question 25

What is the decline stage?

Answer 25

A life cycle stage in which sales and profits of the firms in the industry begin a falling trend.

Question 26

What is retrenchment?

Answer 26

An organization life cycle stag in which established firms must find new approaches to improve the business and its chances for survival.

Question 27

What is industry analysis(IA)?

Answer 27

A research process that provides the entrepreneur with key information about the industry, such as its current situation and trends.

Question 28

What is gross profit?

Answer 28

funds left over after deducting the cost of goods sold.

Question 29

What is net profit?

Answer 29

The amount of money left after operating expenses are deducted from the business.

Question 30

What is profit before taxes?

Answer 30

The amount of profit earned by a business before calculating the amount of income tax owed.

Question 31

What are generic strategies?

Answer 31

Three widely applicable classic strategies for businesses of all types; differentiation, cost, and focus.

Question 32

What is a differentiation strategy?

Answer 32

A type of generic strategy aimed at clarifying how one product is unlike another in a mass market.

Question 33

What is a cost strategy?

Answer 33

A generic strategy aimed at mass markets in which a firm offers a combination of cost benefits that appeals to the customer

Question 34

What is a focus strategy?

Answer 34

A generic strategy that targets a portion of the market, called a segment or niche.

Question 35

What is an entry wedge?

Answer 35

An opportunity that makes it possible for a new business to gain a foothold in a market.

Question 36

What is a competitive advantage?

Answer 36

the particular way a firm implements customer benefits that keeps the firm ahead of other firms in the industry.

Question 37

What are strategic actions?

Answer 37

Competitive responses requiring a major commitment of resources.

Question 38

What are tactical actions?

Answer 38

competitive responses with low resource requirements.