Definitions 3.1 Flashcards
Aims
a generalised statement of where a business is heading
Mission
an aim expressed in a particularly inspiring way
Mission statement
a short passage of text that sums up an organisation’s mission. This may get displayed on walls throughout the business and placed prominently on its website
Distinctive capabilities
ways a firm operates that cannot easily be copied by rivals e.g. Ryanair’s obsession with cost minimisation
Economies of scale
factors that cause average costs to falls as the scale out output increases
Generic strategy
a strategic position that will prove effecttive in every market (i.e. generically). Porter said lowest cost and highest differentiation were the perfect positions fro strength
Product differentiation
the extent to which consumers perceive one product as being distinct from rivals
Stock units
the number of different brands and pack sizes stocked by a company; each has its own barcode; a Tesco hypermarket might have 75,000 separate products; an Aldi has 1,200
Diversification
When a company expands its activities outside its normal range. this may be done to reduce risk or to expand possible markets
Repositioning
Changing a product or its promotion to appeal to a different market segment
Benchmarking
comparing your own performance with that of rivals, to try to identify and learn from the best
Demography
factors relating to the population, such as changes in the number of older people or in the level of immigration
Lobbying
the term originated in the lobby between the House of Commons and House of Lords, it is when electors come to talk to their local MP
Disruptive
Technology would shift a whole sector towards a new way of doing things. This is very painful for those left behind
Competitive advantage
the factors that enable a business to sustain a profitable position in a competitive market
Substitutes
rival products such as Galaxy and Cadbury’s Dairy Milk; many customers are happy to substitute one for the other
Average cost
this is the cost of producing one unit of output. It is calculated by dividing total cost by the current output level
Delegate
passing authority down the hierarchy
Diseconomies of scale
factors that cause average costs to fall as the scale of output increases
Market dominance
describes a situation where a form sells a product that achieves very high market share. This ascendancy over the competition enables the dominant firm to raise prices without loosing too many customers. aAccording to EU, firms with 40-45% market share are dominant
Organic growth
comes from within the business, as compared with inorganic growth achieved by takeovers and mergers
Inorganic
takeover or merger
Strategic fit
buying another business that can provide a real boost to long-term growth and profitability e.g. mars buying Wrigley
Takeover
When one business buys majority ownership in another, thereby gaining full control
Annual general meeting
a once-yearly meeting at which shareholders have the opportunity to question the chairperson and vote new directors to the board
Private equity
investment groups that buy up business in the expectation that they’ll be able to sell them on for profit - usually within three years
Synergy
occurs when the whole is greater than the sum of parts. often the reason given for mergers and takeovers
M-commerce
electronic transactions carried out while on the move, such as ordering an Asda delivery by smartphone
Sales forecast
a method of predicting future sales using statistical methods
Trend
the general path a series of values (for example, sales) follows over time, disregarding variations or random fluctuations
