Definitions 3.1

Question 1

Aims

Answer 1

a generalised statement of where a business is heading

Question 2

Mission

Answer 2

an aim expressed in a particularly inspiring way

Question 3

Mission statement

Answer 3

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

Question 4

Distinctive capabilities

Answer 4

ways a firm operates that cannot easily be copied by rivals e.g. Ryanair’s obsession with cost minimisation

Question 5

Economies of scale

Answer 5

factors that cause average costs to falls as the scale out output increases

Question 6

Generic strategy

Answer 6

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

Question 7

Product differentiation

Answer 7

the extent to which consumers perceive one product as being distinct from rivals

Question 8

Stock units

Answer 8

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

Question 9

Diversification

Answer 9

When a company expands its activities outside its normal range. this may be done to reduce risk or to expand possible markets

Question 10

Repositioning

Answer 10

Changing a product or its promotion to appeal to a different market segment

Question 11

Benchmarking

Answer 11

comparing your own performance with that of rivals, to try to identify and learn from the best

Question 12

Demography

Answer 12

factors relating to the population, such as changes in the number of older people or in the level of immigration

Question 13

Lobbying

Answer 13

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

Question 14

Disruptive

Answer 14

Technology would shift a whole sector towards a new way of doing things. This is very painful for those left behind

Question 15

Competitive advantage

Answer 15

the factors that enable a business to sustain a profitable position in a competitive market

Question 16

Substitutes

Answer 16

rival products such as Galaxy and Cadbury’s Dairy Milk; many customers are happy to substitute one for the other

Question 17

Average cost

Answer 17

this is the cost of producing one unit of output. It is calculated by dividing total cost by the current output level

Question 18

Delegate

Answer 18

passing authority down the hierarchy

Question 19

Diseconomies of scale

Answer 19

factors that cause average costs to fall as the scale of output increases

Question 20

Market dominance

Answer 20

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

Question 21

Organic growth

Answer 21

comes from within the business, as compared with inorganic growth achieved by takeovers and mergers

Question 22

Inorganic

Answer 22

takeover or merger

Question 23

Strategic fit

Answer 23

buying another business that can provide a real boost to long-term growth and profitability e.g. mars buying Wrigley

Question 24

Takeover

Answer 24

When one business buys majority ownership in another, thereby gaining full control

Question 25

Annual general meeting

Answer 25

a once-yearly meeting at which shareholders have the opportunity to question the chairperson and vote new directors to the board

Question 26

Private equity

Answer 26

investment groups that buy up business in the expectation that they’ll be able to sell them on for profit - usually within three years

Question 27

Synergy

Answer 27

occurs when the whole is greater than the sum of parts. often the reason given for mergers and takeovers

Question 28

M-commerce

Answer 28

electronic transactions carried out while on the move, such as ordering an Asda delivery by smartphone

Question 29

Sales forecast

Answer 29

a method of predicting future sales using statistical methods

Question 30

Trend

Answer 30

the general path a series of values (for example, sales) follows over time, disregarding variations or random fluctuations