Growth Definitions Flashcards
Market share
the value of a single company’s sales of revenues compared to the sales of all businesses in the market
Economies of scale
the reduction in per-unit production cost as a business grows
Cash flows
payments received by a business(inflows) and payments made by a business(outflows)
Labour turnover
the percentage of workers leaving the business in a period of time
Productivity
the ratio of output per unit of input(labour or capital over a period of time)
Internal economies of scale
cost reductions experienced by a business when it expands its output
External economies of scale
cost-savings that occur due to external factors in the region or industry that are not under the control of the business
Purchasing economies of scale
lower costs of production that occur when a business is able to buy large quantities of inputs and negotiate lower prices for them
Marketing economies of scale
lower costs of production that occur when the cost of a marketing campaign is spread over a larger quantity of output, thus lowering the average cost of the campaign
Managerial economies of scale
lower costs of production that occur when the cost of hiring a manager is spread over a larger output
Technical economies of scale
lower costs of production that occur when a business is able to purchase equipment that makes the business more efficient
Financial economies of scale
lower costs of production that occur when a business takes out a larger loan, with a lower interest rate, for investment
Diseconomies of scale
the increase in the per-unit production cost as a business grows
Internal diseconomies of scale
an increase in the average unit cost(usually explained by the difficulty of managing internally large operations)
External diseconomies of scale
the increased unit cost of production for a business(due to the expansion of the industry in which the business operates)
Working capital
the difference between current assets and current liabilities
Monopsony
a situation in which the market has only one buyer
Internal growth
expansion of a business with its own resources
Target market
a market segment at which a company/product is aimed
Asset
the resources owned by a business, which have monetary value
External growth
expansion of a business by relying on external resources, typically with another organisation
Merger
the voluntary combination of two businesses to form a new business
Acquisition
the process in which a business takes complete control over another business by acquiring more than 50% of its share capital
Parent company
a company that controls the interests of another company
Subsidiary
a business that is fully owned or partially controlled by another company(i.e. parent company)
Takeover
the purchase of a company by another company(can be either friendly or hostile)
Proxy fight
a competitive struggle between two businesses for the proxy votes from stakeholders needed to control a corporation
Joint venture
a new enterprise undertaken jointly by two or more businesses(which otherwise hold onto their distinct identities)
Strategic alliance
an arrangement between two or more businesses in which they work together to achieve common objectives but do not create a new enterprise
Franchise/Franchising
an arrangement where a franchisee buys the rights to use the name and business model of a franchisor
Franchisee
an individual or business who purchases the right to use an existing buiness’s trademarks, brands and proprietary knowledge
Franchisor
a business which sells the right to open stores and sell products or services using its brand, expertise and intellectual property
Royalties
the payment that is made to an individual or a company for the use of an asset
Satisficing
aiming to achieve enough profit to keep the owner happy(profit is optimised rather than maximised)
NIche market
a small part of a larger market where customers have very specialised needs
Market penetration
a low-risk growth strategy that involves selling more of the same products and services to the same customers(or same customers, through changes to price, promotion or distribution
Product development
a medium-risk growth strategy that involves selling new products to the same customers
Market development
a medium-risk growth strategy that involves selling existing products in new markets
Diversification
a high-risk grwoth strategy that involves selling new products in a new market
Related diversification
a situation where a business enters a new industry that has similarities with the company’s existing industry
Unrelated diversification
a situation where a business enters a new industry that has no similarities with the company’s existing industry
Driving forces
factors that support or promote change
Restraining forces
factors that resist change
