Key Terms - Theme 1 Flashcards
Stock exchange
A place where public limited companies (PLC) trade shares in their organisations. Individuals and other companies are able to buy shares, which make them part-owners in a firm.
Dynamic markets
These are markets that change with a variety of factors, such as consumer tastes, government regulations and the emergence of new competition.
Stable markets
These markets stay the same regardless of changing factors and trends, eg the dairy and standard bread markets.
Trend
The direction in which most things appear to be moving eg there may be a trend for new technology firms to aim at young customers.
Competition
When two or more firms offer their products/services to a market, they enter into competition with one another.
External factors
Influences from outside the company which affect the way they do business eg changes in consumer tastes
Risk vs uncertainty
Risk is generally something that can be planned for. Uncertainty, on the other hand, involves the factors, normally external, that are beyond a firm’s control. Businesses can take calculated risks, but they are generally unable to plan for uncertainty.
Product orientation
When a business focuses more on its product and production process than considering what consumers are looking for
Market orientation
When a business creates a product/service by first finding out what it’s potential consumers want
Primary data
Research data that has been gathered first-hand. Businesses generally collect primary data through questionnaires and surveys
Secondary data
Research data that has been gathered second-hand, such as reading the findings or statistics of a survey published by another company
Market segmentation
When a market is split into groups, such as location, age or language. Businesses use segmentation in order to understand on which section of a market they should concentrate
Market map
Visual representation of a consumer market, which usually utilises two axes (such as price vs quality)
Competitive advantage
Firms that positively distinguish themselves from the competition are said to have the competitive advantage, or the edge, over their rivals
Differentiation
This covers the ways in which a company gains competitive advantage, such as strong product branding, price, marketing and customer service
