MIDTERM Flashcards
vision statement
outlines where you want to be, communicating the purpose and values of your business, providing an outline for your future goals
mission statement
talks about how you will get to where you want to be, and what you do today
business plan
a written description of your business’s future
executive summary
a short document or section that summarizes a longer report or proposal or a group of related reports in such a way that readers can rapidly become acquainted with a large body of material without having to read it all
3 types of strategy
differentiation, LCL (low-cost leader), focus (niche)
differentiation
distinguishing of a process from or service from others
LCL (low-cost leader)
low cost of operation; economizing efficiency, size, scale, scope, and cumulative experience
focus (niche)
concentration on one or a few segments of the market
tactics
methods used to implement a strategy
V = A / P
value = attributes / price
R - C = P
revenue - cost = profit
research & development
investigative work directed towards the innovation, introduction, and improvement of products and processes
product R&D
pertains to a consumer good, namely to its price, quality, and safety
process R&D
pertains to the means by which the consumer good is being made, including working conditions, and treatment of products and labor
mechanistic organization
hierarchical and bureaucratic; characterized by (1) highly centralized authority, (2) formalized procedures and practices, and (3) specialized functions
organic organization
characterized by (1) “horizontal” communications and interactions, (2) low specialization (knowledge resides wherever it is most useful), and (3) decentralization (great deal of formal and informal participation in decision making)
law of diffusion of innovation
a form of statistical analysis that explains how, why, and what rate new ideas and technology spread through culture
categories of adopters
innovators (2.5%), early adopters (13.5%), early majority (34%), late majority (34%), laggards (16%)
the golden circle
relative to the law of diffusion of innovation; illustrates that many people know what they do, but fewer people know how, and even fewer know why
to calculate gross profit…
subtract your total income by your total COGs
EBITDA
Earnings before Interest, Taxes, Depreciation, and Amortization
line of credit
an arrangement between a financial institution and a customer that establishes a maximum loan balance that the bank will permit the borrower to maintain
break-even analysis
used to calculate a margin safety; R - C > 0
L + SE = A
liabilities + shareholder equity = assets
