ESB chapter 7
maturity stage
The third life cycle stage, marked by a stabilization of demand, with firms in the industry moving to stabilize or improve profits through cost strategies.
mass market
large portions of the population
the small business strategy process
prestrategy customers and benefits industry dynamics and analysis strategy selection and implement post start up strategy
boom
a type of life cycle growth stage marked by a very rapid increase in sales in a relatively short time
shakeout
a type of life cycle stage following a boom in which there is a rapid decrease in the number of firms in an industry
Imitative strategy
an overall strategic approach in which the entrepreneur does more or less what others are already doing
SWOT Analysis: Opportunities
chances to make greater sales or profits in the environment
5 key initial decisions of prestrategy
1. what do you expect out of a business? 2. what is your product or service idea (and its industry) 3. for your product or service, how innovative or imitative will you be? 4. who do you plan to sell to ? 5. where do you plan to sell ?
growth stage
An industry life cycle stage in which customer purchases increase at a dramatic rate. A. boom b. Shakeout
entry wedge
An opportunity that makes it possible for a new business to gain a foothold in a market. - supply shortages, unutilized resources, customer contracting, second sourcing, market relenquishment, favored purchasing, government rules.
retrenchment
An organizational life cycle stage in which established firms must find new approaches to improve the business and its chances for survival.
innovative strategy
An overall strategic approach in which a firm seeks to do something that is very different from what others in the industry are doing
differentiation strategy
a type of generic strategy aimed at clarifying how one product is unlike another in mass market
net profit
The amount of money left after operating expenses are deducted from the business
introduction stage
The life cycle stage in which the product or service is being invented and initially developed
cost strategy
a generic strategy aimed at mass markets in which a firm offers a combination of cost benefits that appeals to the customer
focus strategy
a generic strategy that targets a portion of the market, called niche or segment
declining stage
a life cycle stage in which sales and profits of the firm begin a failing trend.
niche market
a narrowly defined segment of the population that is likely to share interests or concerns
Industry Analysis
a research process that provides the entrepreneur with key information about the industry, such as its current situation and trends
SWOT analysis- strength
characteristics of the business or team that give it an advantage over others in the industry
SWOT Analysis: Weaknesses
characteristics that place the firm at a disadvantage relative to others
SWOT Analysis: Threats
elements in the environment that could cause trouble for the business
Gross Profit
funds left over after deducting the cost of goods sold
scope
geographic range covered by the market local to global
Industry Life Cycle
introduction, growth, maturity, decline, retrenchment
scale
size of the market
SWOT analysis
strengths, weaknesses, opportunities, threats
profit before taxes
the amount of profit earned by a business before calculating the amount of income tax owed
Prestrategy
the first step of strategic planning
industry
the general name for the line of product or service being sold, or the firms in that line of business.
strategy
the ideas and actions that explain how a firm will make its profits
pure innovation
the process of creating new products or services, which results in a previously unseen product or service
Generic Strategies
three widely applicable classic strategies for businesses of all types- differentiation, cost, and focus