Small Business Management - Chapter 7

Perceptual Map

a graphic display which positions products, services, brands, or companies according to their scores of important strategic dimensions

Focus Strategy

a generic strategy that targets a portion of the market, called a segment or a niche

Mass Market

large portions of the population

Scale

size of the market

Growth Stage

An industry life cycle stage in which customer purchases increase at a dramatic rate.

Competitive Advantage

The particular way a firm implements customer benefits that keeps the firm ahead of other firms in the industry

Cost Strategy

a generic strategy aimed at mass markets in which a firm offers a combination of cost benefits that appeals to the customer

Decline Stage

a life cycle stage in which sales and profits of the firm begin a falling trend

Industry Analysis (IA)

a research process that provides the entrepreneur with key information about the industry, such as its current situation and trends

Differentiation Strategy

a type of generic strategy aimed at clarifying how one product is unlike another in a mass market

Boom

a type of life cycle growth stage marked by a very rapid increase in sales in a relatively short time

Market

business term for the population of customers for your product or service

Industry Dynamics

changes in competitors, sales and profits in an industry over time

Supra-Strategies

classic benefit combinations which are designed to work where there are many small businesses in an industry, along with a few larger firms

Gross Profit

funds left over after deducting the cost of goods sold

Scope

geographic range covered by the market. Local to Global

Niche Market

narrowly defined segment of the population that is likely to share interests or concerns

Net Profit

the amount of money left after operating expenses are deducted from the business

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 profit

Shake-Out

a type of life cycle stage following a boom in which there is a rapid decrease in the number of firms in an industry

Competitor

all the firms also selling that product or service

Parallel Competition

an imitative business that competes locally with others in the same industry

Entry Wedge

an opportunity that makes it possible for a new business to gain a foothold in a market

Retrenchment

an organizational life cycle stage in which established firms must find new approaches to improve the business and its chances for survival

Incremental Innovation

an overall strategic approach in which a firm patterns itself on other firms, with the exception of one or two key areas

Imitative Strategy

an overall strategic approach in which the entrepreneur does more or less what others are already doing

Strategic Actions

competitive responses requiring a major commitment of resources

Tactical Actions

competitive responses with low resource requirements

Profit before Taxes

the amount of profit earned by a business before calculating the amount of income tax owed

Degree of Similarity

the extent to which a product or service is like another

Introduction Stage

the life cycle stage in which the product or service is being invented and initially developed

Magic Number

the post-tax income the entrepreneur personally seeks from the business

Pure Innovation

the process of creating new products or services, which can result in a previously unseen product or service, also called blue ocean strategy

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

Generic Strategies

three widely applicable classic strategies for businesses of all types - differentiation, cost, and focus

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