Chapter 7

Parallel Competition

An imitative business that competes locally with others in the same industry.

Shake Out

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

Gross Profit

Funds left over after deducting the cost of goods sold.

Cost Strategy

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

Focus Strategy

Generic strategy that targets a portion of the market called a segment or niche.

Growth Stage

Life cycle stage in which customer purchases increase at a dramatic rate.

Decline Stage

Life cycle stage in which sales and profits of the firms in the industry begin falling trend.

Introduction Stage

Life cycle stage in which the product/service is being invented and initially developed.

Industry Analysis (IA)

Research process that provides the entrepreneur with key information about the industry such as its current situation and trends.

Blue Ocean Strategy

Strategy based on creating a new product or service which has no competitors.

Net Profit

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

Profit Before Taxes

The amount of profit earned by a business before calculating the amount of income tax owned.

Maturity Stage

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 Startegies

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

Industry Dynamics

Changes in competitors, sales and profits in an industry over time.

Scope

Characteristic of a market that defines the geographic range covered by the market from local to global.

Scale

Characteristic of a market that describes the size of the market-mass market or niche market.

Strategic Actions

Competitive responses requiring a major commitment of resources.

Retrenchment

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

Incremental Innovation

Overall strategic approach in which a firm patterns itself on to other firms with the exception of 1 or 2 key areas.

Industry

The general name for the line of product or service being sold or the firms in that line of business.

Magic Number

The post tax income the entrepreneur personally seeks from the business.

Perceptual Map

A graphic display which positions products, services, brands, or companies according to their scores on important strategic dimensions.

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 market by a very rapid increase in sale sin a relatively short time.

Entry Wedge

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

Tactical Actions

Competitive responses with low resource requirements.