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