Chapter 7 Terms - Small Business Management

Mass Market

A customer group that involves large portions of the population.

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 a segment or niche.

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.

Parallel Competition

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

Growth Stage

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

Retrenchment

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

Imitative Strategy

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

Net Profit

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

Magic Number

The posttax income the entrepreneur personally seeks from the business. Contents modal dialog

Pure Innovation

The process of creating new products or services, which results in a previously unseen product or service.

Incremental innovation

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

Boom

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

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.

Competitor

Any other business in the same industry as yours.

Distinctive Competence Map

A graphic display that compares your company's product or service to that of your competitors, in order to identify your core (shared) competencies and those unique to you and to your competitor.

Decline Stage

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

Blue Ocean Strategy

A strategy based on creating a new product or service that has no competitors.

Differentiation Strategy

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

Industry Dynamics

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

Gross Profit

Funds left over after deducting the cost of goods sold.

Value Proposition

Small business owners' unique selling points (also known as benefits) that customers can expect from your goods or services, including benefits that differentiate your offering from those of the competition.

Marketing

The actions of a business related to promoting and selling products or services.

Scope

A characteristic of a market that defines the geographic range covered by the market—from local to global.

Scale

A characteristic of a market that describes the size of the market—a mass market or a niche market.

Supply Chain

A way to think about the line of distribution of a product from its start as materials outside the target firm, to its handling in the target firm, to its handling by sellers, with placement into the hands of customers.

Goal

An intended outcome for your business.

Entry Wedge

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

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.

Market

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

Degree of Similarity

The extent to which a product or service is like another.

Industry

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

Introduction Stage

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

Core Competency

The main work of a firm in a particular line of business.

Competitive Advantage

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

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.

Distinctive Competence

Those features, benefits, or aspect of your business that are unique to your firm, or more strongly identified with your firm than with your competitors. This is the specialty for which your firm is best known.

Generic Strategies

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