Chapter 7

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.

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.

Net Profit

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

Competitive Advantage

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

Pure Innovation

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

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 Strategy

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

Organizational Capabilities

abilities, skills, and competencies used by the firm to make profits from tangible and intangible resources

Scale

size of the market

Strategy

the ideas and actions that explain how a firm will make its profit

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.

Competitor

Any other business in the same industry as yours.

Niche Market

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

Best way to identify desirable benefits is through...

potential customers

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 .

Rare Resource

An asset, capability, organizational process, information, or knowledge that is not generally available to competitors.

Valuable Resource

An asset, capability, organizational process, information, or knowledge that lets a firm take advantage of opportunities or lock out competitors.

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.

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.

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.

Imitative Strategy

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

Resources

Any asset, capability, organizational process, information, or knowledge that contributes to the firm's performance Tangible, Intangible

Industry Dynamics

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

Attractive Customers

Corporate customers Loyal customers Local customers Passionate customers

Gross Profit

Funds left over after deducting the cost of goods sold.

Market

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

Opportunities

chances to make greater sales or profits in the environment

Scope

geographic range covered by the market Local to Global

Scope is important for this reason..

Knowing your scope helps deciding where to focus sales and advertising efforts

Scope is important for this reason..

Knowing your target market gives you a way to know which competitors to worry about most, namely those within your market scope

Profit before Taxes

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

Strategic Direction

The conceptualization of how a business might best move in response to the findings of a SWOT analysis—Flaunt, Fix, Fight, Flee, Find, or Fire-up.

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.

Benefits

characteristics of a product or service that the target customer would consider worthwhile value benefit, cost benefit

Strengths

characteristics of the business or team that give it an advantage over others in the industry.

Weaknesses

characteristics that place the firm at a disadvantage relative to others

Combinational Competencies

combining tangible and intangible resources

Threats

elements in the environment that could cause trouble for the business.

Transformational Competencies

firm can make its product or service better in value

What makes a strategy "good"

its fit to the particulars of your business and the resources you can bring to it

Mass Market

large portions of the population