MBA in a Box Glossary

Strategic PositioningThe strategic choices a company makes
Competitive AnalysisUnderstanding who the company’s competitor firms are and which factors influence their behavior
DemandThe quantity of a product or service people are willing and able to acquire
Turnaround TimeA measurement showing us how quickly a company sells its inventory (goods on stock)
Corporate StrategyAnswers the question “Where do we want to compete?” 
Business StrategyAnswers the question “How do we want to compete?” 
Competitive AdvantageA condition which puts a company in a favorable position with respect to its competitors
StakeholderDifferent than a firm’s shareholders; Stakeholders are all groups of people who have an interest in a company’s business: employees, suppliers, clients, society, etc.
OverheadCentralized costs necessary for the firm’s business operations (lighting, office supplies, utilities, etc.)
Consumer AwarenessThe degree to which a consumer is familiar with a product or a brand
Market ShareThe portion of sales a company is responsible for in a given market
Price SensitiveCustomers who are focused on a product’s price. If the price becomes slightly higher, these are the first customers who will stop buying the product
Substitute ProductA different product satisfying the same need
Fixed CostsCosts that do not increase when production output increases (e.g. administration)
Variable CostsCosts that increase when production output increases (e.g. raw materials, production personnel salaries)
Brand AwarenessThe degree to which consumers are able to recognize a brand 
Dominant Product DesignA version of a product that is significantly better than the rest of the products on the market
OvercapacityWhen the companies in an industry have invested in significant levels of production capacity and there isn’t sufficient demand for it
Unitary CostHow much is spent for the production of a single product unit
Unitary RevenueHow much revenue is received from the sale of a single product unit
Unitary MarginThe difference between unitary revenue and unitary cost
R&DResearch and Development activities. The R&D department of a company is focused on product innovation and development
CapexStands for capital expenditures. These are long term oriented investments in fixed assets (e.g. building a new plant)
Economy Of ScaleA proportionate saving in costs gained by an increased level of production
Entry BarriersMechanisms preventing the entry of new competitors in an industry
Concentration RatioShows if an industry is concentrated and dominated by a few big players
SupplierA company that provides products or services used in the production cycle of an entity
End customerEnd customers are the people or firms who end up with a given product and are the ones using it and not reselling it
Production CycleComprises all stages and activities necessary for the production of a product
Bargaining PowerThe relative ability of parties to exert influence over each other
ERP SystemAn Enterprise Resource Planning system is a modern tool used by all large companies to automate a large portion of their Accounting, Admin, and Planning activities
Switching CostsThe costs of replacing an existing system with a new one. Switching costs can be of monetary and non-monetary nature
Market SegmentA sub-segment of the entire market comprising of people with a common characteristic/s
Zero-Sum GameA game in which someone loses and someone wins. There cannot be a win without a loss. The net result is 0.
Nash’s EquilibriumA stable state of a system involving the interaction of different participants, in which no participant can gain by a unilateral change of strategy if the strategies of the others remain unchanged
Prisoner’s DilemmaStandard example of a game analyzed in game theory that shows why two completely “rational” individuals might not cooperate, even if it appears that it is in their best interests to do so
SWOTThe SWOT framework describing a company’s Strengths, Weaknesses, Opportunities, Threats
ShareholderOwner of equity shares in a company
Tangible AssetsAssets of physical nature (vehicles, plants, equipment, cash, etc.)
Intangible AssetsAssets of non-physical nature (patents, trademarks, etc.)
ResourcesAssets acquired with money
CapabilitiesA firm’s ability to deploy resources towards a certain goal and use them in the best possible way to achieve the desired result
Output LevelLevel of production
Economy Of ScopeA proportionate saving, gained by producing two complimentary products
ProcurementThe action of arranging supplier products or services
OutsourcingNowadays companies prefer to externalize certain activities such as Accounting, Payroll, Customer Support, etc. When a third firm handles our Payroll, we say we have outsourced it.
Hybrid Strategy A mix between cost leadership and differentiation
DiversificationHolding a stake in a variety of businesses for the sake of risk reduction
Organic GrowthGrowing from the inside. Expand the company by hiring new employees and grow what is already available
Inorgranic GrowthGrow from the outside through the acquisition of other companies
AcquisitionA company acquires the shares of another company
MergerA company merges another company’s assets in its own legal entity, in the Target’s legal entity, or in a new legal entity
Vertical IntegrationWhen a company expands the activities it performs across the supply chain, undertaking new aspects of the business
Horizontal IntegrationThe combination of two companies operating in the same industry and performing the same activity

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