| Strategy | |
| Term | Explanation |
| Strategic Positioning | The strategic choices a company makes |
| Competitive Analysis | Understanding who the company’s competitor firms are and which factors influence their behavior |
| Demand | The quantity of a product or service people are willing and able to acquire |
| Turnaround Time | A measurement showing us how quickly a company sells its inventory (goods on stock) |
| Corporate Strategy | Answers the question “Where do we want to compete?” |
| Business Strategy | Answers the question “How do we want to compete?” |
| Competitive Advantage | A condition which puts a company in a favorable position with respect to its competitors |
| Stakeholder | Different 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. |
| Overhead | Centralized costs necessary for the firm’s business operations (lighting, office supplies, utilities, etc.) |
| Consumer Awareness | The degree to which a consumer is familiar with a product or a brand |
| Market Share | The portion of sales a company is responsible for in a given market |
| Price Sensitive | Customers 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 Product | A different product satisfying the same need |
| Fixed Costs | Costs that do not increase when production output increases (e.g. administration) |
| Variable Costs | Costs that increase when production output increases (e.g. raw materials, production personnel salaries) |
| Brand Awareness | The degree to which consumers are able to recognize a brand |
| Dominant Product Design | A version of a product that is significantly better than the rest of the products on the market |
| Overcapacity | When the companies in an industry have invested in significant levels of production capacity and there isn’t sufficient demand for it |
| Unitary Cost | How much is spent for the production of a single product unit |
| Unitary Revenue | How much revenue is received from the sale of a single product unit |
| Unitary Margin | The difference between unitary revenue and unitary cost |
| R&D | Research and Development activities. The R&D department of a company is focused on product innovation and development |
| Capex | Stands for capital expenditures. These are long term oriented investments in fixed assets (e.g. building a new plant) |
| Economy Of Scale | A proportionate saving in costs gained by an increased level of production |
| Entry Barriers | Mechanisms preventing the entry of new competitors in an industry |
| Concentration Ratio | Shows if an industry is concentrated and dominated by a few big players |
| Supplier | A company that provides products or services used in the production cycle of an entity |
| End customer | End customers are the people or firms who end up with a given product and are the ones using it and not reselling it |
| Production Cycle | Comprises all stages and activities necessary for the production of a product |
| Bargaining Power | The relative ability of parties to exert influence over each other |
| ERP System | An 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 Costs | The costs of replacing an existing system with a new one. Switching costs can be of monetary and non-monetary nature |
| Market Segment | A sub-segment of the entire market comprising of people with a common characteristic/s |
| Zero-Sum Game | A game in which someone loses and someone wins. There cannot be a win without a loss. The net result is 0. |
| Nash’s Equilibrium | A 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 Dilemma | Standard 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 |
| SWOT | The SWOT framework describing a company’s Strengths, Weaknesses, Opportunities, Threats |
| Shareholder | Owner of equity shares in a company |
| Tangible Assets | Assets of physical nature (vehicles, plants, equipment, cash, etc.) |
| Intangible Assets | Assets of non-physical nature (patents, trademarks, etc.) |
| Resources | Assets acquired with money |
| Capabilities | A firm’s ability to deploy resources towards a certain goal and use them in the best possible way to achieve the desired result |
| Output Level | Level of production |
| Economy Of Scope | A proportionate saving, gained by producing two complimentary products |
| Procurement | The action of arranging supplier products or services |
| Outsourcing | Nowadays 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 |
| Diversification | Holding a stake in a variety of businesses for the sake of risk reduction |
| Organic Growth | Growing from the inside. Expand the company by hiring new employees and grow what is already available |
| Inorgranic Growth | Grow from the outside through the acquisition of other companies |
| Acquisition | A company acquires the shares of another company |
| Merger | A company merges another company’s assets in its own legal entity, in the Target’s legal entity, or in a new legal entity |
| Vertical Integration | When a company expands the activities it performs across the supply chain, undertaking new aspects of the business |
| Horizontal Integration | The combination of two companies operating in the same industry and performing the same activity |
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