Essential Business Concepts and Their Meanings
Key Business Terms and Definitions
Licensing
Licensing – Authorizing the use, performance, or release of something.
Market Development
Market development – A strategy that entails expanding the potential market through new users or new uses. New users can be defined as new geographic segments, new demographic segments, new institutional segments, or new psychographic segments. Another way is to expand sales through new uses for the product.
Market Penetration
Market penetration – The percentage of a target market that consumes a product or service. Market penetration can also be a measure of one company’s sales as a percentage of all sales for a product.
Market Strategy
Market strategy – The result of a meticulous market analysis. A market analysis forces the entrepreneur to become familiar with all aspects of the market so that the target market can be defined and the company can be positioned in order to garner its share of sales.
Marketing Plan
Marketing plan – A comprehensive blueprint that outlines an organization’s overall marketing efforts. A marketing process can be realized by the marketing mix, which is outlined in step 4. The last step in the process is marketing controlling.
Mission Statement
Mission statement – A formal summary of the aims and values of a company, organization, or individual.
Morals
Morals – A lesson, especially one concerning what is right or prudent, that can be derived from a story, a piece of information, or an experience.
National Personality
National personality – The enduring personality characteristics and unique lifestyles found among the populations of particular national states.
Net Profit
Net Profit – The actual profit after working expenses not included in the calculation of gross profit have been paid.
Outsourcing
Outsourcing – Obtaining goods or a service from an outside or foreign supplier, especially in place of an internal source.
Price Escalation
Price escalation – Changes in the cost or price of specific goods or services in a given economy over a period.
Product Adaptation
Product adaptation – The process of modifying an existing product so it is suitable for different customers or markets. An adaptation strategy is particularly important for companies that export their products because it ensures that the product meets local cultural and regulatory requirements.
Product Penetration
Product penetration – The activity or fact of increasing the market share of an existing product, or promoting a new product, through strategies such as bundling, advertising, lower prices, or volume discounts.
Purchasing Power
Purchasing power – The financial ability to buy products and services.
Relative Pricing
Relative pricing – The price of a commodity such as a good or service in terms of another.
Situation Analysis
Situation Analysis – Refers to a collection of methods that managers use to analyze an organization’s internal and external environment to understand the organization’s capabilities, customers, and business environment.
Socialization
Socialization
- A political and economic theory of social organization that advocates that the means of production, distribution, and exchange should be owned or regulated by the community as a whole.
- The means by which social and cultural continuity are attained.
Stakeholder
Stakeholder – A person with an interest or concern in something, especially a business.
Strategic Plan
Strategic plan – An organization’s process of defining its strategy, or direction, and making decisions on allocating its resources to pursue this strategy. It may also extend to control mechanisms for guiding the implementation of the strategy.
Tactical Management
Tactical management – The administrative process of selecting among appropriate ways and means of achieving a strategic plan or objective.
Target Market
Target market – A particular group of consumers at which a product or service is aimed.
The Market Audit
The market audit – A comprehensive, systematic, independent, and periodic examination of a company’s—or business unit’s—marketing environment, objectives, strategies, and activities with a view to determining problem areas and opportunities and recommending a plan of action to improve the company’s marketing.
Values
Values – The regard that something is held to deserve; the importance, worth, or usefulness of something.
Vision Statement
Vision statement – A company’s road map, indicating both what the company wants to become and guiding transformational initiatives by setting a defined direction for the company’s growth.