CHAPTER 3

• a group of people or organizations that may be interested in buying a given product or service, has the resources to purchase it, and is permitted by law and regulation to do so

  market
• includes the offer, target market, and product and delivery capability—answering the questions of who, what, and how

  business definition
• 3 elements of a solid business definition

  offer, target market, production and delivery capability
• includes the complete bundle of products and services you will be bringing to the marketplace

  offer
• answers the question: which segment of the market are you aiming to serve?

  target market
• includes how to perform the key activities required to produce the product or service, deliver it to your customers, and ensure they are satisfied

  production and delivery capability
• include the fundamental ethical and moral philosophy and beliefs that form the foundation of the organization and provide broad guidance for all decision making

  core values
• core values will affect business ____

  decisions
• a concise communication of your purpose, business definition, and values

  mission
• your company's mission is to ____ ____

  satisfy customers
• your company's vision is the ____ ____

  broader perspective
• your company's culture defines the ____ ____

  work environment
• whatever you can do better than the competition that will attract a sufficient number of customers to your business so it can succeed

  competitive advantage
• competition is defined by your target market and can be ____ (selling the same or similar products to the same market) or ____ (selling different products that compete for the same share of customer spending)

  direct, indirect
• 6 factors of competitive advantage

  quality, price, location, selection, service, spped/turnaround
• are the factors that contribute to the ease or difficulty of a new competitor joining an established market, and they cannot be so high that market entry and success are not possible

  barriers to entry
• combines your business definition with your competitive advantage

  competitive strategy
• plan for outperforming the competition. Your tactics are the ways in which you will carry out your strategy

  strategy
• the ways in which you will carry out your strategy

  tactics
• price minus cost of goods sold

  gross profit
• the basic unit of the product or service sold by the business

  unit of sale
• the amount of gross profit that is earned on each unit of the product or service a business sells

  economics of one unit of sale
• cost of producing tangible item

  the cost of producing tangible item
• cost of delivering a service

  cost of services sold
• a term for money when it is exchanged internationally

  currency
• the relative value of one currency to another

  foreign exchange rate
• a method that analyzes the underlying value of the firm’s assets as a basis for negotiating the price

  asset valuation
• a method that assesses the value of the firm based on a stream of earnings that is multiplied either by an agreed-upon factor or by the price/earnings ratio

  earnings valuation
• using projected future cash flows and the time value of money to arrive at a figure

  cash flow valuation