PAU Business & Business Model Design (Cantabria) flashcards

32 cards. Read the term and the definition here. The deck at the top of this page is optional.

Unlimited liability

Legal position of a sole trader or general partner: personal assets can be seized to settle business debts, because owner and business have no separate legal personality.

Sociedad Anónima capital

Spanish public limited company requiring a minimum share capital of 60,000 euros, with at least 25 per cent paid up on incorporation; shares are freely transferable.

Agency problem

Conflict arising when managers, who control the firm, pursue their own interests rather than those of shareholders; mitigated by incentives, boards and disclosure.

Stakeholder

Any individual or group affected by or interested in the firm's decisions, such as employees, customers, suppliers, shareholders, government and local community.

Business Model Canvas

Nine-block framework covering customer segments, value propositions, channels, customer relationships, revenue streams, key resources, key activities, key partnerships and cost structure.

Value capture

The portion of total value created that the firm retains as profit rather than passing to customers, suppliers or competitors through pricing and bargaining.

Freemium model

Business model offering a free basic service to attract a large user base while charging for premium features; revenue depends on converting free users to paying ones.

Network effect

Situation where the value of a product or platform to each user increases as the number of other users rises, creating a barrier to entry.

Disintermediation

Removal of an intermediary from the distribution chain, for example a producer selling directly online instead of through wholesalers and retailers.

Break-even quantity

Output level at which total revenue equals total cost, calculated as fixed costs divided by the difference between price and variable cost per unit.

Economic order quantity

Inventory order size minimising the sum of ordering and holding costs, equal to the square root of twice annual demand times order cost divided by holding cost.

Just-in-time

Production and purchasing approach where materials arrive as needed, cutting inventory and holding costs but leaving little buffer against supply disruption.

Cost of poor quality

Sum of internal failure costs (scrap, rework) and external failure costs (warranty claims, recalls, lost goodwill); external failures are usually the most damaging.

Price elasticity of demand

Percentage change in quantity demanded divided by percentage change in price; demand is elastic when the absolute value exceeds one.

Market segmentation

Dividing a heterogeneous market into groups of buyers with similar needs or characteristics that can be served with a distinct marketing mix.

BCG cash cow

Business unit with high market share in a low-growth market; it generates cash that funds stars and question marks rather than requiring investment.

AIDA model

Sequence describing promotional effect on buyers: Attention, Interest, Desire, Action; each stage requires different messages and media.

Conversion rate

Number of desired actions, such as purchases or sign-ups, divided by the number of visits or impressions, expressed as a percentage.

Current ratio

Current assets divided by current liabilities; measures short-term liquidity and the ability to meet obligations falling due within one year.

Acid-test ratio

Current assets excluding inventory, divided by current liabilities; a stricter liquidity measure because inventory may be slow to convert into cash.

Net present value

Sum of future cash flows discounted at the cost of capital, minus the initial investment; a positive NPV means the project adds value.

Internal rate of return

Discount rate at which a project's net present value equals zero; the project is accepted when IRR exceeds the required rate of return.

Payback period

Time required for cumulative cash inflows to equal the initial investment; simple to apply but ignores cash flows after payback and the time value of money.

Gearing ratio

Measure of financial leverage, typically debt divided by debt plus equity, showing the proportion of capital funded by borrowing rather than owners.

Herzberg two-factor theory

Hygiene factors such as pay and conditions prevent dissatisfaction, while motivators such as achievement, recognition and responsibility generate genuine satisfaction.

Span of control

Number of subordinates directly reporting to one manager; a wide span reduces management layers but limits close supervision.

Matrix structure

Organisational design in which employees report both to a functional manager and to a project or product manager, combining specialism with focus but risking conflicting instructions.

Labour turnover

Percentage of the workforce leaving during a period, calculated as leavers divided by average number of employees, multiplied by one hundred.

Porter's five forces

Framework assessing industry attractiveness through rivalry, new entrants, substitutes, buyer power and supplier power; stronger forces compress average profitability.

Ansoff matrix

Grid of growth options by product and market novelty: market penetration, product development, market development and diversification, the last carrying highest risk.

Vertical integration

Growth along the supply chain: backward integration takes control of suppliers, forward integration takes control of distribution or retail closer to the customer.

Porter's diamond

Model explaining national competitive advantage through factor conditions, demand conditions, related and supporting industries, and firm strategy, structure and rivalry.