Galicia PAU Business and Business Model Design flashcards

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

PESTEL analysis

Framework scanning six macro-environmental factors: political, economic, social, technological, ecological and legal. It identifies external changes a firm cannot control but must anticipate in its strategy.

Value added

Difference between the final value of a firm's output and the value of its intermediate consumption. It measures the wealth the firm actually creates, unlike turnover, which double-counts purchased inputs.

Sociedad limitada capital

Spanish limited company requiring a minimum share capital of one euro. Partners' liability is limited to their contribution, and shares cannot be freely offered to the public.

Opportunity cost

The value of the best alternative forgone when a resource is committed to one use. It is the correct cost for decision-making, unlike historical or sunk costs already incurred.

EU SME thresholds

Micro: under 10 employees and up to 2 million euros turnover. Small: under 50 and 10 million. Medium: under 250 and 50 million. Above these the firm counts as large.

Business model canvas

Nine-block template linking value proposition, customer segments, channels, relationships, revenue streams, key resources, activities, partners and cost structure. It maps how a firm creates, delivers and captures value.

Contribution margin per unit

Price minus variable cost per unit. It shows how much each sale contributes to covering fixed costs, and dividing fixed costs by it gives the break-even volume.

LTV to CAC ratio

Lifetime value divided by customer acquisition cost. A ratio above roughly three is generally considered healthy; below one means each new customer destroys value.

Lean build-measure-learn

Iterative cycle in which a hypothesis is built into a minimum viable product, measured against a pre-set metric, and used to learn whether to persevere or pivot.

Pivot

Structured change to one core element of a business model, such as customer segment, value proposition, channel or revenue model, while keeping the validated learning from previous iterations.

Porter's five forces

Model of industry attractiveness based on rivalry, threat of new entrants, threat of substitutes, buyer bargaining power and supplier bargaining power. High combined intensity compresses average profitability.

VRIO framework

Test of whether a resource supports sustained advantage: it must be valuable, rare, inimitable and the firm must be organised to exploit it. Failing any criterion limits the advantage.

Ansoff matrix

Grid of four growth options: market penetration, product development, market development and diversification. Risk increases from penetration towards diversification, which is new products in new markets.

Experience curve

Observation that unit cost falls by a constant percentage each time cumulative output doubles. It refers to accumulated volume, not current annual production, and underpins cost leadership strategies.

Herzberg two-factor theory

Distinguishes hygiene factors such as pay and working conditions, which prevent dissatisfaction, from motivators such as achievement and responsibility, which create satisfaction. Raising pay alone does not motivate.

Span of control

Number of subordinates reporting directly to one manager. A narrow span creates a tall hierarchy with many layers; a wide span flattens it but increases each manager's supervisory load.

Convenio colectivo

Collective agreement negotiated between unions and employers that sets minimum wages, working time and job grading for a sector or company. It binds the firm even over less favourable individual contracts.

Absenteeism rate

Days lost through absence divided by potential working days, multiplied by 100. It is a percentage indicator of workforce availability and is distinct from the turnover rate.

Price elasticity of demand

Percentage change in quantity demanded divided by percentage change in price. When the absolute value exceeds one, demand is elastic and a price cut raises total revenue.

STP process

Segmentation of the market into groups, targeting of the most attractive segments, and positioning of the offer in customers' minds. Effective segments must be measurable, accessible, substantial, differentiable and actionable.

Primary versus secondary research

Primary research collects new data through surveys, interviews, observation or experiments. Secondary research reuses existing data from sources such as INE, IGE, Eurostat or trade associations.

Relative market share

A firm's market share divided by the market share of its largest competitor. A value above one indicates market leadership and is used in portfolio matrices.

Economic order quantity

Order size minimising total ordering and holding costs, calculated as the square root of twice annual demand times order cost, divided by annual holding cost per unit.

Just-in-time production

System in which materials arrive as needed, minimising inventory and holding costs. It requires reliable suppliers and stable demand, and increases exposure to supply disruption.

Cost of poor quality

Sum of internal failure costs, such as scrap and rework, and external failure costs, such as warranty claims and lost customers. Prevention and appraisal costs are the cost of good quality.

Capacity utilisation

Actual output divided by maximum capacity, expressed as a percentage. Low utilisation spreads fixed costs over fewer units and therefore raises unit fixed cost.

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 and should be accepted.

Internal rate of return

Discount rate at which a project's net present value equals zero. A project is accepted when its IRR exceeds the firm's cost of capital, but IRR can mislead with non-conventional cash flows.

Cash conversion cycle

Days inventory plus days receivable minus days payable. It measures how long cash is tied up in operations; a shorter cycle reduces the financing needed for working capital.

Acid test ratio

Current assets excluding inventory, divided by current liabilities. It is a stricter liquidity measure than the current ratio because inventory may be slow to convert into cash.

Concurso de acreedores

Spanish insolvency proceeding opened when a debtor cannot pay debts as they fall due. Directors must apply within two months of insolvency, and the process may end in a creditors' agreement or liquidation.

Triple bottom line

Reporting framework that evaluates a firm on three dimensions: people, planet and profit. It complements Carroll's economic, legal, ethical and philanthropic dimensions of social responsibility.