PAU Business & Business Model Design (La Rioja) flashcards

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

Sociedad Anónima minimum capital

A Spanish public limited company (SA) requires at least 60,000 EUR of share capital, with at least 25% paid up on incorporation. Shares are freely transferable, making it suited to larger firms raising capital from many investors.

Agency problem

A conflict arising when managers (agents) pursue their own interests rather than those of shareholders (principals). Mitigated by performance-based pay, board monitoring, audits and transparency requirements.

Stakeholder salience

Mitchell, Agle and Wood's model ranking stakeholders by power, legitimacy and urgency. Holding all three makes a stakeholder definitive and priority; two makes it expectant; one makes it latent.

PESTEL analysis

A macro-environment scan covering Political, Economic, Social, Technological, Environmental and Legal factors. Each factor is judged as opportunity or threat, with impact and probability, before strategy is set.

Porter's Five Forces

A framework measuring industry attractiveness through rivalry, new entrants, substitutes, buyer power and supplier power. Stronger forces compress margins, so firms seek positions where they can resist or reshape them.

Strategic group

A set of firms in one industry following similar strategies on key dimensions such as price, quality or geography. Mobility barriers hinder movement between groups and shape where competition is most intense.

Cost leadership strategy

Porter's generic strategy of achieving the lowest cost position in an industry, then pricing at or near industry average to earn above-average margins. It requires scale, process efficiency and tight cost control.

VRIO framework

Tests whether a resource gives sustained advantage: it must be Valuable, Rare, Inimitable and supported by Organisation. Failing value or rarity gives parity or disadvantage; failing organisation prevents capture of gains.

Ansoff matrix

A growth grid crossing products with markets: market penetration, product development, market development and diversification. Risk generally rises as the firm moves away from its existing product-market combination.

Business Model Canvas

A one-page model with nine blocks: customer segments, value propositions, channels, relationships, revenue streams, key resources, activities, partnerships and cost structure. It links how value is created, delivered and captured.

Value proposition fit

Alignment between the customer profile (jobs, pains, gains) and the value map (products, pain relievers, gain creators). Fit is achieved when the offer addresses the most important, unsatisfied profile items.

Multi-sided platform

A business model creating value by connecting two or more distinct groups, such as buyers and sellers. Pricing often subsidises one side to attract it, while the other side generates revenue.

Market segmentation criteria

A usable segment must be measurable, substantial, accessible, differentiable, actionable and stable. Segments failing these tests cannot support a targeting decision or a profitable marketing plan.

Price elasticity of demand

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

Penetration pricing

Setting a low launch price to win rapid market share and volume, accepting thin early margins. It suits price-sensitive markets and products with scale economies or network effects.

Marketing mix 4Ps

Product, Price, Place and Promotion: the controllable variables a firm combines to serve a target segment. Services extend this with People, Process and Physical evidence.

Break-even point

Output where total revenue equals total cost, so profit is zero. Quantity equals fixed costs divided by contribution margin per unit (price minus variable cost per unit).

Economic order quantity

The order size minimising total ordering and holding costs, calculated as the square root of 2DS/H. D is annual demand, S the cost per order and H the annual holding cost per unit.

Bullwhip effect

Amplification of demand variability as orders move upstream in a supply chain. Causes include forecast updating, batch ordering and price promotions; information sharing and shorter lead times reduce it.

Just-in-time production

A lean approach producing items as needed rather than building inventory. It cuts holding costs and exposes defects quickly, but increases vulnerability to supply disruption and requires reliable suppliers.

Net present value

The sum of discounted future cash flows minus the initial investment, discounted at the cost of capital. A positive NPV means the project adds value; it is the preferred appraisal criterion.

Internal rate of return

The discount rate at which a project's NPV equals zero. Accept if it exceeds the cost of capital. Cash-flow sign changes can produce multiple IRRs, so NPV should be checked.

Payback period

The time needed for cumulative cash inflows to recover the initial investment. It is simple and liquidity-focused but ignores time value of money and all cash flows after the cut-off.

WACC

Weighted average cost of capital: equity weight times cost of equity plus debt weight times after-tax cost of debt. It serves as the discount rate for average-risk investment projects.

DuPont analysis

Decomposes return on equity into net profit margin times asset turnover times equity multiplier. It shows whether returns come from profitability, efficiency or leverage.

Minimum viable product

The smallest offering that lets a team test key assumptions with real customers and gather validated learning. It is built to learn fast, not as a cheap final product.

Disruptive innovation

An innovation entering at the low end or a new market with simpler, cheaper offers, then improving until it displaces incumbents. Incumbents often ignore it because it looks unprofitable initially.

Rogers diffusion of innovations

Adoption follows a bell curve: innovators, early adopters, early majority, late majority, laggards. Speed depends on relative advantage, compatibility, complexity, trialability and observability.

Patent protection

A legal right over an invention that is novel, involves an inventive step and has industrial application. It typically lasts up to 20 years from filing, in exchange for public disclosure.

Business model validation

Testing a model's critical assumptions with evidence such as customer interviews, pilots and pre-sales. Assumptions are ranked by importance and uncertainty, then tested cheapest-first before scaling.

Value-based pricing

Setting price according to the perceived value delivered to the customer rather than internal cost. It captures more surplus but requires evidence of what customers will pay relative to alternatives.

Working capital

Current assets minus current liabilities, measuring short-term liquidity. Positive working capital funds day-to-day operations; persistent deficits signal risk of insolvency.

Lean startup loop

A cycle of build, measure and learn using experiments with real users. Results determine whether to pivot the model or persevere, replacing business-plan assumptions with validated learning.