PAU Business & Business Model Design (La Rioja) key terms

Any person or group affected by or able to influence a firm's decisions and results, such as owners, employees, customers, suppliers, lenders and the local community.

Conflict of interest that arises when managers (agents) pursue their own goals rather than those of the owners (principals) who delegated decision-making authority to them.

Set of rules, boards and control mechanisms that determine how a company is directed and how managers are held accountable to shareholders and other stakeholders.

Voluntary commitment by a firm to consider social, environmental and ethical effects of its activity alongside profit, often reported alongside financial results to stakeholders.

Firm whose owners' financial responsibility for company debts is capped at the capital they invested, so personal assets are protected if the business fails.

Person or institution owning part of a company's equity capital, giving rights to a share of profits and to vote on major decisions.

Scanning tool that classifies external influences on a firm into political, economic, social, technological, environmental and legal factors to identify opportunities and threats.

Framework judging industry attractiveness through rivalry among existing firms, threat of new entrants, threat of substitutes, and the bargaining power of buyers and of suppliers.

Conditions that make it costly or difficult for new competitors to join an industry, such as capital needs, regulation, brand loyalty, scale economies or access to distribution.

Diagnostic grid summarising a firm's internal strengths and weaknesses together with external opportunities and threats, used to connect analysis with strategy formulation.

Reduction in average cost per unit as output grows, caused by spreading fixed costs and gaining efficiency in purchasing, production or distribution.

Attribute that lets a firm outperform rivals in its market, typically through lower costs than competitors or through offering buyers superior perceived value.

Generic strategy in which a firm aims to be the lowest-cost producer in its industry, then competes on price or earns higher margins at market prices.

Generic strategy in which a firm offers distinctive features, quality or brand image that customers value enough to pay a price premium.

Growth grid crossing existing and new products with existing and new markets, giving four options: market penetration, product development, market development and diversification.

Top-level decisions about which businesses and markets a company competes in, how resources are allocated across them and how the parts create combined value.

Entering new products or markets different from current activity, either related to existing capabilities or unrelated, in order to spread risk or find growth.

One-page template describing how an organisation creates, delivers and captures value, divided into nine blocks from customer segments and value proposition to costs and revenues.

Clear statement of the specific benefit a product or service delivers to a chosen customer group and why it is better than the alternatives available to them.

Group of buyers sharing similar needs, behaviour or characteristics that a firm decides to serve with a tailored offer rather than treating all buyers alike.

The four controllable levers of product, price, place and promotion that a firm combines to reach its target segment and support its positioning.

Dividing a broad market into smaller groups of buyers with similar needs so that offers and messages can be adapted to each group effectively.

The way a business earns money from each customer segment, for example one-off sales, subscriptions, rentals, licensing fees or commissions.

Output or sales level at which total revenue equals total cost, so the business makes neither profit nor loss; fixed costs divided by unit contribution margin.

Amount each unit sold leaves after variable costs to cover fixed costs and then generate profit, calculated as price minus variable cost per unit.

Expense that does not change with the volume produced in the short run, such as rent, insurance or salaries of permanent administrative staff.

Expense that rises or falls in direct proportion to the quantity produced or sold, such as raw materials, packaging or piece-rate labour.

Investment appraisal method that discounts all expected future cash flows of a project at a required rate and subtracts the initial outlay; positive means value is created.

Rate used to convert future cash flows into today's value, reflecting the time value of money and the risk of the investment being assessed.

Time needed for cumulative cash inflows from an investment to recover the original outlay; simple to use but ignores cash flows after that point.

Discount rate at which a project's net present value equals zero; the project is acceptable when this rate exceeds the firm's required return.

Short-term funds tied up in day-to-day operations, measured as current assets such as stock and receivables minus current liabilities such as payables.

A firm's ability to meet short-term obligations as they fall due, depending on how quickly assets can be turned into cash.

Actual movement of money into and out of a business over a period, which differs from accounting profit because it ignores non-cash items and timing.

Network of organisations, resources and activities that move materials and information from original suppliers through production to final delivery to the customer.

Sequence of primary and support activities inside a firm, from inbound logistics to after-sales service, through which value is added for the customer.

Controlling the quantity and timing of stock held so that production and sales are not interrupted while storage and tied-up capital costs stay low.

Smallest output level at which a plant can produce at the lowest achievable average cost, an important factor in cost competitiveness and entry barriers.

Approach to new ventures that builds a minimum viable product, measures real customer response and quickly pivots or perseveres, reducing wasted effort.

Simplest version of an offering that lets a team test core assumptions with real users and gather feedback before investing in full development.

Deep change in how an organisation operates and delivers value through adopting digital technology, altering processes, culture and customer relationships, not just tools.

New offering that starts in a low-end or overlooked part of a market with simpler, cheaper features, then improves until it displaces established competitors.