TECHNO - KEY TERMS System: Business systems are put in place to create
the going concern element of a business.
Business as a going concern: Businesses are
organized to pursue profits in the short term and
over time. They differ from projects or hobbies in
that they do not have a predetermined end date or
singular definition of success.
Business as an organized activity: Business
requires that resources be organized to deliver
value to a market. Resources include, but are not
limited to, land, labor, and capital.
Business as a purposeful activity: Business
requires that the resources that have been
organized be put to purposeful use.
Business model: The way a business makes money.
Physical factors: Technology venture managers must
adjust physical assets to ensure that its production
processes are repeatable and scalable.
Repeatable: One of the mechanical elements of a
business is to make the production or service
providing processes repeatable.
Scalable: One of the mechanical elements of a
business is to make the production or service
providing processes scalable. That is, as the
business grows. it should be able to expand its
repeatable processes to meet greater customer
demand.
Social responsibility as social obligation: This is a
perspective on the social responsibility of business
that is associated with the Chicago School of
thought. It holds that business should focus on
making profits for owners as its primary concern.
Social responsibility as social reaction: This
perspective holds that business is possible via the
rules of society. As such, a business should
respond to changing social mores and adapt its
practices accordingly.
Social responsibility as social responsiveness:
This perspective holds that business is a social
leader, and that companies should be early
exemplars of new and improved social practices.
Tacit factors: Technology venture managers must
adjust the policies and operating procedures to
ensure that its production processes are repeatable
and scalable.
Value: In business, value is determined by a market or
markets, and is often expressed via the equation:
Value = Price x Quality.
Value proposition: The value that a business brings
to a market is expressed in its value proposition.
Absolute advantage: A nation has an absolute
advantage if it can produce a product more
efficiently (using fewer resources) than any other
nation.
Balance of payments: A country’s balance of
payments is the total flow of money into and out of
the country.
Balance of trade: The balance of trade is the
difference (in monetary terms) between the amount
a nation exports and the amount it imports.
Capital resources: Goods produced to make other
types of goods and services.
Capitalism: An economic system based on private
ownership of property and the market in which
individuals decide how, what, and for whom to
produce.
Comparative advantage: A nation has a comparative
advantage if it can produce one product more
efficiently than other products in comparison to
other nations.
Cost of goods sold: This refers to all the costs
involved with raw materials and production of a
product or service.
Cost-plus-pricing: A price-setting strategy whereby
one adds up all the costs associated with a product
or service, adds a preset profit margin, and derives
the price to the customer.
Currency swaps: Financial instruments used to
protect against foreign exchange risk due to
fluctuations in relative currency prices.
Deflation: The decrease in the general price level in a
market.
Demand: The amounts of goods and services buyers
are willing to purchase at various prices in the
same time period and in market conditions.
Dumping: Refers to disposing of goods in a foreign
market, which are surplus in their native market, at
prices below those in the home market or below the
costs of manufacturing the goods.
Economics: The study of how a society chooses to
use scarce resources to produce goods and
services and to distribute them to people for
consumption.
Economic system: An accepted way of organizing
production, establishing the rights and freedom of
ownership, using productive resources, and
governing business transactions in a society.
Elastic market: A market in which the overall demand
in the market will expand if prices are lowered.
Federal Reserve Board: An entity of the U.S.
government charged with controlling inflation by
regulating the supply of money, mostly via
manipulation of basic banking interest rates.
Gross Domestic Product: The total value of all final
goods and services produced in a particular
economy.
Gross margin: The difference between the selling
price of a product or service and the amount the
entrepreneur had to pay for the raw materials that
make up that product or service (the “cost of goods
sold”).
Knowledge resources: Knowledge resources
concern not only the accumulated knowledge
residing within a society, but also the processes for
creating new knowledge.
Inelastic market: A market in which demand will not
respond to price changes.
Inflation: The rise in the general price level in a
specific market.
Interest rate: The price of money in an economy.
Labor resources: Resources that represent the
human talent of a nation.
Macroeconomics: The study of inflation,
unemployment, business cycles, and growth,
focusing on the aggregate relationships in a society.
Microeconomics: The study of individual choice and
how choice is influenced by economic forces.
Mixed economy: Both the government and private
business enterprises produce and distribute goods
and services.
Natural resources: Resources provided by nature in
limited amounts; they include crude oil, natural gas,
minerals, timber, and water.
Price gouging: Occurs when the supply of an item or
items has been so severely restricted by special
circumstances that the demand is completely out of
balance with the supply.
Pricing power: The ideal situation where a business
sells goods to a willing market at a price it
determines and, at least to some extent, controls.
Price sensitive: Consumers that have become price
sensitive tend to shop for goods and services
primarily based on low price.
Price wars: A condition that ensues in an inelastic
market when one or more competitors begin to
lower prices.
Product market: Markets where business outputs
(goods and services) are sold to consumers.
Resource market: Places where economic
resources—natural, capital, and labor are bought
and sold.
Shortage: A condition in a market where there is
excessive demand and too little supply, which tends
to lead to rising prices.
Spot exchange: When counterparties agree to
execute a transaction and exchange currency
immediately.
Supply: The amount of goods and services available
in the market that sellers are willing to offer at
various prices in a given time period and market
condition.
Surplus: A condition in a market where there is
excessive supply and too little demand, which
tends to lead to falling prices.
Barrier to entry: The difficulties involved in a new
venture entering an industry are referred to as
barriers to entry.
Bartering: Bartering refers to the exchange of
merchandise between countries.
Business model: A business model is simply a
description of the way a venture makes money.
Business process outsourcing: This term refers to Market value: Market value is the term used to
the process of shifting work (a business process) to denote the value of a venture’s products and
a place in the world where it can be performed services to a specific market.
effectively and efficiently at the lowest cost.
Network effect: Also known as “Metcalfe’s Law” the
Capital: This term is used to refer to the items to network effect asserts that the value of a
which a venture holds title, including its cash. technology increases exponentially with the number
of instances of its use.
Capital intensity: The amount of capital required to
launch a venture in an industry. Patent: A patent is a vehicle for protecting IP.
Dilution: When a company sells equity to investors Patent cooperation treaty: In 2008, 139 countries
the current investors are diluted in their ownership were signatories to the patent cooperation treaty,
stakes proportionate to the sale of new equity. which specifies that patents granted in one nation
are eligible for protection in all of the signatory
Dynamic capabilities: This term refers to a venture’s
nations.
capacity to acquire, absorb, and use knowledge
from the marketplace to create constant innovation. Standard operating procedures: A set of rules that
guide the manner in which a process or processes
Early adopters: Customers in a market who are most in a business should be executed.
likely to buy a venture’s products or services even
before they have been thoroughly tested in a Sustainable competitive advantage: The foundation
broader market setting. of a venture’s strategy is to develop and sustain an
advantage over competitors.
Enterprise value: The value that the enterprise as a
whole has to investors or other companies that may Tipping point: A point where the network effect
be interested in purchasing it. initiates, and the value of a venture’s technology
experiences exponential growth.
Initial Public Offering (IPO): An IPO occurs when a
venture that had previously been private offers its Value proposition: The value of a venture’s products
shares for sale on one of the major public stock and services to a market is articulated as the
exchanges around the world. venture’s value proposition.
Intellectual property (IP): IP is the knowledge or
processes that a venture claims and/or has
registered to be proprietary.
International Organization of Standards (ISO): ISO
is an international body that establishes, assesses,
and certifies quality practices in organizations.
Knowledge intensity: This term refers to the amount
of knowledge that is required to be successful in a
particular industry.
Labor intensity: This term refers to the amount of
labor that is required to be successful in a particular
industry.
Land intensive: This term refers to the amount of
land that is required to be successful in a particular
industry.
Market capitalization: Market capitalization is a
simple function of the number of outstanding
shares of a publicly traded company times its price
per share.