Econ Theme 2 Chapter 1-4

Front 1

Economies of scale

Back 1

Average unit cost of production decreases as output increases

Front 2

External economies of scale

Back 2

The ways in which growth in the size of an industry, especially one concentrated in a particular area, can cut cost for all firms in the industry

Front 3

Internal economies of scale

Back 3

Occur within each individual businesness

Front 4

Minimum efficient scale

Back 4

The lowest level of output at which average or unit costs are minimised because companies make full use of economies of scale

Front 5

Monopsony

Back 5

.Markets with a single buyer. Eg. Small suppliers who depend on big buyers.

When a business has power over suppliers because of its market share

Front 6

Brand recognition

Back 6

Measures the percentage of consumers who recognise a specific brand and associate it with product features

Front 7

Diseconomies of scale

Back 7

Average unit cost of production increase as a business grows and as output increases.

Often communication issues or costs of coordination

Front 8

Corporate culture

Back 8

The shared values, attitudes, standards and beliefs that characterise members of an organisation and define its nature

Front 9

organic growth

Back 9

expansion of a single business by extending its own operations rather than by merger or takeover. Slower but more secure

Front 10

inorganic growth

Back 10

expansion by merger or takeover, bringing sudden increases in business size

Front 11

horizontal integration

Back 11

firms with similar products at the same stage of production merge together. brings economies of scale and can achieve larger market share

Front 12

vertical integration

Back 12

backward- adding firms closer to raw materials or other inputs

forward-adding firms closer to final consumer in supply chain

Front 13

conglomerate integration

Back 13

adding together business in unrelated activites

Front 14

research and development

Back 14

leads to innovative and attractive new products for the marketplace. it can be applied to innovation in the production process

Front 15

the product life cycle

Back 15

a series of five stages which typical products go through between their first introduction and the eventual decline in sales.

development, introduction, growth, maturity and decline

Front 16

extension strategy

Back 16

a way in which a business attempts to prolong the mature phase of a product's life cycle. done by: improving/updating, advertising, price changes, adding value, repackaging/ rebranding

Front 17

asymmetric information

Back 17

when one part to a transaction knows more than the other party

Front 18

viral marketing

Back 18

encourages the spread of information and opinions about a product or service from person to person

Front 19

the long tail

Back 19

a large variety of choices, which increasing ability to match the precise niche market needs of individuals and small groups, reducing the dominance of standard hits

Front 20

paid media

Back 20

traditional advertising e.g. billboards, magazines

Front 21

owned media

Back 21

websites and physical shops

Front 22

earned media

Back 22

information spread online by word of mouth, with little or no distribution costs