Earning your MBA can be a real challenge, and with so many students pursuing advanced degrees in the field, it's easy to get overwhelmed in the shuffle. In many ways, the nature of business comes down to survival of the fittest, and NCU wants to help you embrace that concept as you navigate the entrepreneurial terrain.
To get you started in the right direction, Dr. Richard C. Thompson, an Assistant Professor in the School of Business, has offered to share some valuable insight that MBA students should be aware of. Whether you're thinking of applying or finishing up your last semester, understanding the language of the industry will put you in a better position to succeed, while preparing you for new opportunities in the future.
Here are 10 terms that every MBA student should know, according to Dr. Thompson:
1. Competitive Advantage
First off, Dr. Thompson explains a competitive advantage "as an upper hand (production, delivery of service, etc.) that results in lower cost or higher sales than the competition, but mainly, that results in higher margins than the competition." It's a matter of knowing if assets, production processes, human resources, etc. are working more efficiently so that margins are higher than the competition, and, when he refers to margins, that instantly connects to the concept of ROA.
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"ROA or Return on Assets is a measure of how efficiently your assets are working for you in the production of sales," says Thompson. "This is usually measured as net profits/total assets. For example, if your ROA is higher than the industry average, your assets are providing you with a competitive advantage." In addition to ROA, some other related terms are ROE and ROI. "These are similar measures that look at how efficiently your equity or investments are working in the production of profits," Thompson adds. "They are worth knowing in the event that others use them interchangeably."
3. Paradigm Shift
This term has its origins in science, but for a business, it describes doing something entirely different than it has been done in the past. To explain this better, Thompson offers this scenario: "The use of 3D printing to produce industrial components is a paradigm shift away from traditional production methods. Typically, it marks a major change that disrupts industry norms."
4. Data Driven
In today’s world, business actions are based more and more on data. Thompson identifies this term as "the reliance on data for making decisions." Essentially, the use of computers and analytics are solid contributors to new methods of customer engagement and overall profits.
5. Cash Cow
Speaking of profits, "a business segment or product that requires little attention, is usually a mature product," Thompson describes when referring to items or services that are cash cows. "They tend to generate a relatively high amount of cash for a company (relative to its other products), and they serve as major platforms to develop additional products or services.”
6. Core Competency
Much like the premise of cash cows, core competency refers to a specific attribute (or attributes) in a company that are unique and can lead to competitive advantage. "This could be a production process, efficient R&D structure, or a combination of functions and activities," says Thompson. Ideally, it's the driving force that companies should maintain in order to stay ahead of the curve.
Aside from products and services, "a standard analytical approach to reviewing the success of a company is to look at its strengths, weaknesses, opportunities, and threats (SWOT)," Thompson clarifies. "Strengths and weaknesses are internal to a firm, whereas opportunities and threats are external. It is not sufficient to simply catalog various items, but the important step is what you do with this information." A company needs to strategize how to use a strength to counter a weakness or a threat, and together, a better grasp of each one allows for the execution of greater opportunities.
In addition to SWOT, Thompson gives another term called PEST, which is a framework for analyzing the company’s environment as part of the strategic planning process. "The focus is on the political, economic, social and technological elements in the environment that are relevant to the company," says Thompson. "Once SWOT is considered, then PEST is a great way to examine the immediate environment in more detail in order to generate desired growth."
9. Generic Strategies
First coined by Michael Porter, generic strategies represent positions that a company must take within its industry to attain a competitive advantage. "One strategy is cost leadership, where the company focuses on maintaining a lower cost structure than its competitors across all market segments," Thompson clarifies. "A differentiation strategy is where the company strives to have unique products in all market segments, and two other generic strategies are focused versions, focused cost leader and focused differentiator, where the company focuses on cost or product uniqueness for a narrow market segment, usually a singular product." The idea is to have a strategy as opposed to being stuck in the middle where you have no strategy and thus have no clear direction to advance.
10. Disruptive Innovation
Lastly, Thompson brings this essential list to a close with a term called disruptive innovation. Much like how smartphones made laptop computers seem archaic, disruptive innovation is "a new product that totally changes the game in the industry," says Thompson. "It creates a new means of production that leads to the displacement of existing products, and even whole companies." This means that companies who can stay relevant through changing markets will remain triumphant, and students who can welcome the transformation will certainly discover new opportunities moving forward.
Earn Your MBA at NCU
Now that you have a better grasp on these important terms, all that's left to do is to apply them to your current aspirations as a business professional. At NCU, we offer an MBA experience unlike traditional classroom settings. Not only will you earn a competitive degree from world-class instructors, but you'll be able to achieve it at your own pace with a flexibility that other schools can't match.
Something else to consider is that NCU's online MBA doesn't require GMAT or GRE exams in order to enroll, which means that you can spend more time learning what matters to you most. There are tons of benefits to getting your MBA on a remote basis, so contact our admissions office today to learn more about what NCU can do for you.