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Mission What a firm is in business for – what customer desires it exists
to satisfy – what makes it different and superior – how it treats its stake-
holders – what challenges it to be the best of the best – the values that drive
and guide the decisions of all employees.

N

NPV – net present-day value The value of future cash flow at today’s
prices. Equally important is to consider the question of how soon those
cash flows will be enjoyed.
NRV – net realizable value The market value of assets less the cost of
selling them.

O

Overtrading How to go broke while making a profit. Trading that places
unsustainable demands on the finances of a business. To sell more you
have to make more. If to make more requires more working capital than
you have, you are overtrading. Meanwhile cash flow is negative while
uncollected profits appear to soar.

P

Packet Information moves around the internet in “packets”; chunks of
data each with their own destination address. Think of packets as sealed
envelopes containing data, with addresses written on them. They all go
through the system and usually end up at the correct destination. The
more envelopes the system must handle, the slower the process becomes.
Payback period The time that you wait to collect the benefits of invest-
ment of money or resources. If an investment will not pay for itself in a rea-
sonable time it should not be made.
PEST+ analysis A useful technique for assessing the business environ-
ment that includes specification of the political, economic, social, techno-
logical and legal factors that might impinge on the business in any market.
Positioning Finding a market position for a product that emphasizes
what makes it different from and better than the offerings of competition.
Price/Earnings ratio The relationship between a company’s profits and
its share value.
Pricing strategy Price is an important strategic issue that few seem to
optimize. The customer should drive the price and simple demand curves

240 Key management questions