What is the Serviceable Obtainable Market (SOM)? The Serviceable Obtainable Market (SOM) is an estimate of the portion of revenue within a specific product segment that a company is able to capture. Another way of looking at it is as an estimate of the market share for a particular product that a company can garner….
What is a Variable Interest Entity (VIE)? A variable interest entity (VIE) may be any type of legal business structure. It can be, for instance, a trust, a partnership, a corporation, or joint venture. It is created such that even if an investor does not hold a majority of the voting rights, they are able…
What is a Franchise? A franchise refers to a contractual arrangement whereby one party (the franchisor) allows another party (the franchisee) to use its trademarks (or tradenames) and other intellectual property, as well as certain business processes and systems. Franchising can include the manufacturing and marketing of a good or service according to the already…
What is Business Structure? Business structure refers to the legal structure of an organization that is recognized in a given jurisdiction. An organization’s legal structure is a key determinant of the activities that it can undertake, such as raising capital, responsibility for obligations of the business, as well as the amount of taxes that the…
What is a Master Limited Partnership? A master limited partnership is a publicly-traded business venture that combines the features of a corporation with that of a partnership and exists as a publicly-traded limited partnership. Such business ventures are exempt from corporate tax. A master limited partnership pools the tax benefits of a private partnership and…
What is Management by Objectives (MBO)? Management by Objectives (MBO) is a strategic approach to enhance the performance of an organization. It is a process where the goals of the organization are defined and conveyed by the management to the members of the organization with the intention to achieve each objective. An important step in…
What are Affiliated Companies? Affiliated companies are companies that are related through ownership, either with one owning the other as a minority shareholder or with multiple companies being owned by a third party. An affiliated company differs from a subsidiary through the size of the ownership. A subsidiary is a company where 50% or more…
What is an NPO (Non-Profit Organization)? NPOs are organizations that focus on specific social causes, serving their members or the public at large. The revenues earned by these organizations often come from donations, fundraising activities, or membership fees. Some may also sell products and services to generate funds to support their objective. NPOs operate in…
What is Activity-Based Management? Activity-Based Management (ABM) is a way of analyzing and evaluating a company’s business activities through activity-based costing and value-chain analysis. In other words, the ABM method is used to analyze the cost of an activity in relation to the value added by the activity, with the goal of operational and/or strategic…
What is Volume Discount? Volume discount refers to the usage of discounted prices to incentivize an individual or a business to purchase a particular good in a large quantity at one go. When a customer purchases a product in multiple units or a large enough quantity at once, the seller rewards the buyer by selling…
