Businesses & Management Definitions

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Businesses?

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are organization that are involved in the production of goods and/or the provision of services.

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Division of labour?

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refers to the specilization of workers in the provision of goods and/or services by breaking a job down into a particular role.

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Entreprenuers?

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Are the people who plan, manage and organize factors of production.

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Factors of production?

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Are the inputs necessarily for the production process: land, labour, capital and enterprise.

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Industrialization?

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is the process experienced by a country that moves away from primary production towards manufacturing as its principle sector.

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Opportunity costs?

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refers to cost measured in terms of the next best alternative that is forgone when a choice is being made.

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Primary sector?

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businesses involved in the cultivation or extraction of natural resources such as mining, farming, fishing etc.

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Private Sector?

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Business under the control of private individual rather than the government.

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Public Sector?

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part of the economy under the control of the government.

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Secondary Sector?

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where a business is active concerning construction and manufacturing of physical products.

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Structural change?

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a shift in the relative share of a nation output and employment that is attributed to each business sector, i.e. primary, secondary and tertiary sector.

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Tertiary Sector?

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section of the economy where business activity is concerned with the provision of services to customers.

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Value added?

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the difference between a product's price and the total costs of inputs that went into making it.

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Articles of Association?

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is the name given to a document that set out the internal organization and rules of a limited company.

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Certification of Incorporations?

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us the name of the document issued to a limited company to show that it has been legallt formed and is therefore a seperate legal entity from its owner.

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Charities?

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a non-profit organization that are established to support good causes form society's view piont.

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Deed of Partnership?

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Is the legal contract signed by owners of a partnership.

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Incorporation?

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means that there is a legal difference between the legal owner and the business itself.

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Limited liability?

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restriction on the amount of money that can be lost from the owners of a business if it goes into bankruptcy.

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Memorandum of Association?

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the name of one legal document required to create an incorporated company.

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Non-governmental organizations?

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refers to any private sector organization that does not aim to make a profit.

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Partnership?

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private sector business owner by 2-20 people. They share the responsibility and burden of the business.

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Private Limited Company?

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a business organization owner by shareholders with limited liability but whose shares cannot be bought by or sold to the general public.

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Public Limited Company?

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incorporate business organization that allows the general public to buy and sell shares in the company via stock exchange.

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Stock exchange?

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is the market place for trading stocks and shares of the public limited companies.

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Silent partner?

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an investor in a partnership that is not directly involved in the daily running of a business.

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Sole trader?

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a self-employed person. He/She runs their business on their own and has sole responsibility for its success (profit) or failure (unlimited liability).

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Unlimited liability?

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a feature of sole traders and ordinary partners who are legally liable for all monies owned to their creditors.

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Aims?

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Long-term goals of a business.

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Corporate Social Responsibility?

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the consideration of ethical and environmental issues relating to business activity.

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Ethics?

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more values determine and affected business behaviour.

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Mission Statement?

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the declaration of an organization's overall purpose.

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Objectives?

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relatively short term targets of an organization.

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SMARTobjectives?

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specific, measurable, agreed, realistic and timed.

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Social audit?

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independent assessment of how an organization's actions affect society.

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Social Responsibility?

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business being conscientiously concerned with the well being of the general public as a whole.

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Strategy?

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methods businesses can use to achieve in attempt to achieve their mission or vision. Long-term plans

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Tactics?

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short-term method that firms can use to achieve their objectives.

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Vision statement?

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an organization's long term aspirations, i.e. where it ultimately wants to be.

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Appraisal?

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the formal process of evaluating the contribution and performance of an employee.

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Human resource management?

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role of managers in developing the organizations people. This will include task such as the recruitment, selection, dismissal, and training and development of employees.

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Job description?

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The document that outlines the nature of job, i.e. the roles, tasks and responsibilities involved in a particular job.

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Labour productivity?

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measures the output per worker,.

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Labour turnover?

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the number of workfoce that leave a firm as a percentage of the workforce per year.

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Person specification?

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a business document that gives the profile of the ideal candidate for a job.

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Portfolio working?

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Means working means to carry out a number of different jobs.

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Delayering?

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A method of improving the communication by reducing the numbers of levels in an organizational hierarchy.

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Autocratic?

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managers and leaders that adopt an authoritarian style by making all the decisions rather than delegating any responsibilities.

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Contingency theory?

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is a leadership model based on the belief that the 'best' leadership style for a business depends on a range of interconnected factors, such as the size, skills and abilities of the workforce.

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Leadership?

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A skill of getting things done through other people by inspiring, influencing and motivating them.

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Management?

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practice of achieving an organization's objectives by using the available resources

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Empowerment?

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non-financial motivator which involves a line manager giving his or her subordinates some autonomy(independence) in their job.

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Fringe benefits?

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Are the benefits recieved in addition toa wokers wages or salaries.

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Job enlargement?

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increasing the number of tasks that an employee performs.

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Job enrichment?

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giving workers more challenging jobs with more responisbilities.

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Job rotation?

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a form a job enlargement giving workers a number of different tasks.

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Motivation?

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the inner desire and passion to do something.

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Performance related pay?

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a payment system that rewards people who meet set targets over a period of time.

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Piece rate?

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a payment system that rewards people on the amount of produces or sells.

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Producitivity?

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Meassures the level of output per worker.

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Time rate?

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a payment system that rewards people for the time that they put into their work.

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Scientific management?

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developed by F.W Taylor who believed that specialization and division of labour would generate greater levels of productivity.

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Theory X?

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McGregor's term for describing managers that percieve their employees in a pessimistic way,i.e. constant supervision, told what to do and do not seek any responsibility.

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Theory Y?

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believes that employees do have initiative, want praise and recognition for their achievement.

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Market orientation?

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an approach adopted by businesses that are outward looking. They focus on the products that can sell, rather than selling products that they can make.

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Marketing?

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is the management role of predicting, identifying and meeting the needs and wants of customers in a profitable manner.

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Product orientation?

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an approach adopted by businesses that are inward looking. They focus on selling products that they can make, rather than making products that they can sell.

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Social marketing?

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refers to any activity that seeks to influence social behaviour to benefit the target audience and society as a whole.

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Marketing audit?

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refers to the systematic examination and review of the current position of a firm in terms of its strengths and weaknesses.

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Marketing mix?

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refers to the four main elements of marketing strategies; price, product, place, promotion.

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Sales forecasting?

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a quantitative technique that attempts to estimate the level of sales a business excepts to achieve.

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Unique selling piont?

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any aspect of a product that makes it stand out from those offered by rival businesses.

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Brand development?

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The long term product strategy that involves strengthening the name and image of a brand in order to boost its sale.

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Brand extension?

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use of an existing brand name that is successful to launch a new modified product.

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Differentiation?

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any strategy used to make a product appear to be dissimilar from others.

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Extension strategy?

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an attempt by marketers to lengthen the product life cycle of a particular product.

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Marketing myopia?

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refers to the short-sightedness and complacency of marketers in adapting to changes in a market.

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Product?

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refers to any physcial or non-physical item that is purchased by either commercial or private customers.

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Product life cycle?

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a products life; Reasearch &development, launch, growth, maturity, saturation and decline.

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above the line promotion?

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any form of paid-for advertising through mass media.

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below the line promotion?

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promotional method that do not directly use the mass media a s a form of promotion.

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Publicity?

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promoting a business and its products by getting media coverage without directly paying for it.

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Pull promotion?

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lure the customers to buy product.

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push promotion?

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use real estate agents or such to help sell the product, i.e. push the product in customers face.

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Sales promotion?

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short term incentives, ex. free samples, discount coupons.

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Word of mouth?

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spread a good or bad message about a firm.

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channels of distribution?

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the way products gets from the manufacturer to the consumer.

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supply chain management?

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manageing and controlling the sequence of activities from the production of a good or service to it is delivered.

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global marketing?

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refers to the marketing of a product by using the same marketing strategy in various countries.

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international marketing?

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is the marketing of a firm's products in foreign countries.

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B2B?

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stands for business to business and refers to online trade conducted directley for the business customer. ex. amazon.com supplying books to other retailers!

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B2C?

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stands for business-to-consumer and refers to online business conducted directly for the end-user, such as Amazon selling books to individual.

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E-commerce?

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is the trading of goods and services via the internet.

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E-tailers?

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are businesses that operate predominatley online such as Amazon and Ebay.

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Batch production?

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producing a collection of identical products. Work on each batch is fully completed before production switches to another batch.

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flow production?

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a form of flow production whereby different operations are continuously and progressivley carried out.

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line production?

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is a form of flow production whereby a product is assembled in various stages along a conveyor belt until a finished product is made.

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Mass production?

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the manufacturing of large amounts of a standardized product.

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Job production?

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method of production that involves the production of unique or one-off job. ex. tailor made suit-

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average cost?

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refers to the amount a firm spends on producing one unit of output.

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average revenue?

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found by dividing a firm's total revenue by its level of output.

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contribution?

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the difference between sales revenue and total variable costs.

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direct costs?

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those that are directly linked to the production of a specific product.

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fixed costs?

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the costs that do not vary with the level of output.

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indirect costs?

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costs which do not directly link to the production or sale of a specific product.

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variable costs?

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those that change in proportion to the level of output, such as raw materials

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break-even chart?

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a graph that shows a firms costs, revenue and profits at various levels of output

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break even quantity?

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level of output the generates neither profit or loss

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contribution per unit?

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the differnece of selling the product and the price of production

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margin of safety?

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difference between a firms level of demand and break even quantity

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benchmarking?

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process of indentifying best practice in an industry in relation to products process and operations.

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lean production?

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the approach used to eliminate wast in an organization.

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quality assurance?

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refers to the method used by a business to reassure customers abotu the quality of their products.

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total quality culture?

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is a philosophy which occurs in organizations that embed quality in all aspects of business activity.

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bulkincreasing businesses?

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businesses that need to be located near their raw materials in order to minimise costs.

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buld reducing businesses+

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BUSINesses that locate near their raw materials because they are heavier to transport than final products.

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Infrastructure?

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used to describe the transportation, communication and support networks in certain areas.

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buffer stock?

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the minimum stock level held by a business in case there are any unexpected occurences.

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just-in-case (JIC)?

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a stock control management system that recongnizes the need to maintain large amounts of stock in case there any emergencies.

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just-in-time=

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a stock control system where materials and components are scheduled to arrive precisely when they are needed in the production process.

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business angel?

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a wealthy and entrepreneurial investor who risk their money in smalll to medium sized businesses that have high growing potential.

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capital expendenture?

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spending by business on fixed assets such as the purchase of land and buildings.

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creditors?

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individuals in an organization that the business owes money to that need to be settled within 12 months.

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debentures?

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long-term loans to a business with the promise of fixed assets intrest payments to the debentures holders.

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factoring?

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a financial service whereby a factor collects debts on behalf of other businesses.

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leasing?

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is suitable if firms needs to use expensive assests such as equiment or vehicles. the leasing company will hire them to the customeer (leseesö

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non-resources debt factoring?

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where debt factors are protected by their bank against bad debts that might incur.

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overdrafts?

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allow businesses to spend in excess of the amount in its accoutn, this is the cheapest and most flexible way of borrowing for a business.

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revenue expenditure?

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spending of day to day running of a business such as wages, rent utility bills

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working capital?

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the day to day money that is available to a business.

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accounting rate of return?

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calculates the average annual profit of an invsestment. (profit per / years) / (intial invetsment) = x 100

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payback period?

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estimates the length of time that ti will take to recoup the initial cash outflow of an investment project. intial investment/contribution per month

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assets?

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items owned by a business and have monetary value (fixed assets are not intented for resale within 12 months, currents assets are to be used up within 12 months)

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cash flow?

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the transfer or movement of money into and out of an organization.

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cash flow statement?

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finincial docuement that records the actual cash inflows and cash outflows for a business over a specific period.

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liabilities?

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debts owned by a buisness

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liquidity?

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ability to convert assets into cash quickly and easily without a fall in its value.

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overheads?

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such as light, rent, security, insurance.

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balance sheet?

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financial statement showing a firms assets and liabilities at a specific point in time.

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capital employed?

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all long-term sources of finance for a business, such as bank loans, share capital and any resources that hold the business.

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cost of goods sold?

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the direct costs of producing or purchasing a particular level of stock that has actually been sold to customers.

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depreciation?

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fall in value of fixed assets over time

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fixed assets?

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monetary value that are owned by a business that are not supposed to be sold within 12 months. ex, land, machinery

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gross profit?

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the difference between the sales revenue of a business and its direct costs incurred in manufactoirng

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net assets?

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all the assets minus the long term liabilities.

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profit and loss acount?

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financial statement of a firm's trading activity over a period of time (differece from balance sheet as that shows the financial position at a certain time)

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window dressing?

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manupulating ,legallly, financial information to make the results look more flattering.

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current ratio?

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short-term ratio that meassures the number of days it takes, on average, for a business to pay its creditors.

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gearing?

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long-term liquidity ratio that meassures percentage of a firm's capital employed that comes from long-term liabilities.

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gross profit margin?

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the percentage of sales revenue that turns into gross profit

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net profit margin?

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profitability ratio that shows the percentage of sales revenue that turns into net profit

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ratio analysis?

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is a managment tool that compares different financial figures. can be classicified in 5 different categories: profitability, efficiency, liquidity, gearing and shareholder ratio.

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RETURN on capital employed`

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meassures the profit of a business in relation to its size.

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stock turnover=

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number of times a firm sells its stocks within a year.