Textbook Terms For All Sl And Hl Content To Date

Front 1

Business plan

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The document that sets out the business idea, its goals and objectives and other details about how the business will operate (E.g. marketing and finance). Is often a crucial part of an attempt to raise external sources of finance.

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Businesses

Back 2

Organisations involved in the production of goods/ the provision of services.

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Consumers

Back 3

the people/organisations who actually consume a product.

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Customers

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The people/organisations that buy the product.

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The four factors of production

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Land, labour, capital and entrepreneurship.

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Entrepreneurs

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Owners or operators of an organisation who manage, organise and plan the other 3 factors of production. They are risk takers who exploit business opportunities in return for profits.

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Intrapreneurship

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The act of behaving in an entrepreneur but as an employee within a large business organisation. Intrapreneurs work in an entrepreneurial capacity, with authority to create innovative products or new processes for the organisation.

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The main functions of a business

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Human resources (HR), finance and accounts, marketing--> 'the 4 p's' (being product, price, promotion and place) and operations.

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Needs

Back 9

The basic necessities that a person must have to survive e.g. food, water, warmth, shelter, clothing

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Primary sector

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Refers to businesses involved in the cultivation or extraction of natural resource e.g. farming, mining, fishing, ect.

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Product

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Can refer to both goods and services.

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Quaternary sector

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A subcategory of the tertiary sector, where businesses involved in intellectual, knowledge-based activities that generate and share information e.g. information communications technology and research organisations.

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Secondary sector

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The section of the economy where business activity is concerned with the construction and manufacturing of products.

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Sectorial change

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Refers to a shift in the relative share of gross domestic product (GDP), or national output and employment that is attributed to each business sector.

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Tertiary sector

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

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The way in which the four business sectors are linked

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Through the chain of production - the chain that tracks the stages of an item's production.

Production--> manufacturing-->services (tertiary and quaternary output)-->consumers

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Wants

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People's desires e.g. a larger home, a new phone, to go on a holiday.

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Charities

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Non-profit social enterprises that provide voluntary support for good causes (from society's point of view).

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Cooperatives

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For-profit social enterprises set up, owned and run by their members, who might be employees and/or customers.

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A company/corporation

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A business that is owned by shareholders. It has been issues a certificate of incorporation, giving it a separate legal identity form its owners.

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Deed of partnership

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The legal contract signed by the owners of a partnership. The formal deeds specify the name and responsibilities of each partner and their share of any profits or losses.

Front 22

Incorporation

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Means that there is a legal difference between the owners of a company and the business itself. This ensures that the owners are protected by limited liability.

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An Initial Public Offering (IPO)

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Occurs when a business sells all or any part of its business to shareholders on a stock exchange for the first time.

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Limited liability

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A restriction on the amount of money that owners can lose if their business goes bankrupt i.e. shareholders cannot lose more than they invested in the company.

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Microfinance

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A type of financial service aimed at entrepreneurs of a small business, especially at females and those on low incomes.

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Non-government organisations (NGO)

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Private sector non-for-profit social enterprises that operate for the benefit of others rather than primarily aiming to make a profit e.g. Oxfam.

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Partnerships

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A types of private sector business owned by 2-20 people who share the responsibilities and burdens of running and owning the business.

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A private limited company

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A business owned by shareholders with limited liability but whose shares cannot be bought by or sold to the general public.

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The private sector

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The part of the economy run by private individuals and businesses, rather than by the government e.g. sole traders, partnerships, companies and cooperatives.

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A public limited company

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An incorporated business that allows the general public to buy and sell shares int he company via a stock exchange. All shareholders enjoy limited liability.

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Public-private partnerships

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Occur when the government works together with the private sector to jointly provide certain goods or services.

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The public sector

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The part of the economy controlled by the government e.g. state health and education services, emergency services and national defence.

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A sole trader

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A self-employed person who runs and controls the business and is the sole person held responsible for its success (profits) or failure (unlimited liability).

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Social enterprises

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Revenue-generating businesses with social objectives at the core of their operations. They can be for-profit or non-for-profit businesses, but all profits or surpluses are reinvested for that social purpose rather than being distributed to shareholders and owners.

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State-owned enterprises

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Organisations wholly owned by the government.

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A stock exchange

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A market place for trading stocks and shares of public limited companies e.g. the London Stock Exchange (LSE) and the New York Stock Exchange (NYSE).

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Unlimited liability

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A feature of sole traders and ordinary partnerships who are legally responsible/liable for all money owned to their creditors, even if this means that they have to sell their personal possessions to pay their debts.

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Aims

Back 38

The long-term goals of a business, often expressed int he firms mission statement. They are a general statement of the firm's purpose/intensions and tend to be qualitative in nature.

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Ansoff matrix

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The analytical tool to devise various products and market growth strategies, depending on whether businesses want to market new or existing products in new or existing markets.

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Corporate social responsibility (CSR)

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The conscientious consideration of ethical and environmental practices related to business activity. A business that adopts CSR acts morally towards its various stakeholder groups and wellbeing of society as a whole.

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An ethical code of practice

Back 41

The documented beliefs and philosophies of an organisation.

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Ethics

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Moral principals that guide decision making/strategy, concerned with what is right/wrong from society's point of view.

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A mission statement

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Refers to the declaration of an organisations overall progress (Explains the companies reason for existence). It forms the foundation for setting the objectives of a business e.g. Allensburg’s Food and Gas: "To offer commuters on Highway 310 competitive gas prices and great food".

Front 44

Objectives

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Relatively short-term targets of an organisation. targets that are specific, realistic and time constrained.

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Strategies

Back 45

Plans of action that businesses use to achieve their targets e.g. the long terms plans of the whole organisation.

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SWOT analysis

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AN analytical tool used to assess the internal factors (strengths and weaknesses) and external factors (opportunities and threats) of a business decision or issue.

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Tactics

Back 47

Short-term plans of action that firms use to achieve their objectives.

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A vision statement

Back 48

An organisations long-term aspirations; where it ultimately wants to be e.g. "Adidas strives to be the global leader in the sporting goods industry with brands built on a passion for sports and a sporting lifestyle".

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Conflict

Back 49

Refers to situations where stakeholders have disagreements on certain matters due to differences in their opinions.

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External stakeholders

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Individuals/organisations who are not part of the organisation but have a direct interest in its activities/performance e.g. customers, suppliers, government.

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Internal stakeholders

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Members of the organisation e.g. employees, mangers, directors, shareholders.

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Pressure groups

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Individuals with a common concern (e.g. environmental protection) who seek to place demands on organisations o act in a particular way or to influence a change in their behaviour.

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Shareholders/stcokholders

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The owners of a limited liability company. Shares in a company can be held by individuals and other organisations.

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Stakeholders

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Individuals/organisations with a direct interest (a stake) in the activities/performance of a business.

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Business cycle

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Refers to the fluctuation in the level of business activity over time. Countries and their economies move through the cycle of booms, recessions, slumps, recovery and growth.

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Deregulation

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The removal of government rules/regulations which constrain and industry to enhance efficiency and encourage more competition within the industry.

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Economic growth

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Measures changes int he GDP (gross domestic product) of a country over time. It occurs if there's an increase in GDP for over 2 consecutive quarters.

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The exchange rate

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The value of a country's currency in terms of other currencies.

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Inflation

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Occurs when the general price level in an economy continuously rises. It is measured by changes in the cost of living for an average household in a country.

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Interest rate

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Is a measure of the price of money in terms of the amount charged for borrowed funds or how much is offered on money that's saved.

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Protectionist measures

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Any measures taken by a government to safeguard its industries form overseas competitors. They are a threat to businesses trying to operate in foreign markets.

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Unemployment

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The number of people in the workforce who are willing andable to work but cannot find employment.

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STEEPLE analysis

Back 63

Used to examine opportunities and threats of the external environment (social, technological, environmental, economic, political, legal and ethics) on business activity.

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Unemployment

Back 64

Refers to the number of people in the workforce who are willing and able to work but cannot find employment.

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Backward vertical integration

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Occurs when a business amalgamates (combines to form one organisation) with a firm operating in an earlier stage of production e.g. car manufacturer acquires a supplier of tyres or other components.

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Conglomerates

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Businesses that provide a diversified range of products and operate in an array of different industries.

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Diseconomies of scale

Back 67

The cost disadvantages of growth. Unit costs are likely to eventually rise as a firm grows due to a lack of control, coordination and communication.

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Diversification

Back 68

A high risk growth strategy that involves a business selling new products in new markets. i.e. spreading risks over a diverse variety of products and markets.

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Economies of scale

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Refer to lower average costs of production as a firm operates on a larger scale due to gains in production efficiency. e.g. easier and cheaper access to finance.

Front 70

External growth (or inorganic growth)

Back 70

Occurs when a business grows by collaborating with, buying up or merging with another firm.

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Forward vertical integration

Back 71

A growth strategy that occurs with the amalgamation (combining/merging) of a firm operating at a later stage in the production process e.g. a book publisher merges with a book retailer.

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Franchise

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An agreement between a franchisor selling its rights to other businesses (franchisees) to allow them to sell products under its name in return for a fee and regular royalty payments.

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Globalisation

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The growing integration and interdependence of the world's economies, causing consumers around the world to have similar tastes and habits.

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Horizontal integration

Back 74

An external growth strategy that occurs when a business amalgamates (combines) with a firm operating in the same stage of production.

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Internal growth (or organic growth)

Back 75

Occurs when a business grows using its own capabilities and resources to increase the scale of its operations and sales revenue.

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A joint venture

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A growth strategy that combines the contributions and responsibilities of two different organisations in a shared project by forming a separate legal enterprise/business.

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Lateral integration

Back 77

Refers to the M&As between firms that have similar operations but do not directly compete with each other, e.g. PepsiCo acquiring Quaker Oats Company. - EXPAND/SIMPLIFY

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A merger

Back 78

A form of external growth whereby two or more firms agree to form a new organisation, thereby losing their original identities.

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A multinational company (MNC)

Back 79

is an organisation that operates in two or more companies in two or more countries, with its head office usually baed in the home country.

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The optimal level of output

Back 80

is the most efficient scale of operation of a business which occurs at the level of output where average costs of production are minimised.

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The CUEGIS concepts

Back 81

Change, culture, ethics, globalisation, innovation and strategy. Are the six 'lenses' in which we investigate, analyse and evaluate factual content to create a deeper understanding of BM.

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Appraisal

Back 82

The formalprocess of evaluating the contributions and performance of an employee, usuallyconducted through observations and interviews with the apraisee’s line manager.

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Behavioural training

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Deals with identifying functional issues that could improve performancein the workplace by developing behavioural changes in the workforce. It is based on the notion that training ismeaningless unless a desirable change in behaviour takes place.

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Cognitive training

Back 84

Abouttraining and developing mentalskills to improve work performance. Itis based on the notion that the ability to lean is fundamental to success inthe workplace.

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Contract of employment

Back 85

The legalagreement between an employer and an employee, detailing the terms andconditions of employment.

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Demography

Back 86

Thestatistical study of population characteristics, using data such as birthrates, death rates, ageing populations and net migration rates.

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Dismissal

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The termination of a worker’s employment due toemployee incompetence (unsatisfactory performance) or a breach of contract.

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External recruitment

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Involveshiring staff from outside the organisation to fill vacant posts.

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Flexible work patterns

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The trendin using less core staff and more peripheral workers and subcontractors toimprove the flexibility and productivity of the workforce.

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Gross misconduct

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Majormisdemeanours, such as theft, fraud, endangering others or being drunk atwork. Such acts can lead to instantdismissal.

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Human resource management (HRM)

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The role ofmanagers in planning and developing the organisation’s people. This is done through interrelated functionssuch as the recruitment, selection, dismissal, and training and development ofemployees.

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Human resource planning (workforce planning)

Back 92

Themanagement process of forecasting an organization's current and future staffingneeds.

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Induction

Back 93

Training aimed at introducing new staff to the business to get themfamiliar with the policies, practices and culture of the organisation.

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Internal recruitment

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Thepractice of hiring people who already work for the firm to fill a position,rather than employing someone new to the organisation.

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A job analysis

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Part of therecruitment process that involves scrutinising the different components of ajob) such as the routine tasks and responsibilities of the post holder) todetermine what it entails.

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A job description

Back 96

A documentthat outlines the nature of a particular job i.e. the roles, tasks andresponsibilities. It is used for therecruitment and performance appraisal of employees.

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Mentoring

Back 97

A type of‘on-the-job’ training involving a partnership between a mentor and a mentee tohelp the mentee gain and develop specific skills and knowledge.

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The mobility of labour

Back 98

The extentto which workers are flexible enough to move to different locations(geographical mobility) and/or the flexibility in changing to different jobs(occupational mobility).

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Offshoring

Back 99

Anextension of outsourcing that involves relocating business activities andprocesses abroad. It is possible tooffshore work but not outsource it, although the practice is dominated byoffshore outsourcing.

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Off-the-job training

Back 100

Trainingcarried out off-site such as at a tertiary college or training centre. It often requires specialist trainers andequipment that are not available within the business.

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On-the-job training

Back 101

Training carried out whilst at the workplace,with the training delivered by an in-house specialist, such as head ofdepartment or more experiences colleague.

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Outsourcing

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The practice using external providers for certain non-core businessactivities. These firms are able tocarry out the outsourced work for less than the business would be able to.

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Performance management

Back 103

Thecontinuous process of planning, reviewing and mentoring of employees in orderto enhance their performance at work.

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A person specification

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A documentthat gives the profile of the ideal candidate for a job, such as their skills,qualifications and experience.

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Portfolio working

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Tosimultaneously carry out a number of different jobs, often for variousemployers, usually on a part-time or temporary basis. Examples include freelance editors andmanagement consultants.

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Recruitment

Back 106

The process of hiring suitable workers. This entails a thorough job analysis to ensure that the best candidate is hired.

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Redeployment

Back 107

Transferring a staff member from a department or branch that no longer requires his/her services to other areas of the business where a vacancy exists.

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Redundancies

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Occur whenthe employer can no longer afford to hire the worker or when the job ceases toexist following the completion of a project.

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Re-shoring

Back 109

The reversal of offshore outsourcing, i.e. the transfer of business operations back to its country of origin.

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Shotlisting

Back 110

The process of sifting through applications to identify suitable candidates for a job. It is the stage that precedes the interview in the recruitment process.

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Teleworking

Back 111

A method ofworkforce planning whereby employees work in a location away from theworkplace, such as those working from home or at a call centre.

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Training

Back 112

The process of providing opportunities for workers to acquire employment-related skills and knowledge.

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Workforce

Back 113

The numberof employees at any one point in time for a particular organisation. It is often used to measure the size of abusiness.

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Labour turnover

Back 114

Measures the percentage of the workforce thatleaves the organization in a given time period, usually one year. It is often used to determine the level ofmotivation in an organisation.

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Human resource planning (or workforce planning)

Back 115

The management process of anticipating and meeting an organization’s current and future staffing needs.

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Accountability

Back 116

The extent to which a person is held responsible for the success or failure of a task. It allows senior managers to have better control over the running of their organisations.

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Bureaucracy

Back 117

The official administrative and formal rules of an organisation that govern business activity. It involves prescribed rules and policies, standardised procedures, and formal hierarchical structures.

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Centralised structures

Back 118

Occur when the majority of decision making is done by a very small number of people (usually the senior management team) who hold decision making authority and responsibility.

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Chain of command

Back 119

The formla line of authority, shown in an organisational chart, through which formal orders are passed down.

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Communication

Back 120

The transfer of information form one party to another. the purpose or objectives of communication include to instruct, clarify, interpret, notify, warn, receive feedback, review and, above all, to inform.

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Decenstralisation

Back 121

When decision making authority and responsibility is shared out with others in the organisation.

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Delayering

Back 122

The process of removing levels in the hierarchy t flatten the organisational structure, thereby widening the span of control in the hierarchy.

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Delegation

Back 123

The empowerment of a person lower down in the organisational structure by passing on control and authority to complete a certain task or role.

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A flat organisational structure

Back 124

When there are only a few layers in the formal hierarchy and hence managers have a relatively wide span of control.

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The hierarchy of a business

Back 125

The organisational structure based on a ranking system. Each hierarchical level refers to a different rank with its associated degree of authority and responsibility.

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A matrix structure

Back 126

The flexible organisation of representatives form different departments temporarily working together on a particular project.

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Organisational chart

Back 127

A diagrammatic representation of a firm's formal structure.

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A project-based organisation

Back 128

Organises human resources around particular projects, each led by a project manager. Such structures allow business increased flexibility to adjust quickly to market changes and to adopt rapid innovations.

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Responsibility

Back 129

Who is in charge of whom and in what role or capacity, such as a finance director being responsible for the staff and the operations in the finance department.

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The shamrock organisation

Back 130

Charles Handy's model that organisations are increasingly made up of core staff who are supported by peripheral workers, consultants and outsourced staff and contractors.

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Span of control

Back 131

The numberof subordinates overseen by a manger i.e. the number of people who are directlyaccountable to the manger.

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A tall organisation structure

Back 132

When thereare many layers in the hierarchy and hence managers have a narrow span ofcontrol.

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A subordinate

Back 133

Lower in rank (e.g. lower ranked employees)

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Autocratic leadership

Back 134

Leaders who adopt an authoritarian approach bymaking all the decisions rather than delegating any authority to theirsubordinates. Instead, the autocrat simplytells others what to do.

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Democratic leadership

Back 135

Leaders who take into account the views ofothers when making decisions. This participativeleadership style means that decision-making is decentralised.

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Functions of management

Back 136

The roles of managers e.g. the planning,organising, commanding, coordinating and controlling of business operations.

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Laissez-fair leadership

Back 137

Based onhaving minimal direct input in the work of employees. Instead, they allow subordinates to maketheir own decisions and to complete tasks in their own way.

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Leadership

Back 138

The skillof getting things done through other people by inspiring, influencing andinvigorating them.

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Management

Back 139

The practice of achieving an organisation’s objectivesby effectively using and controlling the available human and non-humanresources of the business.

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Leadership style

Back 140

The way in which leaders tend to function, suchas in an autocratic, paternalistic, democratic, laissez-faire or situationalmanner.

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Paternalistic leaders

Back 141

Treat theiremployees as if they were family members, guiding them through a consultationprocess and acting in the perceived best interest of their subordinates. The leader makes decisions of behalf of theteam, building trust and loyalty in the process.

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Situational leadership

Back 142

Refers to the belief that there is no singleleadership style that suits all situations. The ‘best’ style depends on situational factors such as the attitudes,behaviour and competencies of managers and workers.

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Delegation

Back 143

Managers passing on authority to subordinates tocarry out a task or project. This canmotivate workers who wish to be entrusted and recognised for their abilities.

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Empowerment

Back 144

Anon-financial motivator that involves developing the potential of workers orteams to achieve the best they can by granting them the authority to make variousdecisions and to execute their own ideas to solve business problems.

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Fringe payments (perks)

Back 145

Thefinancial rewards paid in addition to a worker’s wages or salaries e.g. freeuniforms, subsidised meals, housing benefit, pension fund contributions andcompany cars.

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Herzberg's two factor theory

Back 146

Looks at the factors that motivate employees,namely hygiene factors (that must be met to prevent dissatisfaction) andmotivators.

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Hygiene factors

Back 147

Parts of ajob that Herzberg refereed to that do not increase job satisfaction by help toremove dissatisfaction such as reasonable wages and working conditions.

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Job enlargement

Back 148

Increasing the number of tasksthat an employee performs, thereby reducing or eliminating the monotony ofrepetitive tasks.

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Job enrichment

Back 149

Involves giving workers more responsibilitiesand more challenging jobs.

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Job rotation

Back 150

A form ofjob enlargement whereby workers are given different tasks, but of the samelevel of complexity, to help reduce the problems caused by performingrepetitive tasks.

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Maslow's hierarchy of needs

Back 151

Outlinesfive levels of needs, from satisfying physiological needs toself-actualisation. Lower order needsmust be met before people progress up the hierarchy.

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Motivation

Back 152

Refers tothe inner desire or passion to do something. The driving forces could be intrinsic (e.g. to have a sense ofachievement) and/or extrinsic (e.g. due to financial rewards).

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Motivators

Back 153

The factorsthat Herzberg considered to increase job satisfaction and motivation levelse.g. praise and recognition.

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Performance-related pay (PRP)

Back 154

A payment system that rewards people who meet set targets over a period of time. vThe targets can be on an individual, team or organisational basis.

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Piece rate

Back 155

A payment system that rewards people based onthe amount that they produce or sell. Thus, their pay is directly linked to their level of productivity.

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Pink's drive theory

Back 156

Suggeststhat people in modern societies are motivated by three key factors: autonomy,mastery and purpose.

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Autonomy

Back 157

The urge to direct our own lives.

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Mastery

Back 158

The desire toget better and better at something that matters.

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Purpose

Back 159

The yearning to do what we do in the service ofsomething larger than ourselves.

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Productivity

Back 160

Measuresthe level of output per worker. It is anindicator of motivation as employees tend to be more productive and increasedlevels of motivation.

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Remuneration

Back 161

The overall package of pay and benefits offeredto an employee

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Scientific management

Back 162

Developed by FW Taylor, suggests that specialisation and division oflabour help to increase the level of productivity. This is especially the case if pay is linkedto a piece-rate reward system.

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Time rate

Back 163

A paymentsystem that rewards staff for the time (rather than output) that they put intowork. It is expressed per period of timee.g. $10 per hour or $5000 per month.

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Capital intensive

Back 164

When the manufacturing/provision of a product relies heavilyon machinery and equipment e.g. automated production systems. Hence, capital costs account for most of acapital-intensive firm’s overall production costs.

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Ecological footprint

Back 165

Measures the impact of resource consumption and wasteproduction on the natural environment. It assesses whether people are living beyond the capacity of the planet,such as how many people drive or whether managers really need to fly overseasfor a meeting.

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Ecological sustainability

Back 166

The capacity of the natural environment to meet the needs ofthe current generation without jeopardising the ability of future generationsto meet their needs.

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Economic sustainability

Back 167

The development that meets the economic needs of the presentgeneration using existing available resources without compromising the abilityof future generations to meet their needs.

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Green technologies

Back 168

Environmentally friendly innovations that consider thelong-term impact on the environment e.g. renewable energy sources such as solarpanels and wind turbines.

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Labour intensive

Back 169

Meaning that the manufacturing/provision of a productrelies heavily on labour e.g. teaching and legal services. Hence, labour accounts for the mostsignificant proportion of a labour-intensive firm’s overall costs ofproduction.

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Operations management

Back 170

Concerned with providing the right goods and services in theright quantities and at the right quality level in a cost-effective and timelymanner.

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Preservation of resources

Back 171

The protecting of Earth’s scarce resources by reducing thehuman impact on the physical environment (e.g. public beaches), the naturalenvironment (e.g. rainforests) and the cultural environment (e.g. heritagesites).

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Production/transformation process

Back 172

The method of turning factor inputs into outputs by addingvalue in a cost-effective way.

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Social sustainability

Back 173

Examines social interactions and structures that arenecessary for sustainable development e.g. it is the ability of the society todevelop in such a way that it meets the social wellbeing needs of the currentand future generations.

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Sustainability

Back 174

Promotes intergenerational equity e.g. production enablesconsumption of goods and services for the people of today without compromisingconsumption for future generations.

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Value-added

Back 175

Occurs during the production of a good or service becausethe value of the output is greater than the costs of production. Businesses cannot earn a profit ifvalue-adding does not occur in the production process.

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Batch production

Back 176

Producing a set of identical products. Work on each batch is fully completed beforeproduction switches to another batch. Itis used where the demand for a product is frequent and steady.

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Capital intensive

Back 177

When manufacturing or provision of a product relies heavilyon machinery and equipment, such as automated production systems. Hence, the cost of capital accounts for thelargest proportion of a capital-intensive firm’s overall productions costs.

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Cell production

Back 178

Organised workers into independent ‘cells’ with each teamcomprising of multi-skilled staff with responsibility and autonomy for completinga whole unit of work in the production process.

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Flow production

Back 179

Uses continuous and progressive processes, carriedout in sequence. When one task iscompleted, the next stage of production starts immediately.

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Mass production

Back 180

The large-scale manufacturing of a homogenous (standardised)product. Unit costs of production arerelatively low when using mass production methods.

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Job production

Back 181

The manufacturing of a unique or one-off. The job can be completed by one person (suchas a tailor) or by a group of people (architects/engineers).

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Productivity

Back 182

Measures the level of labour and/or capital efficiency of a businessby comparing its level of inputs with the level of its output.

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Specialisation

Back 183

The division of a large task or project into smaller tasks,allowing individuals to concentrate on an area of expertise. It is an essential part of mass and flowproduction.

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Standardisation

Back 184

Producing an identical or homogenous product in large quantities,such as printing a particular magazine/book/newspaper.

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Assisted areas/enterprise zones

Back 185

Regions identified by the government to be suffering fromrelatively high unemployment and low incomes, so are in need of regenerationthrough financial assistance.

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Bulk-increasing businesses

Back 186

Are involved with products that increase in weight duringthe production process, so need to be located near their customers in order toreduce costs.

Front 187

Bulk reducing businesses

Back 187

Those that need to be located near the source of the rawmaterials because they are heavier, and hence costlier, to transport than thefinal product.

Front 188

Clustering

Back 188

Means that a business locates near other organisations thatoperate in similar or complementary markets.

Front 189

A footloose organisation

Back 189

A business that does not gain any cost reducingadvantages from locating in a particular location, hence, the firm can locatein almost any location.

Front 190

Industrial inertia

Back 190

The reluctance to relocate due to the inconvenience ofmoving. Managers may feel that thepotential inconveniences and costs of relocation outweigh the benefits.

Front 191

Infrastructure

Back 191

Used to describe transportation, communication and support networksin a certain area.

Front 192

Insourcing

Back 192

The use of an organisation’s own people and resources toaccomplish a certain function or task which would otherwise have beenoutsourced.

Front 193

Location

Back 193

The geographical position of a business. The location is a crucial one, and depends onboth quantitative and qualitative factors.

Front 194

Offshoring

Back 194

The relocation business functions and processes overseas. The offshored functions can remain within thebusiness (with overseas operations) or outsourced to an overseas organisation(known as offshore outsourcing).

Front 195

Outsourcing (subcontracting)

Back 195

Transferring internal business activities to anexternal organisation to reduce costs and increase productivity.

Front 196

Business Angles

Back 196

Wealthy entrepreneurs who risk their own money by investingin small to medium sized businesses that have high growth potential.

Front 197

Capital Expenditure

Back 197

Investment spending on fixed assets such as the purchase ofland and buildings.

Front 198

Debt Factoring

Back 198

A financial service whereby a factor (such as abank) collects debts on behalf of other businesses, in return for a fee.

Front 199

External Sources of Finance

Back 199

Means getting funds from outside the organisation e.g.through debt (overdrafts, loans and debentures), share capital, or thegovernment.

Front 200

Grants

Back 200

Government financial gifts to support businessactivities. They are not expected to berepaid by the recipient.

Front 201

Initial Public Offering (IPO)

Back 201

A business converting its legal status to public limitedcompany by floating (selling) its shares on a stock exchange for the firsttime.

Front 202

Internal Sources of Finance

Back 202

Getting funds from within the organisation e.g. throughpersonal funds, retained profits and the sale of assets.

Front 203

Leasing

Back 203

A form of hiring whereby a contract is agreedbetween a leasing company (the lessor) and the customer (the lessee). The lessee pays rental income to hire assetsfrom the lessor, who is the legal owner of the assets.

Front 204

Loan Capital

Back 204

Medium to long-term sources of interest-bearing financeobtained from commercial lenders. Examples include mortgages, business development loans and debentures.

Front 205

Overdrafts

Back 205

Allow a business to spend in excess of the amount in itsbank account, up to a predetermined limit. They are the most flexible form of borrowing in the short term.

Front 206

Retained Profit

Back 206

The value of surplice that the business keeps to use withinthe business after paying cooperate taxes on its profits to the government anddividends to its shareholders.

Front 207

Revenue Expenditure

Back 207

Spending on the day-to-day running of a business, such asrent, wages and utility bills.

Front 208

Sale-and-leaseback

Back 208

A source of external finance involving a business selling afixed asset (such as its computer systems or a building) but immediatelyleasing the asset back. In essence, thelessee transfers ownership to the lessor but the asset does not physically leavethe business.

Front 209

Share capital

Back 209

The money raised from selling shares in alimited liability company, from its initial public offering (IPO) and anysubsequent share issues.

Front 210

Share Issue/Share Replacement

Back 210

When an existing public limited company raises furtherfinance by selling more of its shares.

Front 211

Sources of Finance

Back 211

The general term used to refer to where or howbusinesses obtain their funds, such as from personal funds, retained profits,loans and government grants.

Front 212

Subsidies

Back 212

Funded by the government to lower a firm’s production costsas output provides extended benefits to society e.g. farmers are often providedwith subsidies to stabilise food prices.

Front 213

Trace Credit

Back 213

Allows a business to ‘buy now and pay later’. The credit provider does not receive any cashfrom the buyer until a later date (usually allow between 30-60 days).

Front 214

Venture Capital

Back 214

High-risk capital invested by venture capital firms, usuallyat the start of a business idea. Thefinance is usually in the form of loans and/or shares in the business venture.

Front 215

Cost

Back 215

The sum ofmoney incurred by a business in the production process e.g. the cost of rawmaterial, wages and salaries, insurance, advertising and rent.

Front 216

Direct Costs

Back 216

Costs specifically attributed to the productionor sale of a particular good or service. Direct costs can be traced back to the product and/or to a cost centre.

Front 217

Fixed Costs

Back 217

The costs that do not vary with the level of output. They exist even if there is no output e.g.the cost of rent, management salaries and interest repayments on bank loans.

Front 218

Indirect Costs/Overheads

Back 218

Costs thatdo not directly link to the production or sale of a specific product e.g. rent,wages of cleaning staff and lighting.

Front 219

Price

Back 219

The amount of money a product is sold for i.e.the sum paid by the customer.

Front 220

Revenue

Back 220

The moneythat a business collects from the sale of its goods and services. It is calculated by multiplying the unitprice of each product by the quantity sold.

Front 221

Revenue Stream

Back 221

The moneycoming into a business from its various business activities e.g. sponsorshipdeals, merchandise, membership fees and royalties.

Front 222

Semi-variable Costs

Back 222

Those thathave an element of both fixed costs and variable costs e.g. power andelectricity or salaried staff who also earn commission.

Front 223

Total Costs

Back 223

The sumof all variable cost and all fixed costs of production.

Front 224

Variable Costs

Back 224

Costs of production that change in proportion tothe level of output e.g. raw materials and piece-rate earnings of productionworkers.

Front 225

Break-even Analysis

Back 225

A management tool used to calculate the level ofsales needed to cover all costs of production. Thereafter, further sales generate a positive safety margin, and henceprofit for the business.

Front 226

Break-even Chart

Back 226

The name given to the graph that shows a firm’scosts, revenues and profits (or loss) at various levels of output.

Front 227

Break-even Point

Back 227

Theposition on a break-even chart where the total cost line intersects the totalrevenue line, i.e. where TC = TR.

Front 228

Break-even Quantity

Back 228

The level of output that generates neitherprofit nor loss. It is shown on thex-axis on a break-even chart.

Front 229

Contributionper unit (unit contribution)

Back 229

Thedifference between the selling price of a product and its variable costs ofproduction, i.e. P- AVC. The surplusgoes towards paying fixed costs.

Front 230

The Margin of Safety (MOS)

Back 230

Thedifference between a firm’s level of demand and its break-even quantity. A positive MOS means the firm can decreaseoutput (sales volume) by that amount without making a loss. A negative MOS means the firm is making aloss.

Front 231

Profit

Back 231

The positive difference between a firm’s revenueand its costs. On a break-even chart,profit is shown at all levels of output beyond the break-even quantity.

Front 232

A Special Order Decision

Back 232

Occurs whena customer places an order at a price that differs from the normal pricecharged by the business.

Front 233

Target Price

Back 233

The priceset by a firm in order to reach a certain profit target. E.g. a firm with TFC of $3500, AVC of $120,sales target of 60 units and a profit target of $2500 must have a target priceof $220. This is derived from thecalculation (x – 120) X 60 – 3500 = $2500.

Front 234

Total Contribution

Back 234

The unit contrition(P-AVC) X quantity of sales (Q) i.e. total contribution = (P – AVC) x Q. It is essentially a firm’s gross profit.

Front 235

The Appropriation Account

Back 235

The finalsection of a P&L account and shows how the net profit after interest andtax is distributed, i.e. dividends to shareholders and/or retained profit keptby the business.

Front 236

A Balance Sheet

Back 236

Containsfinancial information on an organisation’s assets, liabilities and the capitalinvested by the owners on one specific day, thus showing a ‘snapshot’ of thefirm’s financial situation.

Front 237

The Book Value

Back 237

The valueof an asset as shown on a balance sheet. The market value of assets can be higher than its book value because ofintangible assets such as the brand value or the goodwill of the business.

Front 238

Cost of Goods Sold (COGS)

Back 238

Also knownas Costs of Sales (COS), is shows in the trading account and represents thedirect costs of producing or purchasing stock that has been sold.

Front 239

Final Accounts

Back 239

Thepublished annual financial statements that all limited liability are legallyobligated to report, i.e. the balance sheet and the P&L accounts.

Front 240

Fixed Assets

Back 240

Itemsowned by a business, not intended for sale within the next twelve months, butused repeatedly to generate revenue for the organisation e.g. land, premise andmachinery.

Front 241

Goodwill

Back 241

An intangible asset which exists when thevalue of a firm exceeds its book value (the value of the firm’s net assets).

Front 242

Gross Profit

Back 242

The difference between the sales revenueof a business and its direct costs incurred in making or purchasing theproducts that have been sold to its customers.

Front 243

Historic Costs

Back 243

Thepurchase cost of a particular fixed asset.

Front 244

Intangible Assets

Back 244

Fixed assets that do not exist in aphysical form e.g. goodwill, copyrights, brand names and registered trademarks.

Front 245

Net Assets

Back 245

Show the value of a business bycalculating the value of all its assets minus its liabilities. This figure must match the equity of thebusiness in its balance sheet.

Front 246

Net Profit

Back 246

The surplus (if any) that a businessmakes after all expenses have been paid for out of gross profit.

Front 247

The Profit and loss Account (Income Statement)

Back 247

A financial record of a firm’s tradingactivity over the past 12 months, consisting of three parts: the tradingaccount, the P&L account and the appropriation account.

Front 248

The Residual Value

Back 248

An estimate of the scrap or disposalvalue of an asset at the end of its useful life.

Front 249

Retained Profit

Back 249

The amount of net profit after interest,tax and dividends have been paid. It isthen reinvested in the business for its own use.

Front 250

Share Captial

Back 250

The amount of money raised through thesale of shares. It shows the valueraised when the shares were first sold, rather than their current market value.

Front 251

Shareholders' Funds

Back 251

The equity of the owners, i.e. the sharecapital invested by the owners and the retained profit and reserves that havebeen accumulated.

Front 252

The Trading Account

Back 252

The first section of the P&L account, showing thedifference between a firm’s sales revenue and its direct costs of trading, i.e.it shows the gross profit of a business.

Front 253

Window Dressing

Back 253

The legal act of creative accounting by manipulatingfinancial data to make the results look more flattering.

Front 254

The Acid test Ratio

Back 254

A liquidity ratio that measures a firm’s ability to meet itsshort-term debts. It ignores stockbecause not all inventories can be easily turned into cash in a short timeframe.

Front 255

Capital Employed

Back 255

The value of all long-term sources of finance for a businesse.g. bank loans, share capital and accumulated retained profit.

Front 256

The Current Ratio

Back 256

The short-term liquidity ratio that calculates the ability of a business to meet its debts within the next twelve months.

Front 257

Efficiency Ratios

Back 257

Indicate how well a firm’s resources have been used, such as the amount of profit generated from the available capital used in the business.

Front 258

Gross Profit Margin (GPM)

Back 258

A profitability ratio that shows the percentage of sales revenuethat turns into gross profit.

Front 259

Liquid Assets

Back 259

The possessions of a business that can be turned into cash quickly without losing their value i.e. cash, stock and debtors.

Front 260

Liquidity Crisis

Back 260

A situation where a firm is unable to pay itsshort-term debts, i.e. current liabilities exceed current assets.

Front 261

Liquidity Ratios

Back 261

The ability of a firm to pay its short-term liabilities,such as by comparing working capital to short-term debts.

Front 262

Net Profit Margin

Back 262

The percentage of sales revenue that turns into net profit,i.e. the proportion of sales revenue left over after all direct and indirectcosts have been paid.

Front 263

Profitability Ratios

Back 263

Examine profit in relation to other figures, e.g. the GPM and NPM ratios. These ratios tend to be relevant to profit-seeking businesses rather than for non-profit organisations.

Front 264

Ratio Analysis

Back 264

A quantitative management tool that compares differentfinancial figures to examine and judge the financial performance of abusiness. It requires the application offigures found in the final accounts (the balance sheet and the P&Laccount).

Front 265

Return on Capital Employed (ROCE)

Back 265

An efficiency ratio (although it also reveals the firm’s profitability) measuring the profit of a business in relation to its size (as measured by capital employed).

Front 266

Assets

Back 266

Items with a monetary value that belong to abusiness. They can either be fixedassets (e.g. machinery, tools and buildings) or current assets (e.g. cash,stock and debtors).

Front 267

Cash

Back 267

A current asset and represents the actual money a businesshas. It can exist in the form of cash inhand (cash held in the business) or cash at bank (cash held in the bankaccount).

Front 268

Cash Flow

Back 268

The transfer or movement of money into and out of anorganisation. Cash inflows mainly come fromsales revenue whereas cash outflows are for items of expenditure.

Front 269

Cash Flow Forecast

Back 269

A financial document that shows the predicted future cashinflows and cash outflows of a business during a specified trading period,usually 12 months.

Front 270

Cash Flow Statement

Back 270

The financial Document that records the actual cash inflowsand cash outflows of a business during a specified trading period, usually 12 months.

Front 271

Closing Balance

Back 271

The value of cash left in a business at the end of eachmonth, as shown in its cash flow forecast or statement, using the formula:Closing balance = Opening balance + Net cash flow.

Front 272

Current Assets

Back 272

Liquid resources owned by a business, i.e. cash,debtors and stocks.

Front 273

Current Liabilities

Back 273

Represent the money that a business owes that needs to berepaid within the next 12 months e.g. overdraft, creditors and taxes.

Front 274

Creditors

Back 274

Businesses that have sold goods or services to trade credit,so will collect the money from its debtors at a future date.

Front 275

Debtors

Back 275

Customers who have purchased goods or serviceson credit, so owe the business money which is collected at a later date.

Front 276

Expenses

Back 276

The expenditure in the working capital cycle, i.e. costs of productionsuch as salaries, rent, advertising and distribution.

Front 277

Fixed Assets

Back 277

Illiquid resources owned by a business and are not intendedfor resale within the next 12 months but are used to generate revenue e.g.land, vehicles and trademarks.

Front 278

Insolvency

Back 278

A situation where a firm’s working capital is insufficientto meet its current liabilities. It canlead to the collapse of a business as creditors will take legal action torecover their money.

Front 279

Liabilities

Back 279

Debts owed by a business. Current liabilities are short-term debts that need to be repaid within thenext 12 months of the balance sheet date, e.g. overdrafts. Long-term liabilities, such as mortgages andbank loans, are repayable over a longer period.

Front 280

Liquidity

Back 280

The ability of a business to convert assets into cashquickly without a fall in its value.

Front 281

A Liquidity Problem

Back 281

When a business doesn’t have enough cash to pay its currentliabilities (short-term debts).

Front 282

Net Cash Flow

Back 282

The cash that is left over after cash outflows have beenaccounted for from the cash inflows, per time period.

Front 283

Opening Balance

Back 283

The value of cash in a business at the beginning of eachmonth, as shown in its cash flow forecast or statement. It is equal to the closing balance in theprevious month.

Front 284

Overheads

Back 284

The costs not directly associated with theproduction process yet necessary for providing and maintaining businessoperations e.g. lighting, rent, security and insurance

Front 285

Overtrading

Back 285

When a business attempts to expand too quickly without thesufficient resources to do so, usually by accepting too many offers, thusharming its cash flow position.

Front 286

Profit

Back 286

In its simplest form is the positive difference between afirm’s total sales revenue and its total costs of production.

Front 287

Stock (Inventory)

Back 287

The physical goods that a business has in its possession forfurther production (raw materials and unfinished goods), or for sale (finished goods).

Front 288

Working Capital (Net Current Assets)

Back 288

The amount of finance available to a business forits daily operations. It is calculatedby current assets minus current liabilities.

Front 289

The Working Capital Cycle

Back 289

The time interval between cash outflows forcosts of production and cash inflows from customers who receive their finished goodsand services.

Front 290

the Average Rate of Return (ARR)

Back 290

Calculates the average annualprofit of an investment project, expressed as a percentage of the initial sumof money invested.

Front 291

Investment

Back 291

The purchase of assets withthe potential to yield future financial benefits e.g. upgrading computersystems or the purchase of property (such as land and buildings).

Front 292

Investment Appraisal

Back 292

A financial decision-making tool that helps managersto calculate whether certain investment projects should be undertaken basedmainly on quantitative techniques.

Front 293

The Payback Period (PBP)

Back 293

An investment appraisaltechnique that calculates the length of time needed to recoup (earn back) theinitial expenditure on an investment project.

Front 294

Qualitative Investment Appraisal

Back 294

Judging whether an investmentproject is worthwhile through non-numerical means e.g. is the investmentconsistent with the corporate culture?

Front 295

Quantitative Investment Appraisal

Back 295

Judging whether an investmentproject is worthwhile through numerical (financial) interpretations I.e. thePBP and ARR.

Front 296

Commercial Marketing

Back 296

The use ofmarketing strategies to meet the needs and wants of customers in a profitableway.

Front 297

Ethical Code of Practice

Back 297

The guidelines that help businesses to act in amoral way by considering what is ethically right or wrong (from society’s pointof view).

Front 298

A Market

Back 298

A place or process whereby customers and suppliers trade. A market exists where there is demand for aparticular product and where there is a willingness from businesses to supplythese products.

Front 299

Market Concentration

Back 299

Measuresthe degree of competition that exists within a market by calculating the marketshare of the largest few firms in the industry.

Front 300

Market Leadership

Back 300

Firms with the largest market share in aparticular market.

Front 301

Market Orientation

Back 301

A marketingapproach adopted by businesses that are outward looking by focusing on makingproducts that they can sell, rather than selling products that they can make.

Front 302

Market Share

Back 302

Measuresthe firm’s sales revenues as a percentage of the total sales revenue in theindustry.

Front 303

Market Size

Back 303

Themagnitude of an industry, usually measured in terms of the value of salesrevenue from all the businesses in a particular market, per time period.

Front 304

Market Growth

Back 304

Market growth refers to an increase in the size of a marketper period of time, usually a year. It can be measured by an increase in thevalue or volume sales in the market.

Front 305

Marketing

Back 305

The management process of predicting, identifying andmeeting the needs and wants of customers in a profitable manner.

Front 306

Marketing Objectives

Back 306

The specific marketing goals of an organisation. The marketing objectives of for-profitorganisations include increased sales revenue, market leadership and greatermarket share.

Front 307

Marketing Strategies

Back 307

The medium to long term plan to achieve a firm’s marketingobjectives.

Front 308

Needs

Back 308

The essential necessities that humans must have to survive,i.e. food, shelter, water and warmth.

Front 309

Product Orientation

Back 309

A marketing approach used by businesses that are inwardlooking as they focus on selling products that they can make, rather than makingproducts that they can sell.

Front 310

Social Marketing

Back 310

Any activity that seeks to influence socialbehaviour to benefit the target audience and society as a whole.

Front 311

Wants

Back 311

Human desires, i.e. thing that people would liketo have. Irrespective of a person’s incomeor wealth, all people have infinite wants.

Front 312

Consumer Profiles

Back 312

The demographic and psychographiccharacteristics of consumers in different markets e.g. their age, gender,occupation, income level, religion, marital status and purchasing habits.

Front 313

Differentiation

Back 313

The act ofdistinguishing a business or its products from rivals in the industry. It tries to create the perception amongcustomers that the firm’s product is different (unique or special) comparedwith substitute products from rival businesses.

Front 314

Ethical Marketing

Back 314

The moral aspects of an organisation’s marketingstrategies. It can be encouraged by theuse of moral codes of practice.

Front 315

Market Segmentation

Back 315

The process of categorising customers intodistinct groups with similar characters (such as age or gender) and similarwants or needs.

Front 316

The Marketing Mix

Back 316

Thecombination of various elements needed to successfully market a product. It is used to review and develop marketingstrategies and is at the heart of marketing planning. Traditionally, it consists of the 4 p’s:product, price, place and promotion.

Front 317

Marketing Objectives

Back 317

The targetsthat the marketing department wishes to achieve e.g. sales growth or increasedmarket share. Marketing objectivesshould derive from the organisation’s overall objectives.

Front 318

Marketing Plan

Back 318

Thedocument outlining a firm’s marketing objectives and strategies for a specifiedtime period.

Front 319

Marketing Planning

Back 319

Thesystematic process of devising marketing objectives and appropriate marketingstrategies to achieve these goals. Itrequires the collection and analysis of information about a particular markete.g. market research data on existing and potential customers.

Front 320

Mass Marketing

Back 320

Refers toundifferentiated marketing. This is astrategy that ignores targeting individual market segments.

Front 321

Niche Marketing

Back 321

Targets aspecific and well-defined market segment e.g. some businesses provide high-endspeciality goods (such as Louis Vuitton handbags) in niche markets.

Front 322

Packaging

Back 322

A form of non-price competition that focuseson the ways in which a product is presented to the consumer. Psychologists argue that people’s moods areaffected by aspects of packaging such as colour and texture.

Front 323

Physical Evidence

Back 323

The imageportrayed by a business (or perceived by customers) regarding its observableand tangible features e.g. the cleanliness and physical attributes of anorganisation.

Front 324

Place

Back 324

The methodsof distributing products to customers.

Front 325

Position Map (Perception Map)

Back 325

A visualaid that shows customer perceptions of a product or brand in relation to othersin the market, often by comparing perceptions about price and quality.

Front 326

Price

Back 326

The amount that customers pay for a particulargood or service.

Front 327

Process

Back 327

Part of theextended marketing mix which refers to the methods and procedures used to giveclients the best possible experience.

Front 328

Product

Back 328

A physical good or an intangible service, suchas a computer or a haircut. Businessessell products to fulfil the needs and wants of their customers.

Front 329

Promotion

Back 329

The strategies used to attract customers to buy a firm’s products. Branding, for example, helps to differentiatea product from its competitors.

Front 330

Repositioning

Back 330

A marketing strategy that involves changing themarket’s perception of a firm’s product or brand in comparison to rival firms.

Front 331

Segmentation

Back 331

The processof categorising customers into distinct groups of people with similarcharacteristics (such as gender or age) and similar buying habits for marketresearch and targeting purposes.

Front 332

Targeting

Back 332

Eachdistinctive market segment having it sown specific marketing mix. Different markets can be targeted, dependingon whether firms operate in niche or mass markets.

Front 333

Unique Selling Point (Unique Selling Position)

Back 333

Any aspectof a product that makes it stand out (in a positive way) from those offered byrival businesses.

Front 334

Marketing Audit

Back 334

Asystematic examination and review of the current position of a firm in terms ofits strengths and weaknesses.

Front 335

Market Research

Back 335

The range of marketing activities designed todiscover the opinions, beliefs and feelings of potential and existing customersto identify and anticipate the needs and wants of customers.

Front 336

Academic Journals

Back 336

Periodicalpublications from educational and research institutions that publish data andinformation relating to a particular academic discipline.

Front 337

Cluster Sampling

Back 337

Used whengetting feedback from respondents involves too much time, travelling and money. E.g. It would be too time consuming andcostly for a company to randomly interview people across all the counties thatit operates in.

Front 338

Convienience Sampling

Back 338

Usessubjects that are easy (convenient) to reach e.g. students often use theirclassmates and friends in a research study. It relies on ease of reach and volunteers because of their availability.

Front 339

Focus Groups

Back 339

Formingsmall discussion groups to gain insight into the attitudes and behaviour ofrespondents. The group is typically madeup of participants who share a similar customer profile, such as teenage boyswho like to play computer games.

Front 340

Interviews

Back 340

A type ofprimary research that involves discussions between an interviewer andinterviewees to investigate their personal circumstances and opinions. Beliefs, attitudes and feelings can beexamined in detail.

Front 341

A Market Analysis

Back 341

Reveals thecharacteristics and the outlook (trends) for a particular product or industrye.g. market size, market share and market growth rate.

Front 342

Market research

Back 342

Marketingactivities designed to discover the opinions, beliefs and preferences ofpotential and existing customers in order to identify and anticipate theirwants and needs.

Front 343

Non-Sampling Errors

Back 343

Caused by human error or human behaviour. They arise from the researcher’s mistakes inrecording, processing or analysing data, or because respondents do not alwaysgive truthful and honest answers.

Front 344

Observations

Back 344

A method ofprimary research that involves watching how people behave or respond in differentsituations. It can be done under controlled conditions (like a laboratory test)or as real-life situations (where people do not know that they are beingwatched).

Front 345

The Population

Back 345

Inmarketing terms, refers to all potential customers of a particular market.

Front 346

Primary Research (Field/Bespoke Research)

Back 346

Market researchthat involves gathering new data first-hand for a specific purpose. Methods of primary research include surveys (questionnaires),interviews, focus groups and observations.

Front 347

Qualitative Market Research

Back 347

Gettingnon-numerical answers and opinions from respondents. The main purpose is to understand thebehaviour, attitudes and perceptions of customers, employees or otherrespondents.

Front 348

Quantitative Market Research

Back 348

Aboutcollecting and using factual and measurable information rather than opinions.

Front 349

Quota Sampling

Back 349

The most common sampling method, involving acertain number of people (known as the quota) form different market segmentsbeing used for research.

Front 350

Random Sampling

Back 350

Giveseveryone in the population un equal chance of being selected for the sample.

Front 351

A Sample

Back 351

A selectedproportion of the population used for primary market research purposes.

Front 352

Sampling Errors

Back 352

Caused bymistakes made in the sample design, such as unrepresentative sample being usedor the sample size being too small.

Front 353

Secondary Research (Desk Research)

Back 353

Thecollection of second-hand data and information that already exists, previouslygathered by others. E.g. governmentpublications and news articles.

Front 354

Snowballing

Back 354

Marketresearch carried out with individuals who then suggest other friends, familymembers or colleagues, thereby increasing the sample size. It is sued when firms are unable to get holdof appropriate respondents as the population is not clear.

Front 355

Stratified Sampling

Back 355

Subdividing the market into segments (known as strata) that share homogenous orvery similar characteristics. A numberof respondents form each stratum that is proportional to the population is thenrandomly selected for the sample.

Front 356

A Survey (Questionnaire)

Back 356

A documentthat contains a series of questions used to collect data for a specificpurpose. It is the most common method ofprimary research.

Front 357

Brand Development

Back 357

A long-termproduct strategy that involves strengthening the name and image of a brand toboost its appeal and sales.

Front 358

Brand Loyalty

Back 358

Whencustomers buy the same brand of product time and time again. They are devoted to the brand since they havebrand preference over other brand names.

Front 359

Brand Value

Back 359

The premiumthat customers are willing to pay for a brand over and above the value of theproduct itself, i.e. customers are willing to pay more for a reputable brand.

Front 360

Branding

Back 360

The use ofan exclusive name, symbol or design to identify a specific product ororganisation. It differentiates aproduct from similar ones offered by rival firms.

Front 361

Cash Cow

Back 361

A term usedin the Boston Consulting Group (BCG) matrix to refer to any product thatgenerates significant money due to its large market share in a matured market.

Front 362

Consumer Goods

Back 362

Productsbought for personal consumption, such as consumer durables (e.g. furniture,computers and cars) and perishables (e.g. food and flowers).

Front 363

Dogs

Back 363

Product inthe Boston Consulting Group (BCG) matrix that have low market share and operatein low growth or stagnant markets. Hence, dogs do not generate much cash or profit for a business.

Front 364

An Extension Strategy

Back 364

An attempt bymarketers to lengthen the life cycle of a particular product, typically usedduring the maturity or early decline stages of the product’s life cycle.

Front 365

Fast-Moving Consumer Goods (FMCGs)

Back 365

Everydayconvenience products sold in retail outlets such as supermarkets, e.g. personalhealth care products and groceries.

Front 366

Producer Goods

Back 366

Productspurchased for commercial use, rather than for private use, such as machinery,vehicles and land.

Front 367

Product

Back 367

Anyphysical or non-physical items (good or service) that is purchased bycommercial or private customers.

Front 368

Product Differentiation

Back 368

Anystrategy used to make a product appear to be distinct form others, such asquality, branding and packaging.

Front 369

The Product Life-cycle (PLC)

Back 369

The typical process that products go through from their initial designand launch to their decline and eventual withdrawal. Different products undergoeach of the five stages (research, launch, growth, maturity and decline) atvarying speeds.

Front 370

Product Portfolio

Back 370

The rangeof products or strategic business units owned and developed by an organisationat any one point in time.

Front 371

Question Marks (Problem Children)

Back 371

Products ina Boston Consulting Group (BCG) matrix that complete in high market growthindustries, but have low market share. They consume lots of cash but do not generate much profit, if any.

Front 372

Rising Stars (Or Stars)

Back 372

Products ina Boston Consulting Group (BCG) matrix that have high or rising market share ina high growth market.

Front 373

Cost-plus Pricing (Mark-up Pricing)

Back 373

Adding apercentage or predetermined amount of profit to the cot per unit of output todetermine the selling-price.

Front 374

Loss Leader Pricing

Back 374

Setting theprice of a product below its costs of production. The purpose is to entice customers to buyother products with high profit margins in addition to purchasing the lossleader product.

Front 375

Mark-up

Back 375

The extraamount charged by a business on top of its unit costs of production in order toearn a profit margin. This can beexpressed as an absolute amount (e.g. $10 per bottle) or as a percentage of thecost (e.g. 25% per bottle).

Front 376

Non-pricing Strategies

Back 376

The methodsused by a business to market its products other than by focusing on price. Examples include advertising, branding,packaging and customer loyalty schemes.

Front 377

Penetration Pricing

Back 377

Setting lowprices to gain entry into a new market. Once the product has established market share, prices can be raised.

Front 378

Predatory Pricing

Back 378

Temporarilysetting prices so low that rivals, especially smaller firms, cannot compete ata profitable level.

Front 379

Price

Back 379

The amountpaid by a customer to purchase a good or service.

Front 380

Price Discrimination

Back 380

Chargingdifferent prices to different groups of customers for the same product e.g.adult and children airline tickets.

Front 381

Price Leadership

Back 381

Used forbest-selling products or brands in a particular market. Customers perceive there to be fewsubstitutes for such products so the dominant frim can set its own prices. Competitors set their prices based on theprice of the market (or price) leader.

Front 382

Price Skimming

Back 382

Initiallycharging high prices for innovative or high-tech products. Price is reduced as the novelty wears off andas substitute products appear.

Front 383

Price Wars

Back 383

Businessescompeting by a series of intensive price cuts to threaten the competitivenessof rival firms.

Front 384

Psychological Pricing

Back 384

Roundingdown numbers such as $9.90 to make prices seem lower (than $10).

Front 385

Above the Line (ATL) Promotion

Back 385

Any form ofpaid-for promotion through the mass media (such as television and radio) toreach a wise audience.

Front 386

Advertising

Back 386

Amethod of informative and/or persuasive promotion that is usually paidfor. The aim of commercial advertisingis to raise the level of demand for a firm’s products.

Front 387

Advertising Clutter

Back 387

The huge volume of advertisements that thepublic is bombed with.

Front 388

Below the Line (BTL) Promotion

Back 388

Does notuse paid-for mass media sources, e.g. free samples (toiletries, food, drinks,etc), discount vouchers (to entice customers to buy the product) andadded-value promotions (e.g. special introductory deals).

Front 389

Direct Marketing

Back 389

Promotionalactivities that aim to sell a product straight to a customer rather than byusing an intermediary.

Front 390

Guerrilla Marketing

Back 390

Apromotional strategy that aims to ambush or catch the attention of customersthrough unusual, innovative, unconventional and/or shocking techniques, on arelatively low budget.

Front 391

Logos

Back 391

A from ofproduct differentiation that use a visual symbol to represent a business, itsbrands or its products, e.g. Nike’s tick.

Front 392

Promotion

Back 392

A component of the marketing mix. Refers to the methods sued to inform,persuade and/or remind people about a firm’s products or brands.

Front 393

Promotional Mix

Back 393

Thecombination of individual ATL and BTL promotional methods used by a business,such as advertising, direct marketing, packaging and sales promotion.

Front 394

Public Relations (PR)

Back 394

Business activitiesaimed at establishing and protecting the desired image of an organisation. PR is concerned with getting good mediacoverage, usually without directly paying for it.

Front 395

Publicity

Back 395

The processof promoting a business and its products by getting positive media exposurewithout directly paying for it.

Front 396

Sales Promotions

Back 396

Short-termincentives designed to stimulate demand for a product, e.g. discount coupons,prize draws, price cuts and trade fairs.

Front 397

Social Media

Back 397

Themarketing practice of gaining Internet traffic through social media websitessuch as Facebook, Twitter, YouTube and Google.

Front 398

Social Networking

Back 398

Anyplatform sued mainly by individuals to build social relationships betweenpeople, often because they are friends or share things in common. Social network services include Google+,Instagram and Facebook.

Front 399

Slogans

Back 399

Catchphrases designed to represent the essenceof a business or its products using a memorable set of words.

Front 400

Sponsorship

Back 400

A promotionaltechnique that involves funding, supporting or donating resources for an eventor business venture in return for prominent publicity.

Front 401

Viral Marketing

Back 401

Apromotional strategy that combines online technologies with word of mouth (WOM)techniques. It is usually done throughthe Internet via emails and social networks.

Front 402

Word of Mouth (WOM)

Back 402

Thespreading of marketing messages about a firm and the quality of its products orits customer service. It is perhaps themost cost-effective form of promotion.

Front 403

Agents (brokers)

Back 403

Negotiatorswho help to sell a vendor’s products, such as real estate agents sellingresidential and commercial property for their clients.

Front 404

Channels of Distribution

Back 404

The waysthat a product gets form the manufacturer to the consumer. E.g. wholesalers, agents, retailers,e-commerce and vending machines.

Front 405

Direct Mail

Back 405

Promotionalmaterial sent directly to people’s homes or places of work, often with personaldetails gathered from a database containing information about known customers.

Front 406

Direct Marketing

Back 406

Anypromotional activity that involves making direct contact with customers, e.g.personal selling and direct mail.

Front 407

Distribtion (place)

Back 407

The processof getting the right products to the right customers at the right time and placein the most cost-effective way.

Front 408

Distributors

Back 408

Independentbusinesses that act as intermediaries by specialising in the trade of productsmade by certain manufacturers.

Front 409

Intermediaries

Back 409

The process of using intermediaries in the chianof distribution between manufacturers and consumers of a product.

Front 410

Place

Back 410

Thedistribution of products, i.e. how products get form the producer to theconsumer. E.g. products could beavailable at large warehouses, at retail outlets, through agents or via theInternet.

Front 411

Retailers

Back 411

The sellersof products to the general public (i.e. consumers) that operate in outlets (or‘shops’ in everyday language).

Front 412

Specialty Channel of Distribution

Back 412

Anyindirect way to distribute products that does not involve retailers, i.e. distributionwithout the use of intermediaries such as e-commerce, vending machines and mailorder.

Front 413

Telemarketing

Back 413

The use oftelephone systems (audio and text message) to sell products directly topotential customers.

Front 414

Wholesalers

Back 414

Businessesthat purchase large quantities of products from a manufacturer and thenseparate or ‘break’ the bulk-purchases into smaller units for resale, mainly toretailers.

Front 415

The Zero-level Distribution Channel

Back 415

Skips anyintermediaries, i.e. the producer sells directly to the consumer.

Front 416

B2B (Business to Business)

Back 416

Refers toe-commerce conducted directly for business customers rather than the end user(consumers), e.g. Amazon.com supplies books ot retailers.

Front 417

B2C (Business to Consumer)

Back 417

Refers toe-commerce business conducted directly for the end user (the consumer), e.g.Amazon.com selling books directly to private individuals.

Front 418

C2C (Consumer to Consumer)

Back 418

Ane-commerce platform, such as eBay, that enables customers to trade with eachother.

Front 419

E-commerce (Electric Commerce)

Back 419

The tradingof goods and services via the Internet, electronic systems and computernetworks.

Front 420

E-tailers

Back 420

Businessesthat operate predominantly online, such as Alibaba.com, eBay, Facebook andGoogle. They are different fromretailers that operate physical stores and outlets.

Front 421

The Elevator Pitch

Back 421

The ideathat marketers only have a short time span available to hold the interest ofcustomers. It is an importantconsideration for e-marketers when designing their websites.

Front 422

Price Transparency

Back 422

Theopenness in communication about prices being charged by businesses. E-commerce allows customers to access pricecomparisons quite easily.

Front 423

Spam

Back 423

Unsolicitedand superfluous marketing messages via email or pop-up advertisements. The common messages of ‘spamming’ is toadvertise a firm’s products, such as financial services or computer software.

Front 424

Viral Marketing

Back 424

Apromotional technique that relies on the use of online social networks, such asemail, vlogs, blogs, Twitter and YouTube.

Front 425

Expected Value

Back 425

The likely financial result of an outcomeobtained by multiplying the probability of an event occurring by the forecasteconomic return if it does occur.

Front 426

Decision Trees

Back 426

A quantitative methods organisationalplanning tool that calculates the probable values of different options, helpingmangers to minimise the risk in decision-making.

Front 427

Force Field Analysis

Back 427

Deals with the forces for and againstchange. Driving forces are the benefitsof change (e.g. reduced costs or improved production) whilst restraining forcesare the cause of resistance to change.

Front 428

Fishbone diagram (or cause and effect model)

Back 428

An organisational planning tool based onidentifying and dealing with the root causes of a problem or issue facing abusiness.

Front 429

Gantt Charts

Back 429

A visual representation of all the tasks ina particular project plotted against the timescale. As a planning and scheduling tool, it allowsproject managers to monitor progress.

Front 430

Organisational Planning Tools

Back 430

The various methods that businesses use toaid their decision-making, e.g. decision trees, fishbone diagrams, Gantt chartsand force field analysis.

Front 431

Depreciation

Back 431

The fall in the value of fixedassets over time, from wear and tear (due to the asset being used) orobsolescence (outdated o out of fashion).

Front 432

Reducing balance Method

Back 432

A method of depreciation that reduces thevalue of a fixed asset by the same percentage each year throughout its usefullife. This is the more realistic methodto use.

Front 433

Straight Line Method

Back 433

A method of depreciation that reduces thevalue of a fixed asset by the same value each year throughout its usefullife. This is the relatively easiermethod to calculate.

Front 434

A Budget

Back 434

A financial plan of expected revenue andexpenditure for a department or an organisation, for a given period of time.

Front 435

Budgetary Control

Back 435

The use of corrective measures taken toensure that actual outcomes equal the budgeted outcome, by systematicmonitoring of budgets and investigating the reasons for any variances.

Front 436

Contingency Fund

Back 436

A reserve budget that is set aside for emergencyand backup use.

Front 437

A Cost Centre

Back 437

A department or unit of a business thatincurs coasts but is not involved in making any profit. These costs are clearly attributed to theactivities of that department e.g. salaries, wages, lighting, components andcapital expenditure.

Front 438

The Master Budget

Back 438

The overall or consolidated budget,comprised of all separate budgets. TheChief Financial Officer (CFO) has general control and management of the masterbudget.

Front 439

A Profit Center

Back 439

A department or unit of a business thatincurs both costs and revenues. Profitcentres tend to be used by large diversified businesses that have a broadproduct mix.

Front 440

SMART Budgets

Back 440

Specific, measurable agreed realistic andtime constrained. This helps to ensurethat budgets are appropriately set in order to facilitate budgetary control.

Front 441

Variance

Back 441

Any discrepancy between actual outcomes andbudgeted outcomes. Favourable variancesmean the variance is beneficial for the business. The opposite is true for adverse variances.

Front 442

Expected Value

Back 442

The likely financial result of an outcomeobtained by multiplying the probability of an event occurring by the forecastedeconomic return if it does occur.

Front 443

Decision Trees

Back 443

A quantitative methods organisationalplanning tool that calculates the probable values of different options, helpingmangers to minimise the risk in decision-making.

Front 444

Force Field Analysis

Back 444

Deals with the forces for and againstchange. Driving forces are the benefitsof change (e.g. reduced costs or improved production) whilst restraining forcesare the cause of resistance to change.

Front 445

Fishbone Diagram (or Cause and Effect Diagram)

Back 445

An organisational planning tool based onidentifying and dealing with the root causes of a problem or issue facing abusiness.

Front 446

Gantt Charts

Back 446

A visual representation of all the tasks ina particular project plotted against the timescale. As a planning and scheduling tool, it allowsproject managers to monitor progress.

Front 447

Organisation Planning Tools

Back 447

The various methods that businesses use toaid their decision-making, e.g. decision trees, fishbone diagrams, Gantt chartsand force field analysis.

Front 448

Adaptive Cultures

Back 448

The Culture of an organisation that isresponsive and receptive to change. Suchorganisations tend to be innovative and are able to foster change

Front 449

Corporate (Organisational) Culture

Back 449

The traditional andnorms within an organisation. It islargely based on people’s beliefs, values and attitudes in the workplace.

Front 450

Cultural Intelligence/ Quotient (CQ)

Back 450

Measures the abilityof an individual to blend into occupational, organisational and nationalcultures. CQ is an indicator of aworker’s ability to cope with change.

Front 451

Cultural Clash

Back 451

When there is conflictor incompatibility between two or more cultures within an organisation e.g.when two firms integrate via a hostile takeover.

Front 452

Cultural Gap

Back 452

The difference betweenthe existing culture of an organisation and its desired culture. Management strive to reduce this gap.

Front 453

Inert Cultures

Back 453

The opposite ofadaptive cultures as people are negative about and resistant to change.

Front 454

Innovative Cultures

Back 454

Exist in organisationsthat empower workers to make important decisions and to act on their owninitiative.

Front 455

Person Cultures

Back 455

Exist in organisationswhen staff in similar position, with similar expertise and training establishgroup to share their knowledge.

Front 456

Power Cultures

Back 456

Exist when there isone dominant individual or group that holds decision-making power. Hence, the organisational structure is likelyto be flat with a relatively wide span of control.

Front 457

Role Cultures

Back 457

Exist in highlystructured firms with formal rules, policies and procedures. Job roles are clearly stated in jobdescriptions and power is devolved to middle managers.

Front 458

Task Cultures

Back 458

Exist in organisationswhere the focus is on getting results. Individuals and teams are empowered and have some discretion over theirresponsibilities.

Front 459

Arbitration

Back 459

A process thatinvolves an independent person or body (the arbitrator) deciding on anappropriate outcome to a dispute. Thearbitrator’s final decision in legally binding.

Front 460

Collective Bargaining

Back 460

The negotiationprocess whereby trade union representatives and employer representativesdiscuss issues with the intention of reaching a morally acceptable agreement.

Front 461

Conciliation

Back 461

A process whereby thetwo parties involved in a dispute agree to use the services of an independentmediator to help in the organisation.

Front 462

Conflict

Back 462

Disagreements thatresult from differences in the attitudes, beliefs, values or needs ofpeople. It can also arise from pastrivalries and personality clashes.

Front 463

Conflict Resolution

Back 463

The course of actiontaken to manage and resolve conflict or differences in opinions.

Front 464

Employers' Associations

Back 464

A type of employer’srepresentatives. The association is anorganisation that represents the general views and interests of all businesseswithin a certain industry by negotiating with unions and influencing governmentaction.

Front 465

Employer Resolutions

Back 465

Individuals ororganisations that represent the management team in the collective bargainingprocess.

Front 466

Go Slows/Slowdowns

Back 466

A form of industrialaction that involve employees working at the minimum pace allowable under theiremployment contract.

Front 467

Industrial Action

Back 467

The activities taken bydisgruntled employees due to disputes over working conditions and practicese.g. hours of work or pay disputes. Itis a result of poor employer-employee relationships or conflict at work.

Front 468

Industrial Democracy

Back 468

Means that employees are given responsibilities andauthority to complete tasks, i.e. they have opportunities to be involved in thedecision-making process.

Front 469

Negotiation

Back 469

A bargaining processwhereby separate parties attempt to achieve a mutually acceptable outcome, i.e.a ‘win-win’ situation.

Front 470

A No-Strike Agreement

Back 470

A method of conflictresolution involving members of a labour union agreeing not to strike as a formof industrial action.

Front 471

Overtime Bans

Back 471

A form of industrialaction with workers complying with a labour union directive for members todisengage from working beyond their contracted employment hours.

Front 472

A Single-union Agreement

Back 472

An organisationagreeing to participate in collective bargaining with a sole trade union thatrepresents the workers.

Front 473

StaffAssociations

Back 473

Strive to uphold thewelfare of their staff members (although their bargaining power is weaker thanthat of trade unions) by dealing with issues that are directly relevant tostaff in their actual workplace.

Front 474

Strike Action

Back 474

A form of industrialaction that involves employees refusing to work. This is usually the result of majorindustrial unrest such as large-scale pay disputes or serious grievances.

Front 475

A Trade/Labour Union

Back 475

An organisation of worker-members who unite to protect their rights andwellbeing in the workplace.

Front 476

Work-to-Rule

Back 476

When employees go theabsolute minimum required, as stated in their employment contracts, i.e. theyadhere precisely to all rules and regulations in order to reduce productivity.

Front 477

Credit Control

Back 477

The ability of a business to collect its debtswithin a suitable time frame.

Front 478

Creditor Days Ratio

Back 478

An efficiency ratio that measures theaverage number of days it takes for a business to pay its creditors.

Front 479

Debtor Days Ratio

Back 479

An efficiency ratio that measures theaverage number of days it takes for a business to collect the money owed fromdebtors.

Front 480

Efficiency Ratios

Back 480

Show how well a firm’s resources have beenused, such as the amount of time taken by the firm to sell its stock(inventory) or the average number of days taken to collect money from itsdebtors.

Front 481

Gearing

Back 481

Measures the percentage of a firm’s capitalemployed that comes from external sources (long-term liabilities), such asdebentures and mortgages. Firms thathave at least 50% gearing are said to be ‘highly geared’.

Front 482

Stock Turnover Ratio

Back 482

Measures the number of times a businesssells its stocks within a year. It canalso be expressed as the average number of days it takes for a firm to sell allof its normal inventory.

Front 483

Correlation

Back 483

Shows the degree to which two sets of numbers orvariables are related, e.g. sales revenue over a period of time. Marketers are interested in establishing astrong correlation between marketing expenditure and sales growth.

Front 484

Cyclical Variation

Back 484

Recurrent fluctuationsin sales linked to the economic cycle of booms and slumps. Unlike seasonal variations, cyclicalvariations can last longer than a year.

Front 485

Extrapolation

Back 485

A forecastingtechnique used to identify the trend by using past data and extending thistrend to predict future sales.

Front 486

Moving Averages

Back 486

Used to find underlying trends by smoothing out variations in a dataset caused by seasonal, cyclical and random variations. It is common to use up to four-part movingaverages, i.e. averaging sales figures for four consecutive time periods.

Front 487

Sales Forecasting

Back 487

A quantitative management technique used to predict a firm’s level ofsales over a given time period.

Front 488

Seasonal Variations

Back 488

Periodic fluctuationsin sales revenues over a specified time period, such as certain months orquarters of the year.

Front 489

Random Variations

Back 489

Unpredictablefluctuations in sales revenues caused by erratic and irregular factors thatcannot be practically anticipated.

Front 490

Time Series Analysis

Back 490

A sales forecastingtechnique that attempts to predict sales levels by identifying the underlyingtrend from a sequence of actual sales figures

Front 491

People

Back 491

The employees who interact with customers,thereby delivering the service to customers. The reputation of a business largely depends on the training, motivationand communication skills of employees.

Front 492

Physical Evidence

Back 492

The tangible aspects of a service e.g. a luxuryhotel with a welcoming lobby, nice décor, well-groomed hotel staff, spas, gym,etc.

Front 493

Process

Back 493

The ways in which aservice is provided or delivered, including payment systems, queuing times,customer services, after-sales care and delivery services.

Front 494

A Service

Back 494

An intangible productsupplied by a business e.g. bus rides, library facilities, theatre shows,insurance deals and haircuts.

Front 495

The 7 P's Model

Back 495

The marketing ofservices which includes three additional Ps (people, processes and physicalevidence) in addition to the traditional 4 Ps in the marketing mix (product,price, promotion and place).

Front 496

Business etiquette

Back 496

The mannerism andcustoms (traditions) by which business is conducted in different countries.

Front 497

Cultural Exports

Back 497

The commercialtransfer of ideas and value from one country to another, e.g. US fast-food,Hollywood movies and drive-through outlets.

Front 498

Direct Investment

Back 498

A business setting upproduction and/or distribution facilities in overseas markets.

Front 499

Exporting

Back 499

The practice of selling domestically producedgoods and/or services to overseas buyers in order to gain access to largerinternational markets.

Front 500

Global Marketing

Back 500

The marketing of aproduct by using the same marketing strategy in numerous countries to gain frommarketing economies of scale.

Front 501

Globalisation

Back 501

The integration and interdependence of theworld’s economies, resulting in cultures and tastes converging at andaccelerating pace.

Front 502

International Marketing

Back 502

The marketing of afirm’s products in foreign countries.

Front 503

Licensing

Back 503

Occurs when athird-party firm (licensee) buys the right to produce the goods of anotherbusiness (the licensor).

Front 504

Andon

Back 504

A lean production method that uses visualcontrol systems to indicate the status of an aspect of the production processe.g. machinery, production line or work process.

Front 505

Benchmarking

Back 505

The process of identifying best practice inan industry, in relation to products, processes and operations. It sets the standards for other firms toemulate.

Front 506

Cradle to cradle (C2C)

Back 506

A sustainable model of production based onnatural processes. The underlyingprinciple of C2C is that there is no waste in nature.

Front 507

ISO 9000

Back 507

The world’s most widely recognised standardfor quality management. It is endorsedby the ISO to firms that use quality management systems to meet the needs ofcustomers.

Front 508

Just-in-time (JIT)

Back 508

An inventory management system based onstocks being delivered as and when they are needed in the productionprocess. As stocks are delivered justbefore they are used, there is no need to have buffer stocks.

Front 509

Kaizen

Back 509

The Japanese term for ‘continuousimprovement’ a lean production philosophy where workers and managerscontinually try to find ways to improve work processes and efficiency.

Front 510

Kanban

Back 510

A method of lean production used to ensurethat inventory is based on actual customer orders using a card system with aninventory number attached to each component in the production process.

Front 511

Lean Production

Back 511

The approach used to eliminate waste (muda)in an organisation. As a result, leanorganisations benefit from higher productivity and lower costs.

Front 512

Quality

Back 512

When a good or service must be fit for its purposeby meeting or exceeding the expectations of consumers.

Front 513

Quality Assurance

Back 513

The methods used by a business to reassurecustomers that its products meet certain quality standards, such as the ISO9000.

Front 514

Quality Circles

Back 514

Groups of workers that meet on a regularbasis to identify problems related to quality assurance, to consideralternative solutions to the identified problems, and to make feasiblerecommendations for improvement.

Front 515

Quality Control

Back 515

The traditional way of quality managementthat involves checking and reviewing work processes. This is usually carried out by qualitycontrollers and inspectors.

Front 516

Quality Management

Back 516

The function concerned with controllingbusiness activities to ensure that products are fit for their purpose. The quality of a product is seen as anoverall package, from the production and purchase of the product to the use andbeyond (after-sales care).

Front 517

Total Quality Management (TQM)

Back 517

The process that attempts to encourage allemployees to make quality assurance paramount in the various functions(production, finance, marketing and HRM) of an organisation.

Front 518

Zero Defects

Back 518

The goal of producing each and everyproduct without any mistakes or imperfection, thereby eliminating waste andreworking time (the time taken to correct faults).

Front 519

Buffer Stock

Back 519

The minimum stock level held by a firm incase there are unexpected events e.g. late deliveries of components or a suddenincrease in demand for the firm’s product.

Front 520

Capacity Utilization

Back 520

Measures a firms existing level of outputas a proportion of its potential output. High capacity utilization means that the firm is producing close to itsproductive capacity.

Front 521

Just-in-case (JIC)

Back 521

The traditional stock management systemthat maintains buffer stock in case there are unexpected fluctuations in supple(such as delayed delivery of stocks) or sudden changes in the productionprocess.

Front 522

Labour Productivity

Back 522

A measure of the efficiency of a firm’sworkers by calculating the output per worker. It is an indicator of the currentlevel of skills and motivation of the workforce.

Front 523

Lead Time

Back 523

Measures the duration between placing anorder and receiving it. The longer thelead time, the higher the buffer stocks tend to be.

Front 524

Make-or-buy Decisions

Back 524

Situations where a firm has t decidebetween manufacturing a product or purchasing it from a supplier based oncomparing the cost to make (CTM) with the cost to buy (CTB).

Front 525

Maximum Stock Level

Back 525

The upper limit of inventories that a firmwishes to hold at any point in time.

Front 526

The Optimum stock Level (Economic Order Quantity)

Back 526

The best inventory level for a firm, whichensures that there are sufficient stocks for production whilst incurringminimal costs.

Front 527

Productive Capacity

Back 527

A firm’s maximum (potential) output if allof its resources are used fully and efficiently.

Front 528

Productivity Rate

Back 528

Measures the degree of efficiency in theuse of resources in the production process. It uses an average measure e.g. output per worker, revenue per salesperson or output per machine hour.

Front 529

Re-order Level

Back 529

The level of stock when a new order isplaced. Lead times mean that there-order level helps to prevent production problems arising from a lack ofstock.

Front 530

Re-oder Quantity

Back 530

The amount of new stock ordered. It can be seen from stock control chart bycalculating the difference between the maximum and minimum stock levels

Front 531

A Stock-out

Back 531

Occurs if a business does not hold enoughstocks to meet order for production.

Front 532

Stockpiling

Back 532

Occurs when a business over-produces soholds too much stock. This is detrimentalto the firm’s cash flow position.

Front 533

Stocks (Inventories)

Back 533

The materials, components and products usedin the production process i.e. raw materials, semi-finished goods and finishedgoods.

Front 534

The Supply Chain

Back 534

The sequence of activities from the productionof a good or service to it being delivered to the end customer.

Front 535

The Usage Rate

Back 535

The speed at which stocks aredepleted. The higher the usage rate, themore frequent re-ordering of stocks needs to be.