Buss4 Key Words

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Mission Statement

Back 1

A qualitative statement of an organisations aims. It uses language intended to motivate employees and convince customers and those outside the firm of its sincerity and commitment.

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Corporate Aims

Back 2

The long-term intentions of a business

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Corporate Objectives

Back 3

Targets that must be achieved in order to meet the stated aims of the business

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Stakeholder

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An individual or group with a direct interest in the activities and performance of an organisation

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Macroeconomics

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The study of the whole economy

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Microeconomics

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The study oof individual parts of the economy

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Gross Domestic Product
(GDP)

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The total value of a country's output over the course of a year

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Gross National Product
(GNP)

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The total value of a country's output over the course of a year plus net income from abroad. The growth in real GNP per head of population is the main measure of economic growth

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Consumer Durables

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Goods that are owned by households, but are not instantly consumed by them, eg. Cars, computers, televisions

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Stock

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Raw materials, components, work-in-progress and finished goods.

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Capital Goods

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Items that are purchased by firms because they help them to produce goods

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Business Cycle
(or Trade Cycle)

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The regular patterns of ups and downs within an economy or of gross domestic product growth over time. It can be characterised by 4 terms: Boom, Recession, Slump and Recovery.

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Boom

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Period characterised by high levels of consumer demand, business confidence, profits and investment at the same time as rising costs, increasing prices and full capacity.

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Recession

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Period characterised by falling levels of consumer demand, output, profit and business confidence, little investment, spare capacity and rising levels of unemployment

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Slump

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Period characterised by very low levels of consumer demand, investment and business confidence, an increasing number of businesses failing and falling levels of unemployment

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Recovery

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Period characterised by slowly rising levels of consumer demand, rising investment, patchy but increasing business confidence and falling levels of unemployment

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Economic Growth

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An increase in the level of economic activity or real gross domestic product (GDP)

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Interest Rates

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The cost of borrowing money and the return for lending money.

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Exchange Rate

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The price of one country's currency in terms of another

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Flexible/Freely Floating/Fluctuating Exchange Rates

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The demand for and the supply of the currency determine the exchange rate

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Fixed Exchange Rate

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The government decides to fix the value of its currency permanently in relation to other currencies

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Inflation

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An increase in the general level of prices within an economy. Inflation also means that there is a fall in the purchasing power of money.

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Deflation

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A decrease in the general level of prices within an economy or a rise in the purchasing power of money

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Cost-Push Inflation

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Occurs when there is an increase in the costs of production (including wages, raw materials, fuel, tax etc) that forces firms to increase their prices in order to protect their profit margins

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Demand-Pull Inflation

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The process by which prices rise because there is excess demand in the economy

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Inflationary Expectations

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Views about what will happen to the rate of inflation in the future

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Hyperinflation

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A situation where the value of money decreases so fast that people lose confidence in it

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Unemployment

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The number of jobless people who want to work, are availiable to work and are actively seeking employment

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Structural Unemployment

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Long-term unemployment resulting from a change in demand, supply or technology in the economy which produces a fundamental decline in an industry

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Cyclical Unemployment

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Unemployment resulting from and economic downturn or recession in the business cycle

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Globalisation

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The process of enabling financial and investment markets to operate internationally, largely as a result of deregulation and improved communications

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International Competitiveness

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The ability of firms to sell their products sucessfully both abroad in export markets and at home in competition against imports.

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Emerging Market

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An international area that has the potential to grow and develop in terms of productive capacity, market opportunities and competitive advantage

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Government Intervention

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Policy based on the belief that government should exert a stron influence on the economy rather than allowing market forces to dictate conditions.

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Laissez-Faire

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Policy based on the belief that the free market will maximise business efficiency and consumer satisfaction; government therefore tries to avoid interfering in the running of business or any other part of the economy

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Privatisation

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When state-run industries and state-owned assets are returned or sold to the private sector

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Monetary Policy

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Controlling the money supply and the rate of interest in order to influence the level of spending and demand in the economy

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Fiscal Policy

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The use of taxation and government expenditure to influence the economy

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Demographics

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The characteristics of human populations and population groups, including elements such as age, ethnicity, gender, religion and sexual orientation

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Externalities

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The environmental effects of a firms activities which may be positive, such as job creationor providing a pleasing landscape around the factory, or negative, such as polluting the atmosphere with funes or congesting the roads with lorries.

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Contingency Planning

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Planning for unexpected, often unwelcome events in order to minimise their risks and costs

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Environmental Audit

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An independant checkon a firm's polluting activities, such as emissions, wastage and levels of recycling

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Pressure Group

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An organisation formed by people with a common interest or shared goal, who join together to further their interests or achieve their goals by putting pressure on the general public, governments or businesses

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Business Ethics

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The moral principles that should underpin decision making. Ethical behaviour involves actions and decisions that are seen to be morally correct.

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Ethical Code

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An instruction from an organisation to its employees to indicate how they should react to situations relating to moral values.

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Ethical Investment

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Stock market investment based on a restricted list of firms that are seen as ethically sound

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Public Relations (PR)

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Activities to boost the public profile of an organisation

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Corporate Social Responsibility (CSR)

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The duty of an organisation towards employees, customers, society and the environment.

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Social Auditing
(Or CSR reporting)

Back 49

The process by which a business attempts to assess the impact of the entire range of its activities on stakeholders and society in general

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Technological Change

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Adapting new applications of practical or mechanical sciences to industry and commerce

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Information Technology

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The creation, storing and communication of information using microelectronics, computers and telecommunications

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Fair Competition

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Where firms compete on equal terms ina way that offers consumers the best choice of products and prices

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Unfair Competition

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Where firms do not compete fairly, but act in a way that restricts consumer choice in the long or short run