Basic Definitions Flashcards
What is Revenue (Turn over)??
The amount of money that is earned from the selling of goods and services
What is Competitive Pricing??
Price-matching other companies or going below their prices to gain more customers
What is Profit??
Achieving a sales revenue that is higher than the total cost
What is Growth??
To increase the size or volume of sales by the value
What is an Entrepreneur??
People who turn ideas into businesses
What is Survival??
To continue to exist as a business
What are Fixed Costs??
Costs that are not impacted by the level of output
What are Variable Costs??
Costs that are influenced by the level of output
What is the Economy Scale about??
It’s all about reducing the costs of things
E.g. Stock
What is an Autocratic leading style??
When managers take in no inputs for subordinates, exert authority & make choices off their own beliefs.
What is a democratic leading style??
When managers value subordinate inputs, rely on their them and share team responsibilities.
What is Opportunity Cost??
The loss of other alternatives when one alternative is chosen
What is cash flow?
The movement of money coming into and out of a bank
What is a cash flow forecast?
A forward looking statement that tries to predict future cash inflows and outflows
What is an opening balance??
How much money the business has at the start of each month
What is a closing balance??
How much money the business has at the end of the month
What is net cash flow??
The result of inflows and outflows in a period of time
What are receivables??
When a business is owed money from customers
What are payables??
When a business owes money to suppliers
What are trade creditors?
People you owe money to
What is an overdraft??
An agreement with the bank allowing the business to withdraw money above the amount available
What is debt factoring??
The process of selling a business’ debts
What are credit terms??
The amount of time a customer is given to pay for their goods and services
What is credit control??
the process of chasing payments from debtors
What are marketing objectives??
The targets that the marketing function of a business wants to achieve in a period of time
What is sales volume??
The amount of sales expressed as a number of units sold
E.g. 20 tonnes of wool
What is sales value??
The amount of sales expressed as the total sum of money spent by consumers
E.g. £3million expenditure on merch
What is market size??
The total sales value or sales volume in a given market
What is market growth??
The % increase in the size of the market by the value or volume over a period of time
What is market share??
The proportion of total market sales that a firm has
What is branding??
A promotional method that involves the creation of a distinguished identity for a business and their products
What is brand loyalty??
When customers keep returning to buy from a recognised brand
What are stakeholders??
Anyone with an interest in the actions of a business
What is a primary stakeholder??
Someone in a direct relationship with the business
What is benchmarking??
Identifying the best practices from other firms and adopting elements of this in the firms performance
What is capital expenditure??
Spending money on machinery
What is equity??
Capital invested by the shareholders of a company
What is market research??
The collection and analysis of data information to inform a business about its market
What are gross profit margins (GPM)??
A measure of a firms profitability by looking at the relationships between gross profit and sales
What is operating profit margins (OPM)??
A measure of profitability by looking at the relationships between net profit and sales revenue
What is price elasticity??
When demand has disproportional responses to price changes of products or services
What is price inelasticity??
When demand for a product is proportional to the change of its price.
What is market segmentation??
Occurs when the market is split into subgroups of consumers with similar characteristics
What is demographic segmentation??
Identifying subgroups of the population based on their demographic profile or characteristics
What is income segmentation
Identified subgroups of the market based on their levels of income and professions
What are the 7P’s of of marketing??
Product. Price. Place. Promotion. People. Physical environment. Process.
What is a cash cow??
This is an established product of a business that have high market share in a low growth market
What are rising stars??
Products growing in demand, with the potential to become cash cows. They are typically funded by cash cows and face fierce competition
What is a problem child??
Products with low market share in a high growth market. They can be turned into cash cows with a lot of cost, time and attention
What are dogs (marketing)??
Products likely to be discontinued due to having little market share and little growth
What is the product life cycle??
A technique used to track the stages a product goes through during its life. Also tracks the sales of a product from start to end
What are the product life cycle stages??
Development > introduction > growth > maturity > decline > extension strategies
What’s Added Value??
The difference between the costs to produce a good or service and the it’s price.
Branding & quality influence it .
What’s a mission statement ??
It’s an outline of why a business exists and what it hopes to achieve
What’s a mission statement ??
It’s an outline of why a business exists and what it hopes to achieve
What are corporate objectives??
Objectives that the entire business hope to achieve across all the functions of the business
(Marketing, Financial, HR, Operations)
What is a SWOT analysis??
- Its an analysis that considers the Strengths, Weaknesses , Opportunities and Threats that a business is facing.
- The strength and weaknesses are internal factors to its current position.
- The opportunities and threats are external factors expected to occur in its future.
What are the Stages of SWOT Analysis??
- Internal analysis
- External analysis
- Prepare SWOT
- Generate strategic plans
what is a Balance sheet?
Its a financial statement that summaries the financial state of a business at a point in time
what is an income statement?
a representation of a company’s revenue, expenses and profitability over a period of time
what is ROCE?
Return On Capital Employed (ROCE) is a financial ratio that is used to measure the profitability of a company and the efficiency with which it uses its capital.
what is Liquidity?
- it’s a measure of a business’ ability to survive in the short-term.
- It involves covering any short-term liabilities such as loans, staff wages, bills and taxes.
What is the acid test ratio?
its a test used to indicate a company’s ability to pay off its current liabilities without relying on the sale of inventory or on obtaining additional financing.
what is Gearing?
- it measures what proportion of a business’ capital is funded through long-term loans.
- A highly geared business is of greater risk if interest rates are likely to increase
What are Efficiency ratios?
they assess the internal management of business i.e. how efficient are managers at controlling current assets
What are payable days?
they’re a measure of how long it takes, on average, for a the business to pay of supplies it has purchased on credit
what are Receivable days?
they’re a measure of how long it takes for a customer to pay the business for goods and services it has purchased on credit.
what is inventory turnover?
- it is the average inventory held which can be calculated by finding averages of inventory at the start and end of the year.
- It measures how frequently a business turns over its inventory within a year.
- Can vary depending on the nature of the firm
what is data mining?
it is the process of analysing data from different perspectives and then summarising it into useful information.
what are operations?
They are all about the measurement of performance, efficiency, costs and time
What are competition laws?
- They are laws that look to promote fair competition in markets while stopping he abuse of consumers by firms due to monopoly
- This means anticompetitive practices (price fixing) between firms are illegal
what is a monopoly?
- it exists where there is only one business in the market
- The government refer to any business that has at least 25% market share as having monopoly powers
What is a Cartel
where two or more businesses work together and agree not to compete with each other
What is short-termism?
- when investors, companies, or countries focus on short-term results to the detriment of long-term growth
- Its a financially-based approach
What is profit quality?
- it’s the degree to which profit is likely to continue into the future, i.e. the sustainability of the profit
- A high quality profit is one which can be repeated or sustained but a low profit quality is one which it is difficult to repeat
what are core competencies?
- they are the advantages that one company has over its competitors that can’t be copied.
- It’s the areas of business that the company excels at, and it’s often what the company is known for.
What is regulation?
Regulation is the creation of rules and sanctions within an industry in order to modify the economic behaviour of firms
what are SMEs??
Small and Medium sized Enterprises are
businesses that maintain revenues, assets, or a number of employees below a certain threshold.
Each country has its own definition of what constitutes a small and midsize enterprise.
what is De-Regulation?
De-regulation is the opening of markets to new competition through the removal of rules and regulations that created barriers to entry
Affects of De-Regulation?
- lowers costs of operations, allowing more businesses to enter a market, and lowers prices for consumers.
- Businesses strive to reduce costs to compete effectively .
- Businesses strive to meet consumer demand by reducing price and providing a greater range of products .
- Less government intervention allows firms to produce to the need of the market.
What is corperate privatization?
- Privatization describes a transition
that takes a company from being publicly
traded to becoming privately held. From a plc to an Ltd - Privatization leads to monopoly power as
most privatized firms operate in markets
with barriers to entry such as economies of
large scale
what are arguments for Regulation?
Protect consumers against the abuse of monopoly power that would lead to higher prices, supernormal profits, and inefficiency
To create an environment that will encourage businesses to strive for efficiency through reduced costs
This has been achieved through capping prices, forcing businesses to cut costs in order to increase profit
To ensure quality and choice are maintained
What are Kotter and Schlesinger’s 4 reasons for resistance to change?
Self-interest. They would be worse off if the change occurred (eg lose their job).
Fear and misunderstanding. They do not trust the managers’ motives.
Different assessments…
Prefer things as they are.
6 ways to overcome change
(Kotter and Schlesinger)
- Education
- Participation
- Facilitation and Support
- Manipulation and Co-option
- Negotiating and Bargaining
- Explicit and Implicit Coercion
What is Span of control??
The ease with which managers communicate and coordinate with subordinates
What is regional structure?
Regional structure is the geographical layout of the different firms of one organisation
What is product based structure??
It’s when employees are divided into self-contained divisions according to:
- the particular line of products or services they produce
- the customers they deal with
- the geographical area they serve
What is matrix structure??
an organizational structure in which some individuals report to more than one supervisor or leader
Typically used in organisations which have diverse product lines and services
What is network analysis??
It’s a technique used to identify the order in which all activities need to be completed when planning a project
What is Lewin’s force field??
It’s a model that analyses what affects change could have on a business in terms of forces ( driving forces and resisting forces)
What is off-shoring??
It’s the process of moving business functions
E.g. production and IT support
Reasons for off-shoring??
- Lower costs
- higher productivity
- enter new markets
- overcome domestic regulations
- talent pool
What is Re-shoring??
It’s the process of moving previously off-shored business functions back to the country of origin
Reasons for re-shoring??
- cost savings no longer so significant
- reduces quality issues
- infringement to intellectual property
- shorter lead times
- Government incentives
What are Porter’s generic strategies??
- Cost leadership
- Differentiation
- Cost Focus
- Differentiation focus
What is cost leadership (Porter’s generic strategies)??
It targets mass markets using economies of scale, high capacity utilisation and efficient resource management to keep costs very low
