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IB Business Management > Buisness glosarry 3 > Flashcards

Buisness glosarry 3 Flashcards

1
Q

Persuasive advertising

A

Advertising that tries to persuade consumers to purchase a product.

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2
Q

Piece rate

A

A payment system where employees are paid according to how much they produce. They are paid an amount per unit produced, the argument being that this will motivate them to work harder.

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3
Q

Place

A

The P from the marketing mix that refers to the distribution of the product.

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4
Q

Point of sale promotion

A

Advertising or promotion of the product at the point where the consumer is actually buying the product.

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5
Q

Policy

A

A strategy that is a means of achieving an objective.

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6
Q

Policy instruments

A

Tools used to achieve an objective. Fiscal policy and monetary policy are both examples.

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7
Q

Population

A

The number of people living in a country.

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8
Q

Potential output

A

The output that could be achieved if all resources were to be fully deployed.

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9
Q

Predatory pricing

A

A situation where a firm reduces price in the short run to try to force competitors out of the industry.

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10
Q

Preference share

A

A less risky investment than an ordinary share as it carries a fixed rate of return for the investor, though they do not carry the same shareholders’ rights as ordinary shares.

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11
Q

Present value

A

The value today of future incomes from an investment.

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12
Q

Pressure groups

A

Groups who come together to present a particular cause and to try to influence policy and behaviour. They will try to lobby government and firms to achieve their objectives.

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13
Q

Prestige pricing

A

Pricing where a business is able to set a high price because of the image associated with its product.

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14
Q

Price

A

The amount of money a good or service is bought for.

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15
Q

Price competition

A

The process of firms trying to attract customers through changes (cuts) in price.

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16
Q

Price discrimination

A

A situation where the same product is sold in different markets for different prices.

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17
Q

Price earnings ratio

A

A ratio that measures the earnings from a share compared to the price of the share. Higher ratios are better as they reflect higher returns.

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18
Q

Price elasticity of demand

A

A measure of the responsiveness of demand to a change in price. It is calculated by taking the percentage change in demand and dividing by the percentage change in price.

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19
Q

Price elasticity of supply

A

A Measure of the responsiveness of supply to a given change in price. It is calculated by taking the percentage change in supply and dividing by the percentage change in price.

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20
Q

Price index

A

A figure measuring price changes. It is a statistical measurement of a typical basket of goods purchased by people. A measure of inflation.

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21
Q

Price maker

A

Firms who are able to influence price as their output represents a significant share of the market.

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22
Q

Price taker

A

Firms whose output does not influence price as they are too small to influence the market price and therefore simply ‘take the market price’.

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23
Q

Pricing policies

A

The ways in which firms set prices or aim to influence the prices of goods and services.

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24
Q

Primary data

A

Information that doesn’t as yet exist. It is data that is collected for the first time by a researcher and is likely to be collected through questionnaires or surveys.

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25
Q

Primary sector

A

The sector of the economy concerned with agriculture and the extraction of raw materials (for example, mining, fishing and agriculture).

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26
Q

Prioritising

A

The process of putting tasks or activities in order of ‘needing to be done’. Required when there are a large number of tasks needing to be carried out with insufficient resources to do this quickly.

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27
Q

Private sector

A

The part of the economy privately owned and in the control of individuals and companies.

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28
Q

Privatisation

A

The process of moving economic activity from the public sector to the private sector.

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29
Q

Problem child

A

One of the four types of product identified in the Boston Matrix. It is a product that has a low market share within a fast growing market.

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30
Q

Process innovation

A

Using new technologies in the production process to make the production process more efficient or to ensure a better quality outcome from the process.

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31
Q

Product life cycle

A

A curve showing the different stages that a product passes through during its lifetime.

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32
Q

Product orientation

A

A situation where a firm focuses more on creating the product than responding to the needs of the market.

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33
Q

Product portfolio

A

The range of products offered by a company. Companies will want to ensure that they have a full and balanced range.

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34
Q

Production

A

The process of making goods and services from the inputs available (the factors of production).

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35
Q

Productive capacity

A

The amount that a firm or plant could produce if all the resources available to it were to be fully employed and working as efficiently as possible.

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36
Q

Productivity

A

A measure of efficiency. It can be calculated by taking the total level of output and dividing by the quantity of inputs used.

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37
Q

Profit

A

A situation where a firm receives more revenue from the sale of a product or service than it cost to manufacture the good or service. It is a reward for risk.

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38
Q

Profit and loss account

A

A record of the firm’s trading activities over a period of time.

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39
Q

Profit margin

A

Profit as a percentage of turnover (or sales). It is calculated by taking the level of profit, dividing by the level of turnover and multiplying by 100 to get the figure as a percentage.

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40
Q

Profit maximisation

A

The main motive for a firm. It is where firms aim to make the largest surplus of revenue over cost.

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41
Q

Profitability ratios

A

A group of ratios that measure the profitability of a company. They include the return on capital employed and gross and net profit margins.

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42
Q

Progressive tax

A

A tax that takes an increasing proportion of income as income rises. Income tax is an example.

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43
Q

Promotion campaigns

A

Promotional efforts by firms that are aimed at encouraging people to purchase a product. Examples may include the giving of free gifts or two for the price of one offers.

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44
Q

Public corporations

A

Industries owned by the state/government.

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45
Q

Public expenditure

A

Spending by central government and local authorities on providing goods and services, transfer payments and debt repayments.

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46
Q

Public interest

A

The common good or the good of society at large.

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47
Q

Public limited company

A

A limited liability company owned by shareholders. The shares in the company are available publicly for purchase through the stock exchange.

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48
Q

Public relations

A

The division of a firm that deals with communication with their consumers / customers (the ‘public’). They will usually be responsible for dealing with the media, comments, complaints and criticisms.

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49
Q

Public sector

A

The sector of the economy under government control.

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50
Q

Published accounts

A

The financial statements that every limited company has to issue annually.

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51
Q

Purchasing

A

The buying of any raw materials, parts or equipment that are needed by the firm for production of theor goods or services.

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52
Q

Qualitative research

A

The gathering of information that is not statistical but that gives an idea about the perceptions or views that customers have of a product or service.

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53
Q

Quality assurance

A

A way for a firm to give their customers greater confidence about the quality of the product they are buying. This may be offered through a group/organisation that offers a quality stamp of some sort.

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54
Q

Quality circles

A

Small groups of workers who get together to look at all issues relating to the quality of production of the good or service. It may be a part of a Total Quality Management (TQM) approach.

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55
Q

Quantitative research

A

The gathering of statistical data for market research or other purposes.

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56
Q

Quick ratio

A

Another name for the acid test ratio. It is the current ratio with stock and work-in-progress deducted from current assets.

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57
Q

Quotas

A

A limit on the quantity of goods that can be imported into a country. They are a form of protectionist policy.

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58
Q

Rate of interest

A

The price of money. It is the extra percentage that has to be paid when borrowing money or that a saver receives when putting their money aside for the future.

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59
Q

Rate of return

A

The percentage return earned by an asset. It can be measured as the profit earned by a firm as a percentage of the assets.

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60
Q

Ratio analysis

A

A tool for analysing the financial performance of a company by calculating ratios from their published accounts.

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61
Q

Re-order level

A

The minimum level that the firm will allow their stocks to fall to before they re-order new ones.

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62
Q

Real income

A

The level of national income adjusted for inflation.

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63
Q

Real rate of interest

A

The rate of interest adjusted for inflation.

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64
Q

Real terms

A

When a variable has been adjusted so that the effects of inflation have been taken into account.

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65
Q

Real wage

A

The value of income in real terms. It is a measure of what the wage is actually able to buy in terms of goods and services.

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66
Q

Receivership

A

The process of winding up a firm following its collapse.

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67
Q

Redundancy

A

The process of laying off staff where job cuts need to be made. It may be either compulsory where workers are given their notice because there is no longer work for them or voluntary.

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68
Q

Reflate

A

A process of boosting the level of economic activity through expansionary economic policies.

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69
Q

Reflationary policies

A

policies aimed to boost the level of economic activity. These could be either fiscal or monetary policies.

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70
Q

Regressive tax

A

Taxes that take a smaller proportion of income as income rises. i.e. tax that hits less well-off people harder.

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71
Q

Regulations

A

Rules and laws that control the behaviour of consumers and firms.

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72
Q

Regulatory bodies

A

Organisations that monitor the performance of industries and enforce regulations.

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73
Q

Repositioning

A

The process of shifting a product or products from one part of the market to another - in other words from one market segment to another.

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74
Q

Research and development

A

Spending to try to find new products and to improve existing products.

75
Q

Resources

A

The inputs used to produce goods and services. They are often termed factors of production.

76
Q

Restrictive practices

A

Business practices that are intended to give an advantage by limiting or restricting competition from other firms.

77
Q

Retained profit

A

The annual level of profit that the firm does not distribute to the shareholders as dividend, but retains for re-investment within the firm.

78
Q

Return on capital employed

A

A ratio that measures the performance of the firm in relation to the capital that has been invested. It is calculated by dividing the net profit before tax and interest by the level of capital employed and then multiplying by 100 to get the figure as a percentage.

79
Q

Returns to scale

A

The way in which changes in the quantity of inputs (factors of production) affect output. Often referred to as economies or diseconomies of scale.

80
Q

Revenue

A

The money received from the sale of output.

81
Q

Right first time

A

A production technique/philosophy that aims for no defects, mistakes or spoilt output. The aim of the approach is to reduce waste and therefore production costs.

82
Q

Risk-bearing economies of scale

A

The ability of large firms to spread the costs of uncertainty over a wider range of activities and therefore reduce their unit cost.

83
Q

Role based

A

A system of allocating responsibility for tasks and activities based on what it is that the individual is actually responsible for carrying out.

84
Q

SWOT analysis

A

A tool used by businesses to help them develop marketing and other strategies. It looks at internal STRENGTHS and WEAKNESSES of the business and the external OPPORTUNITIES and THREATS.

85
Q

Sale and leaseback

A

A method for raising finance (or working capital) if firms face a liquidity problem. It involves the sale of fixed assets to a specialist firm who then leases the assets back to the firm.

86
Q

Sales

A

The amount of goods or services sold by a firm in a given period of time.

87
Q

Savings

A

That part of disposable income (income after tax) not spent on goods and services. Income that is not spent, but put aside.

88
Q

Scarcity

A

The fundamental economic problem. It arises because there are insufficient resources to meet all consumer wants.

89
Q

Secondary data

A

Data that is existing published information that the firm uses for market research.

90
Q

Secondary sector

A

That part of the economy concerned with the manufacture of goods.

91
Q

Self employment

A

Working for oneself.

92
Q

Seller’s market

A

A situation where there is an excess demand in the market. Sellers of the good or service are therefore at an advantage.

93
Q

Share capital

A

The money that has been raised from the selling of shares in the firm. This figure is shown as part of the shareholders’ funds on the firm’s balance sheet.

94
Q

Share issue

A

The process of selling shares in a firm.

95
Q

Share premium

A

The difference between the nominal (or face value) of the share and the value that the share is sold for.

96
Q

Shareholder funds

A

The capital of the business that has been raised or is directly attributable to the shareholders. Includes share capital and retained profit.

97
Q

Shareholders

A

The owners of limited companies and public limited companies.

98
Q

Shares

A

Issued by companies as a way of raising long-term capital for the company. By holding these you become you become an owner of the company.

99
Q

Shock

A

An unanticipated event that affects the economy and firms or consumers.

100
Q

Short run

A

The period of time in which at least one factor of production is fixed. Over this time period the firm can only expand production by using more of the variable factor.

101
Q

Short term liquidity ratios

A

A group of ratios that includes the current ratio and the acid test ratio and measure how easily the company can meet its short-term financial commitments from the current assets they have.

102
Q

Single currency

A

A situation where countries agree to use the same currency. The Euro is an example.

103
Q

Skimming pricing

A

A pricing policy sometimes used by companies introducing a new product. A high price is set to ensure large profits are made and R&D costs recovered before the competitors are able to produce a similar product.

104
Q

Slumpflation

A

A situation that occurs when there is high inflation, high unemployment and negative growth.

105
Q

Small firms

A

Companies which employ a relatively low number of workers.

106
Q

Social audit

A

A check of the way in which a company is meeting their accepted social responsibilities. An assessment of whether the firm is meeting its obligations towards society as a whole.

107
Q

Social marketing

A

A form of marketing where you include within your marketing mix an awareness of the social responsibility and impact that your products on society as a whole and the environment in which they operate.

108
Q

Sole trader

A

The most basic form of business ownership where the business is private, has unlimited liability and the owner bears the financial risks of the business on their own.

109
Q

Span of control

A

The number of people in an organisation for whom one person is responsible.

110
Q

Spare capacity

A

A situation where a firm or economy can produce more with existing resources than they are currently producing.

111
Q

Specialisation

A

The process of focusing on the production of a single good or service or a particular activity in the production of that good or service.

112
Q

Stagnation

A

A negative level of economic growth that last beyond just the short-term.

113
Q

Stakeholders

A

All of those individuals or groups who have an interest or stake in a business. These include: employees, suppliers, creditors, customers, shareholders and local communities.

114
Q

Standards of living

A

The quality of peoples lives. It will depend on the level of incomes as well as other measures like the number of doctors, nurses, teachers and so on.

115
Q

Star

A

One of the product categories in the Boston Matrix. It is a product that has a high or rising market share within an expanding market.

116
Q

Stock Exchange

A

A market for shares and securities. Traders are linked by computer and trade in shares meaning that their value is determined by supply and demand.

117
Q

Stock turnover

A

A ratio that measures the number of times in a year a business sells their stocks. It is calculated by dividing the cost of sales by the stock figure. This gives the ‘number of times’ that a firm has sold their stock in a year.

118
Q

Stockpiling

A

The process of building up a stock of goods. This may be involuntary which may be caused by overproduction or a slowdown in demand or it may be a matter of policy in preparation for seasonal peaks in demand.

119
Q

Stocks

A

Also known as inventories. Made up of raw materials, work in progress and unsold consumer goods that are held by the firm ready for production or sale.

120
Q

Straight line depreciation

A

Perhaps the simplest method of calculating depreciation. It involves subtracting the residual (or scrap value) of the asset from its cost and then dividing the result by the number of years of useful life that the asset is likely to give.

121
Q

Strike

A

A form of industrial action that can be used by employees (members of a trade union) in the event of an industrial dispute that is proving difficult to resolve. It is the process of stopping work completely for a period of time.

122
Q

Subsidiary

A

A firm that is more than 50% owned by another firm.

123
Q

Subsidy

A

A payment made to firms or consumers by the government designed to encourage an increase in output.

124
Q

Substitutes

A

Goods that can be used for the same purpose and are in competition with each other. They are therefore alternatives to each other.

125
Q

Supply

A

The amount of a good which firms are willing and able to sell at a given price. It will be determined by the price of a good, the costs of producing it, the firm’s motives and the available technology.

126
Q

Supply chains

A

The lines of distribution for the organisation’s goods or services. It is vital that these are high quality if the business is to be efficient and profitable.

127
Q

Supply curve

A

An upward-sloping curve showing the amount of a good which producers are willing and able to sell at different prices. It shows the relationship between supply and price with all other determinants of supply held constant.

128
Q

Synergy

A

This is the hoped for result when companies merge or combine together. They hope to see that the value created by the combined business is greater than the sum of the two parts. This may come about through economies of scale, avoidance of duplication or a range of other efficiencies in marketing, planning, distribution and production.

129
Q

Takeover

A

When one company buys sufficient shares in another company to have a controlling interest. It may be hostile which means it is against the wishes of that company’s directors.

130
Q

Tangible assets

A

Physical assets held by the firm. They would include assets like buildings, machinery, cars and trucks.

131
Q

Target market

A

A market or market segment that a firm has decided to focus on selling to.

132
Q

Target rate of profit

A

A situation where an organisation sets their price to try to achieve a certain level of profit.

133
Q

Tariffs

A

Taxes on goods imported into a country. They are a form of protectionism and are often used by governments to try to reduce the level of imports into a country.

134
Q

Teams

A

Groups of workers who work together to produce goods and services.

135
Q

Technical economies of scale

A

The lower unit costs which come about from larger firms being able to use more efficient techniques of production and the fact that a larger plants are often cheaper to run. This is often helped by the principle of increased dimensions.

136
Q

Telemarketing

A

A direct selling technique (below the line promotion) that involves using the telephone and telesales teams to sell a product.

137
Q

Tender

A

A situation where interested firms are asked to put in a bid for how much they think a specific piece of work or contract will cost to carry out and details of how they propose to do the work (including timescales, specifications and so on).

138
Q

Tertiary sector

A

The service sector of the economy. For example, leisure and financial services.

139
Q

Theory X

A

A category proposed by theorist Douglas McGregor who looked at the reasons why people work. He suggested two categories to explain the different reasons why people work. These workers, he argued, are essentially motivated by money, lazy and dislike work and need to be carefully controlled by management.

140
Q

Theory Y

A

A category proposed by theorist Douglas McGregor who looked at the reasons why people work. He suggested two categories to explain the different reasons why people work. These workers, he argued, can enjoy work if well motivated and will show creativity and take responsibility for their work.

141
Q

Total costs

A

The total amount spent by a firm on producing a given level of output. They are made up of the fixed costs and the variable costs of production or the direct and the indirect costs of production.

142
Q

Total quality management

A

A philosophy that tries to generate responsibility for quality at every level of the organisation.

143
Q

Total revenue

A

The income received by a firm from the sale of their goods and services. It can be calculated by multiplying the price received for each unit by the number of units sold.

144
Q

Trade cycle

A

The cyclical fluctuations that occur in economic activity. Economies tend to move, over time, through periods of boom and slump.

145
Q

Trade union

A

An organisation of workers that represents them in negotiations with their employers. They will seek improvements for its members and represent them in collective bargaining about wage levels.

146
Q

Trade war

A

A situation where countries retaliate against import restrictions imposed on them by themselves placing import restrictions on goods entering the country. It is a dispute over trade.

147
Q

Trade-off

A

A situation where one thing has to be sacrificed in order to obtain something else.

148
Q

Trademark

A

A form of legal protection for a company’s brand or product. They generally have to be registered with a national Patent Office to gain the legal protection.

149
Q

Trading account

A

The top section of the profit and loss account that shows the trading performance of the firm. It shows their total sales and the cost of sales - therefore showing their gross profit.

150
Q

Transfer pricing

A

A form of internal pricing where companies set internal prices to charge other branches of the same company. Multinationals may use this as a means to move profits within branches of the company to take advantage of different tax rules in different countries.

151
Q

Unemployment

A

The number of workers (of working age) without a job who are willing and able to work.

152
Q

Unemployment rate

A

The percentage of the working population without a job who are willing and able to work.

153
Q

Unfair dismissal

A

A situation where an employee is dismissed from their job by a firm without good reason. The employee often has the right to take their case to an industrial tribunal.

154
Q

Unique selling point

A

Any aspect of or characteristic of a product that differentiates it from the competition. Firms will often want to stress this in their marketing.

155
Q

Unit cost

A

The average cost - cost per unit of output. It is calculated by dividing the total cost by the level of output.

156
Q

Unlimited liability

A

A situation where the owners of a business may have to sell off some or all of their personal possessions to meet the debts of the business because there is no limit to the amount of claims that can be made against them.

157
Q

Vacancies

A

Unfilled jobs.

158
Q

Value added

A

The financial worth that a firms adds to the raw materials that they process into the good or service they produce. The difference between the value of the goods and services sold and the cost of buying raw materials and other supplies necessary for production.

159
Q

Values

A

The principles that underpin the decisions that firms make and the policies they pursue.

160
Q

Variable costs

A

Costs that change with the level of output. Examples include costs like raw materials and labour costs.

161
Q

Variable pricing

A

Variable pricing is where a firm offers the same goods for sale at different prices in different market segments.

162
Q

Variance

A

The difference between a planned value for a variable and the actual outcome.

163
Q

Variance analysis

A

A tool used to explore the difference between the plans that a firm made beforehand and the actual outcome.

164
Q

Vertical integration

A

A situation where firms at different stages of the production chain merge together.

165
Q

Vertical merger

A

A situation where firms at different stages of the production chain merge together.

166
Q

Voluntary export agreements

A

An agreement between firms in another country and the government to limit the volume of exports coming into a country.

167
Q

Wage differentials

A

The difference in wages between workers in different occupations and different regions.

168
Q

Wage drift

A

A situation where traditional wage differentials between groups of workers are eroded. This can often be a cause of industrial disputes.

169
Q

Wage rate

A

The amount of pay received for working over a period of time. It will usually be expressed as an amount per period of time.

170
Q

Wage-price spiral

A

A situation that occurs when workers demand a pay rise above inflation. This results in an increase in the firm’s costs and means that they have to put their prices up further if they are to maintain their profit margin. This in turn, will lead to further inflation …..

171
Q

Wage-wage spiral

A

A situation that occurs when a wage increase in one industry sets off a series of wage claims in other industries so as to maintain wage differentials.

172
Q

Wages

A

The level of pay received for working. It is the income received by labour as a factor of production.

173
Q

Wants

A

People’s desires for goods and services. Wants result in demand, but to be effective demand the want has to be backed by an ability to pay.

174
Q

Weight-gaining industries

A

Industries where the raw materials are relatively small, but these are converted to produce a bulky finished product.

175
Q

Weight-losing industries

A

Weight-losing industries are industries where the raw materials are relatively bulky, but the resulting product is relatively smaller.

176
Q

Wild cards

A

An alternative name for a problem child which is one of the four types of product identified in the Boston Matrix. It is a product that has a low market share within a fast growing market.

177
Q

Work

A

The process of being employed by a firm or for yourself and using your skills and abilities to be a part of the production of a good or service.

178
Q

Work study

A

A technique used to analyse a job to identify the various stages and tasks involved and the time taken to complete them. From this information the study aims to suggest more efficient ways of producing the good or service.

179
Q

Workforce

A

All those who are employed, self employed, claiming benefit or in the armed forces. It is everyone who is available to work and of working age.

180
Q

Working capital

A

The difference between current assets and current liabilities (can also be termed net current assets). The figure shows the funds available for a business to meet their immediate expenditure needs.

181
Q

Working capital cycle

A

Shows the flow of cash in and out of the business. It shows how cash has to flow out of the business to pay for raw materials, to pay wages and to pay for other production costs and produce the goods and services before the product can be sold to generate cash to flow back into the business.

182
Q

Working population

A

All those who are eligible and willing to work.

183
Q

Yield

A

The income from an asset as a percentage of its price.

184
Q

Zero-based budgeting

A

A budgeting technique that takes a completely fresh start and avoids using historic / past data as a starting point for budgeting.

IB Business Management (3 decks)

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