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A2 Business > Buss3 Defenitions > Flashcards

Buss3 Defenitions Flashcards

1
Q

Aims/goals

A

General statements of what a business intends to achieve. Precise details of those intentions are set out in objectives

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2
Q

Business unit strategy

A

How a business attempts to compete successfully in a particular market

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3
Q

Corporate objectives

A

Objectives that relate to the business as a while. Usually set by top management

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4
Q

Corporate strategy

A

Concerned with the overall purpose and scope of the business activities

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5
Q

Cost leadership

A

A business strategy concerned with aiming to be the lowest-cost producer in an industry. Usually requires exploitation of economies of scale

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6
Q

Functional objectives

A

Set for each major business function- designed to ensure that the corporate objectives are met

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7
Q

Mission statement

A

A statement of the overall purpose of the business

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8
Q

Shareholder value

A

Where shareholders earn a return from their investment which is greater than their required rate of return

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9
Q

SMART objectives

A

Objectives that are more likely to be achieved because they are specific, measurable, achievable, realistic and timed

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10
Q

Social responsibility

A

The way in which a business meets its responsibilities to society as a key external stakeholder

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11
Q

Swot analysis

A

Assessment of the internal and external strengths and weaknesses of a business that the business needs to consider

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12
Q

Targets

A

Similar to objectives. Targets are often set at an individual or team level

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13
Q

Acid test ratio

A

A liquidity ratio that looks at whether a business can pay for current liabilities out of cash and near-cash assets (it ignores the value of stocks)

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14
Q

Asset turnover

A

A ratio that calculates the relationship between revenues and the total assets employed in a business

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15
Q

Assets

A

Amount owned by, or owed to a business

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16
Q

Average rate of return

A

A measure of the total accounting return from an investment project

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17
Q

Balance sheet

A

The financial statement that provides a snapshot of the assets and liabilities of a business at a particular date

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18
Q

Capital expenditure

A

Expenditure on assets which are intended to be kept in the business (eg it systems, machinery) rather than sold or turned into products

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19
Q

Cash flow targets

A

Specific objectives set by a business for cash-flow generated by a business

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20
Q

Corporation tax:

A

The tax levied on the profits of companies. The percentage varies depending on the size of the profits earned: typically 20-30%

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21
Q

Cost minimisation

A

A strategy of achieving the most cost-effective way of delivering goods and services to the required level of quality

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22
Q

Creditor days

A

A ratio that estimates the average period (in days) taken to settle amounts owed by a business to suppliers

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23
Q

Current ratio

A

A simple and popular measure of liquidity that assess the ability of current assets (eg cash, stocks) to finance current liabilities (eg trade creditors)

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24
Q

Debentures

A

A long term source of finance- a debenture is a form of bond or long term loan issued by a company

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25
Q

Debtor days

A

A ratio that focuses on the average time it takes for trade debtors to settle their accounted; usually measured in days

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26
Q

Depreciation

A

An accounting estimate of the fall in value of a fixed asset over time

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27
Q

Discount factor

A

The multiplication factor that converts a projected cost or benefit into a future year into its present value

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28
Q

Dividend

A

Amounts paid to shareholders out of the profits earned by a company

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29
Q

Dividend yield

A

A measure of shareholder return- calculated by comparing the dividend per share by the share price

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30
Q

Fixed assets

A

Assets such as property, equipment and vehicles that are intended to be retrained and used in a business for more than one year

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31
Q

Gearing

A

A ratio that focuses on the long-term financial stability and capital structure of a business. The gearing ratio measures the proportion of assets in a business that are financed by borrowing

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32
Q

Going concern

A

A business that is viable and able to continue in business for the foreseeable future

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33
Q

Goodwill

A

An intangible asset that can be included in a balance sheet= the difference between the net assets of a business acquired and the price paid for the business

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34
Q

Income statement

A

A financial statement that summaries the trading results of a business over a specific period- usually one year

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35
Q

Investment appraisal

A

Analytical techniques to help management evaluate the returns from potential investments and to help choose between competing investments

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36
Q

Liabilities

A

Amounts owed by a business to others

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37
Q

Liquidity

A

The ability of a business to finance required payments to creditors

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38
Q

Net present value

A

The present value of a series of future net cash flows that will result from an investment, minus the amount of the original investment

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39
Q

Operating profit

A

The product earned by a business from its entire trading operations- stated before financing (eg interest) and tax

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40
Q

Over trading

A

Where a business suffers financial difficulties from expanding too quickly- usually suffering set-up losses and increased working capital

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41
Q

Payback period

A

The time it takes for a project to repay its initial investment

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42
Q

Profit centres

A

A separately identifiable part of a business for which it is possible to identify revenues and costs and calculate a relevant profit

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43
Q

Profit quality

A

The sustainability of profit from one period to the next. Higher quality profit is profit that is likely to be repeated rather than affected by one-off items

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44
Q

Profitability

A

The amount of profit earned in a period (absolutely measure) or rate of profit earned compared with revenue

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45
Q

Provisions

A

Amounts set aside to cover future cots it liabilities (redundancies, legal dispute etc)

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46
Q

Ratio analysis

A

Interpretation of financial performance by calculating and interpreting ratios

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47
Q

Retained earnings

A

Profits earned by a business that are kept in the business rather than distributed as dividends

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48
Q

Revenue expenditure

A

Spending on day-to-day operation of the business (eg raw materials etc)

49
Q

Rights issue

A

The issue of new shares to existing shareholders in order to raise new finance. The new shares are usually offered at a significant discount to the existing share price to encourage take-up

50
Q

Return on capital employed

A

A measure of the percentage return that a business earns from the capital employed in the business. Often referred to as the ‘primary ratio’

51
Q

Share capital

A

The amount invested into a company by shareholders

52
Q

Shareholder returns

A

The rewards earned by shareholders = dividends paid to them + any increase in the value of their shares

53
Q

Stock turnover

A

A liquidity ratio that looked at how often a business rotates its stock during a year

54
Q

Trade creditors

A

A liquidity ratio that looks at how often a business rotate its stocks during a year

55
Q

Trade debtors

A

Amounts that are owed to a business from its customers

56
Q

Working capital

A

The net amount invested by a business to finance day-to-day trading: usually calculated as current assets- current liabilities

57
Q

Ansoffs matrix

A

A strategic model for helping a business analyse the relationship between general strategic direction and suitable marketing strategies

Market penetration (existing product, existing market)

Product development (new product, existing market)

Market development (existing products, new markets)

Diversification (new products, new markets)

58
Q

Competitive advantage

A

Skills, competences, resources and other advantages that enable a business to out-perform it’s competition

59
Q

Correlation

A

A measure of how close the relationship it (positive or negative) between an independent variable and a dependent variable

60
Q

Customer relationship management

A

The process of building a long-term profitable relationship between a business and its customers

61
Q

Extrapolation

A

The use of trends established by historical data to make predictions about future values

62
Q

Growth rate

A

The percentage growth over a particular period. Market growth rates are typically quoted in terms of percentage growth per year

63
Q

Market analysis

A

The process of analysing the size, structure and growth of a market in order to support marketing decisions

64
Q

Market share

A

The proportion of a market revenue or sales volume that is captured by a business of brand

65
Q

Marketing budget

A

Specific amounts that are allocated to activities in the marketing plan

66
Q

Marketing plan

A

The actions that management intend to take via the marketing mix in order to achieve marketing objectives

67
Q

Moving average

A

A calculation that takes a data series and ‘smoothes’ the fluctuations in data to show a trend average

68
Q

Product positioning

A

The way in which the marketing function tried to create an image or identity in the minds of the target market

69
Q

Repositioning

A

Changing the marketing mix for a product to appeal to a different market segment

70
Q

Sales forecasting

A

Techniques for estimating the likely demand (revenue and volume) for a product in future periods

71
Q

Target market

A

The market segment or segments which a business is attempting to enter with the chosen marketing mix

72
Q

Test marketing

A

Launching a new product or service in a limited pet of the target market in order to gauge the viability of the product and assess the most appropriate marketing mix

73
Q

Trend

A

A general direction in which something tends to move

74
Q

Capital intensity

A

The extent to which production or operations depends on investment in and use of capital (ie machined, buildings etc)

75
Q

Critical path analysis

A

Project management tool that uses network analysis to help manage complex and time sensitive operations

76
Q

Diseconomies of scale

A

Factors which result in higher unit costs as production output reaches too high a level

77
Q

Economies of scale

A

Cost advantages that a business can exploit as a result of expanding its scar of production. Economies of scale reduce the average unit cost of production

78
Q

Efficiency

A

A measure of the ability of a business to achieve the required level of production whilst minimising the use of resources

79
Q

Industrial inertia

A

Where a business decides to stay in its existing location despite potentially better locations being available to it

80
Q

Innovation

A

Putting a new idea or approach into action- the commercial exploitation of ideas

81
Q

Just in time

A

Methods of lean production where production resources arrive at the moment they are required rather than being held in stock

82
Q

Kaizen

A

A cultural approach to lean production and quality assurance. Involves encouraging employees to constantly seek and implement small incremental changes to production in order to improve quality and efficiency

83
Q

Labour intensity

A

The extent to which production or operations depend on investment in and use of labour ie people, training

84
Q

Labour productivity

A

The level of output per unit of labour

85
Q

Lead-time

A

The period of time between an order being placed and being received

86
Q

Lean production

A

An approach to management that focuses on cutting out waste whilst still ensuring quality

87
Q

Marketing economies

A

Where marketing costs per unit sold can be lowered by spreading marketing costs over larger output

88
Q

Minimum efficient scale

A

The minimum output a business needs to achieve in order for it to be able to minimise unit costs

89
Q

Network analysis

A

Breaking a project down into separate activities and their requirements

90
Q

Offshoring

A

Where a business has work done for it overseas

91
Q

Outsourcing

A

Where a business has work done for it by someone else

92
Q

Productivity

A

Measures of how effective a business is in turning resources (eg labour hours) into output

93
Q

Purchasing economies

A

Cost savings that arise from buying in bulk or from a more powerful relationship with a supplier due to increased output

94
Q

Quota

A

A restriction on the volume or quantity of a good that can enter or be sold in a market (form of trade barrier)

95
Q

Scale

A

The size or output of a business, best measured relative to that of direct competitors

96
Q

Subcontracting

A

Part of outsourcing- where another business is used to provide pet of the production process

97
Q

Tariff

A

A tax levied on imports to increase their price compared with domestic goods (form of trade barrier)

98
Q

Technical economies

A

Reductions in unit costs arising from the effective use of technology

99
Q

Unit costs

A

The key measure of productive efficiency- calculated as total costs divided by total output (over a specific period)

100
Q

Arbitration

A

An alternative to a court of law in determining legal and employment disputes. Involves a specialist outsider being asked to make a decision on a dispute

101
Q

Centralisation

A

An organisational structure where authority rests with senior management at the centre of the business

102
Q

Communication

A

The process by which a message or information is exchanged from a sender to a receiver

103
Q

Conciliation

A

A way of mediated industrial disputes to gain agreement without going to arbitration

104
Q

Core workers

A

Employees who are part of the core workforce of a business- central to the business activities

105
Q

Decentralisation

A

An organisational structure where authority is delegated further down the hierarchy, away from the centre

106
Q

Delayering

A

The process of removing one or more layers from an organisational structure

107
Q

Downsizing

A

The reduction in the scale and resources of a business

108
Q

Flexible working

A

The range of employment options designed to help employees balance work and home life

109
Q

Gap analysis

A

Analysis of the difference between the workforce needs of a business and it’s current capabilities

110
Q

Hard HRM

A

An approach to HRM based on treating employees as resources in the same way as any other business resource

111
Q

Human resource management

A

Strategies for managing people in order to achieve business objectives

112
Q

Peripheral workers

A

Employees who are on the fringe of the core workforce. They are not essential workers and their activities can often be outsourced or provided using flexible contracting

113
Q

Soft HRM

A

An approach to HRM based on treating employees as the most important resource in a business

114
Q

Labour turnover

A

The proportion of staff that leave their employment with a business over a period of time

115
Q

Team working

A

Individuals work in groups rather than go using on their own specialised jobs

116
Q

Trade union

A

Organisations of employees who seek to negotiate their employment terms through collective bargaining

117
Q

Workforce planning

A

How a business determine how many and what kind of employees are required

118
Q

Works council

A

A formal meeting of employer and employees to consider issues affecting the business and workplace- mandatory for larger businesses in the EU

A2 Business (3 decks)

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