definitions Flashcards
added value
The extra worth created when a product or service is enhanced, making it more valuable than it’s original cost
Design mix
The combination of the three factors needed to create an effective product: function, aesthetics and the costs of making it
Boston matrix
Analyses a company’s product portfolio in relation to the rate of market growth and the level of market share.
Price skimming
Setting a high price before other competitors come into the market (attracts early adopters who are willing to pay more for a novelty product)
Penetration pricing
Setting a relatively low initial price - usually lower than intended - to attract new customers
Competitive pricing
a business has to set the price of it’s products or services based on competitors pricing
Psychological pricing
The price is set to make the customer believe the product is cheaper than it really is
Contribution pricing
Pricing based on the variable costs of making or purchasing the product, intended to make sure the selling price covers the fixed costs of the business.
Above the line promotion
advertising activites that use mass media e.g. advertising on television, in newspapers or on the internet .
Below the line promotion
Where the business has direct control over the target or intended customers
Viral marketing
Creating memorable and attention-grabbing advertising for use in social media campaigns, it’s the hope that customers will share the adverts.
Emotional marketing
Advertising that aims to appeal to customers needs and aspirations through their emotions.
Global marketing
A strategy that aims to increase sales by marketing products or services internationally
Expenditure
The spending on the day-to-day operations of the business
Budget
A financial plan for the future detailing the revenues and costs of a business
Share capital
Funds raised by issuing shares in return for cash
Venture capital
Money invested in a business in which there is a substantial element of risk but have high growth potential
Cash flow
The movement of cash into and out of a business
Cash flow forecast
A prediction of the amount of cash flowing into and out of the business over a given period of time
Financial objective
A goal set by a business which is measured in monetary terms, such as a certain amount of profit to be achieved by a specific date
Income statement
A record of a business’s revenues and costs over a specific period, usually 1 year.
Cost of sales
Those costs that directly generate sales, including the cost of raw materials and labour costs.
Gross profit
Revenue minus the cost of selling the products or services
Net profit
What is left after all the costs of a business have been taken from it’s revenues
Gross profit margin
The calculation used to assess a business’s proportion of money left over from revenue after taking into account the cost of goods sold
Multi-skilling
Training employees to do different jobs within the business, or have a varied set of skills
Internal recruitment
A job vacancy is filled from within a business’s existing workforce
External recruitment
The business recruits an applicant from outside its existing workforce
On-the-job training
Employees are trained through carrying out real tasks, usually in the workplace
Off-the-job training
Training that happens outside the workplace
Labour productivity
A measure of the efficiency of a person or machine in converting inputs into useful outputs
Hierarchy of a business
The levels of management from the highest to lowest rank
Wide span of control
Employees have greater decision making powers in the business
Narrow span of control
Employees have less authority to make decisions, as there are more managers supervising them.
Tall organisational structure
An organisational structure that has many levels of hierarchy and a narrow span of control.
Flat organisational structure
An organisational structure with few levels of hierarchy and a wide span on control
matrix organisational structure
An organisational structure in which people can work across teams and projects as well as within their own department
Delayering
When a business removes one or more levels from its hierarchy.
Piece rate
An amount paid for each completed task.
Autocratic leadership
The leader makes all of the decisions with no consultation with employees.
Paternalistic leadership
More attention is given to the needs and views of workers. Employees are consulted for their ideas, although the leader ultimately makes the decisions
Democratic leadership
The leader encourages others to participate in decision-making through the consultation and delegation.
Laissez-faire
Leaders provide minimal guidance and allow team members to make decisions and manage their work independently
Bureaucratic leadership
A leadership style that makes use of a hierarchy of authority in which decisions are based on the application of rules.
Trade union
An association of workers in a trade or a profession, formed to defend and advance their rights and interests.
Collective bargaining
Representatives of employees, such as trade unions, negotiate with employers regarding the terms and conditions of employment.
Job production
A method of production in which a business concentrates on producing a single unit at a time.
Batch production
Manufacturing a number of goods at the same time.
Flow production
A method of production in which units move directly from one operation to the next in a continuous sequence.
Lean production
An approach which aims to minimise costs by cutting out wasteful practices while maintaining high quality.
Kaizen
Practices to promote continuous improvement, such as asking groups of workers to share ideas about working more efficiently.
Just-in-time
A stock management strategy which aims to increase efficiency by receiving raw materials only when they are needed in the production process.
Cell production
A system in which the production line consists of small teams (cells), with each cell being responsible for a significant part of the end product.
Quality control
The process of inspecting products to ensure that they meet the required quality standards.
Quality assurance
A process which aims to reduce the risk of mistakes by ensuring that workers adhere to a set of procedures and standards.
Total quality management (TQM)
An approach in which all workers are meant to take responsibility for improving the quality of their work
Quality circles
Groups of employees who meet up regularly to identify potential improvements in quality.
Lead time
The total time it takes to manufacture and / or deliver a product.
Internal economies of scale
Relate to the growth of an individual business
External economies of scale
A result of a whole industry growing in size and thus being able to reduce unit costs
Bench marking
a process which the business looks at other comparable organisations, normally with better performance in a particular area to see what lessons can be learned to improve their own performance
Market orientation
Where a business aims to provide a product or service to meet customers wants or needs
Asset lead marketing
An approach where by a business’s assets are used to meet customer needs
