Definitions Of Key Words Flashcards
1
Q
What is an enterprise?
A
A factor of production required to turn ideas into successful organizations
2
Q
Define infrastructure.
A
Refers to roads, bridges, highways, railways, and communication systems supporting the effective operation of society and the economy
3
Q
What is market failure?
A
Occurs when prices in the market are no longer determined by the forces of demand and supply and resources are misallocated
4
Q
What does macroeconomic study?
A
How the economy as a whole functions along with factors that affect the economy
5
Q
What is economic growth?
A
An increase in the value of total goods and services produced in an economy over time
6
Q
List the four stages of the trade cycle.
A
- Recovery
- Boom
- Recession
- Slump
7
Q
What is inflation?
A
A sustained increase in the general prices in an economy as the value of money declines
8
Q
What is demand-pull inflation?
A
Occurs when the demand for goods and services exceeds an economy’s ability to supply these goods and services
9
Q
What is cost-push inflation?
A
Occurs when firms have to pay increasing prices for labor and raw materials for production
10
Q
What defines a recession?
A
Associated with falling demand, output, and unemployment over a period of at least 6 months
11
Q
What is a slump?
A
Occurs after recession, when production and employment are at their lowest and many businesses are failing
12
Q
What does unemployment refer to?
A
The portion of people wanting and seeking a job, but not currently working
13
Q
Define structural unemployment.
A
Occurs due to fundamental changes in the economy, particularly as industries are dying and particular labor skills are no longer needed
14
Q
What is cyclical unemployment?
A
Caused by fluctuations in the trade cycle, e.g., unemployment is high during recession
15
Q
What is frictional unemployment?
A
Refers to when people are temporarily out of work as they have left their previous jobs and are yet to find a new one
16
Q
What is monetary policy?
A
Regulates the amount of money supply and interest rate of an economy
17
Q
Define fiscal policy.
A
Uses taxing and expenditure to achieve a desired level of economic activity
18
Q
What is a direct tax?
A
A form of taxation imposed on income and wealth, e.g., income tax
19
Q
What is an indirect tax?
A
A form of taxation imposed on spending
20
Q
What are supply-side policies?
A
A range of measures which promote the effective operation of the free market and increase total output supplied or produced by an economy
21
Q
What is an exchange rate?
A
The price of a country’s currency in terms of the price of another currency
22
Q
Define CSR.
A
A concept identifying a business’s responsibilities to all its stakeholders including employees, customers, the local community, and government
23
Q
What is a pressure group?
A
An organization of individuals with similar interests that brings attention to irresponsible business practices
24
Q
What is a social audit?
A
An assessment determining the impact of the business’s activities on society
25
What is window dressing?
When an organization manipulates or displays its financial records in the most favorable manner
26
Define urbanization.
The movement of people from countryside to cities
27
What is big data?
A vast and complex set of data that can be analyzed using modern-day software and technology
28
What is a barrier to entry?
Something that makes it harder for other businesses to penetrate a market, e.g., existing brands enjoying extensive customer loyalty
29
What is disruptive innovation?
When a business establishes a new market or market segment by disrupting an existing one and may replace market leaders
30
Define MNC.
A corporation with headquarters in one country but operates in a range of different countries
31
What is an environmental audit?
An assessment carried out by an independent body to judge the level of damage caused to the environment by a business’s activities
32
What is sustainability?
A sustainable business approach aiming to meet current needs without compromising the ability of future generations to meet their needs
33
What is a strategy?
A long-term plan of action devised with corporate and business objectives in mind
34
Define tactics.
Specific actions or steps undertaken to accomplish a strategy
35
What is strategic management?
The process of developing and implementing a strategy
36
What is competitive advantage?
An advantage gained by a business compared to its competitors due to factors like innovative methods or low prices
37
What is strategic analysis?
Analyzing the current position of a business and the environment it operates in to inform strategic decisions
38
What does macro-environment refer to?
External factors influencing a business’s performance but are outside their control
39
What is blue ocean planning?
When a business combines differentiation and low costs to create a new market space and new demand
40
What is scenario planning?
A technique to help managers plan ahead
41
What is SWOT analysis?
A model assessing a business’s strengths, weaknesses, opportunities, and threats
42
What does PEST analysis analyze?
The external macro-environment of a business
43
What is a vision statement?
A statement of what a business aims to achieve in the future
44
What is Boston Matrix analysis?
Assessing a business’s products in relation to their market position
45
What is Porter’s Five Forces analysis?
A model for understanding the level of competition in the industry a business operates in
- Industry rivalry
- threat of new entrants
- supplier baragining power
- bargaining power of buyer
- threat of substitutes
46
What are core competencies?
Unique capabilities that set a business apart from its competitors
47
What is Ansoff’s Matrix analysis?
A model for assessing the degree of risk associated with prominent growth strategies
48
What is force field analysis?
Quantifying the desirability or restrictiveness of factors that influence a strategic choice
49
What are decision trees?
Assessing options in relation to their outcomes and economic returns
50
Define strategic implementation.
The process of implementing the chosen strategy by adequate resource planning and allocation
51
What is corporate culture?
The collective beliefs and attitudes of an organization’s people
52
What is change management?
Managing an organization’s transition from one stage to another during strategy implementation
53
What is a contingency plan?
A plan for coping with unplanned events
54
What defines organizational structure?
The way a business is designed to carry out its activities
55
What is authority?
The power to control the decisions or actions of others in relation to particular tasks or circumstances
56
Define responsibility.
To be held accountable for the fulfillment of a certain task
57
What is a hierarchal structure?
A structure where all employees are subordinate to someone above them in a hierarchy, except for executives
58
What is a functional structure?
A structure based on various functions of the business, e.g., marketing, finance, or HR
59
Define matrix structure.
A structure that puts together teams from different departments with different specialties to complete projects
60
What is intrapreneurship?
The idea that employees are given room and authority to make their own decisions and implement their own ideas
61
What is the chain of command?
The line of information and authority within the organization
62
What is span of control?
The number of subordinates under the responsibility of one manager
63
What is delayering?
The process of reducing the layers of hierarchy within the business
64
Define centralized structure.
A structure where managers control all major decisions
65
What is decentralization?
A structure where greater decision-making power is delegated to employees
66
What are line managers?
Managers with authority over a certain group of employees or resources of a department
67
What are staff managers?
Managers responsible for providing support functions within the business, particularly to line managers
68
Define communication.
The exchange of ideas and thoughts between people
69
What is effective communication?
When information is given and met with feedback to ensure understanding
70
What is feedback?
A response given in return to information confirming it has been received and understood
71
What is one-way communication?
When information is passed from top to bottom with no feedback
72
What is two-way communication?
Information flows both upward and downward in an organization
73
Define vertical communication.
The exchange of information between people at different levels of hierarchy
74
What is horizontal communication?
Exchange of information between people at the same level of hierarchy
75
What is formal communication?
The exchange of information using official channels such as meetings
76
What is informal communication?
The exchange of information through unofficial channels
77
What is leadership?
The art of motivating and inspiring a group of people to achieve a common objective
78
Who are directors?
Elected by shareholders to oversee long-term business goals
79
What are managers responsible for?
Planning, organizing, motivating, and controlling the business’s resources
80
What is the role of supervisors?
They are the link between managers and shop-floor workers
81
What are worker representatives?
Elected by the workforce to act as a link between workers and management
82
Define emotional intelligence.
The ability to recognize and manage one's own feelings and those of others
83
What is human resource strategy?
A strategy to achieve a business’s HR objectives to fulfill corporate objectives
84
What is hard HRM?
An approach prioritizing business needs and optimal employee use by cutting costs
85
What is soft HRM?
An approach treating employees as assets, focusing on training and well-being
86
What is a flexible workforce?
A workforce with less emphasis on full-time contracts and more on part-time or temporary ones
87
What is a temporary worker?
A worker with a contract existing only for a specific period
88
Define part-time staff.
Employees working about half the hours of full-time employees
89
What is job sharing?
A flexible contract employing two part-time workers to complete the work of one full-time employee
90
What are annualized hours?
Contracts with a fixed number of hours to be worked over a certain period
91
What is a zero-hour contract?
A contract with no fixed number of hours agreed upon by employer or employee
92
What is flexi-time?
A flexible working contract allowing employees to work hours based on preferences
93
What is shift working?
A practice allowing businesses to operate round-the-clock by employing shifts
94
What are compressed working hours?
A practice where an employee reduces working days but works longer hours each day
95
What is labor turnover?
The number of employees leaving an organization over a specific period
96
What is labor productivity?
The rate of output of an employee over a specific period
97
What is absenteeism?
The rate of employee absence in relation to total employees employed
98
What is management by objectives (MBO)?
Motivating and coordinating a workforce by dividing organizational objectives
99
What is market analysis?
Examines a market’s condition in terms of demand sensitivity with respect to changes
100
What is price elasticity of demand (PED)?
The responsiveness of a product’s demand in relation to a change in its price
101
Define income elasticity of demand (IED).
Measures the sensitivity of a product’s demand in relation to a change in consumer income levels
102
What is promotional elasticity of demand (PED)?
Measures the change in demand in relation to a change in promotional expenditure
103
What is research and development?
The process of acquiring and applying scientific knowledge to create new products or services
104
What is sales forecasting?
The process of estimating the volume or value of a firm’s future sales
105
What is correlation?
A potential link between two variables under consideration
106
What is extrapolation?
Identifying the underlying trend in past data and projecting this trend forward
107
What is total revenue?
The total amount of income generated from sales
108
What is a marketing plan?
A plan set out to convey business intentions regarding marketing activities based on research
109
What is the marketing mix?
A combination of 4Ps (product, price, place, promotion) for marketing a product
110
Define marketing strategy.
A long-term plan of action for the marketing department to achieve objectives
111
What is protectionism?
When a government protects domestic producers against foreign competitors
112
What are tariffs?
Taxes placed on foreign goods and services being imported into a country
113
What are quotas?
Limits on the number of foreign goods and services that can be imported
114
What is globalization?
Increased flow of people, capital, and goods across borders
115
What is economic collaboration?
When countries make trade easier between each other
116
What is a pan global strategy?
The same marketing strategy adopted for all markets of the business
117
What is a localized strategy?
Adapts the marketing mix to cater to local tastes and consumer cultures
118
What is capital?
Money invested into a business used to purchase assets
119
What is offshoring?
When a business moves one or more operations to another country
120
What is reshoring?
When a business moves back to its initial country of operations
121
What is scale of operations?
The maximum capacity of production of a business with available resources
122
What are economies of scale?
Reductions in unit costs due to increased scale of operations
123
What are diseconomies of scale?
Increases in unit costs of production as the scale of operations increases
124
What is quality control?
The process of assessing products for faults at the end of production
125
What defines a quality product?
One that meets customers’ needs and expectations
126
What is quality assurance?
The prevention of faults in products during production
127
What is total quality management (TQM)?
An approach integrating all employees to meet the expectations of both internal and external customers
128
What is benchmarking?
Measuring performance against leaders in the field to improve quality
129
What is operations management?
Responsible for the production of goods and services and controlling the transformation of raw materials into final goods
130
What is computer-aided design?
The usage of software to create and modify product designs
131
What is computer-aided manufacturing?
The usage of software to control the manufacturing process
132
What is product innovation?
Involves development of new products
133
What is process innovation?
Involves the development of new and more efficient production systems
134
What is enterprise resource planning?
The usage of software to collect information for managers to carry out day-to-day business activities
135
What is a statement of profit or loss?
A financial statement showing total sales revenue, costs, and profits over a specific period
136
What is a statement of financial position?
A financial statement recording the assets and liabilities of a business on a specific day
137
What is profit?
A surplus of revenue over costs often invested back into the business
138
What is a loss?
When a business’s expenditure exceeds its total sales revenue
139
What is gross profit?
The difference between total sales revenue and costs of production
140
What is operating profit?
Profit after deducting indirect costs like salaries from gross profit
141
What are assets?
Items owned by a business in the form of cash, property, machinery, etc.
142
What are liabilities?
Debts owed by a business, e.g., taxes and loans
143
What is equity?
A shareholder’s share in a limited company if the business shuts down
144
What is capital expenditure?
Money spent on assets lasting more than a year, e.g., property
145
What is closing inventory?
The amount of inventory a business has left at the end of an accounting year
146
What is net realizable value?
147
What are liabilities?
Debts owed by a business to other businesses or individuals
## Footnote
They could be in the form of taxes and loans acquired by a business.
148
Define equity in the context of a limited company.
A shareholder’s share that they are owed if the business decides to shut down operations, sell its assets, and pay all its liabilities.
149
What is capital expenditure?
Money spent by businesses on assets that last for more than a year, such as property and machinery.
150
What does closing inventory refer to?
The amount of inventory a business has left at the end of an accounting year.
151
Explain the net realizable value (NRV) method.
A technique of valuing inventories by calculating the amount raised by selling them and deducting any costs involved in the sale.
152
What is depreciation?
A decrease in the value of a business’s assets over time.
153
What is ratio analysis?
The technique of assessing a business’s financial performance by comparing one piece of accounting information with another.
154
Define liquidity.
The ability of a business to raise cash as and when needed without the assets losing any value.
155
What are liquid assets?
Assets owned by a business that can easily be converted to cash.
156
What does the current ratio measure?
The ability of a business to meet its liabilities over a period of a year or so.
157
Define the acid test ratio.
A ratio that measures the ability of a business to meet its short-term debts by comparing its current liabilities with its liquid assets.
158
What is capital employed?
The long-term funding employed by a business comprising its non-current liabilities, share capital, and reserves.
159
What does the return on capital employed (ROCE) ratio indicate?
The percentage return of operating profits earned on the total value of the capital employed.
160
What is the gross profit margin?
The percentage of the revenue that accounts for the gross profit earned by a business over a specific accounting period.
161
What does the operating profit margin represent?
The percentage of the revenue that accounts for the operating profit earned by a business over a specific accounting period.
162
What is the inventory turnover ratio?
A ratio that represents the selling out of a business’s inventory in comparison to its costs of sales.
163
What is trade receivables turnover?
The time taken by a business to collect the money that its customers owe them.
164
Define credit sales.
Purchases made by customers for which payment is delayed by an agreed-upon time period.
165
What are cash sales?
Purchases made by customers where payment is made at the time of the sale.
166
What does trade payables turnover indicate?
The amount of time taken by a business to pay back the money it owes to its suppliers.
167
What is gearing?
The long-term liquidity of a business.
168
Define dividend per share.
The division of the total annual dividends offered by a company with the total number of issued shares.
169
What is the dividend yield ratio?
The percentage of dividend received on one share compared to its market price.
170
What does the dividend cover ratio measure?
The extent to which a business can easily pay back its dividends from the profits for the year.
171
What is the price-earnings ratio?
The amount that shareholders are willing to pay for each dollar earned on a single share.
172
What is investment appraisal?
A series of techniques designed to assist businesses in judging the desirability of investing in particular schemes.
173
Define risk in the context of finance.
The chance of a misfortune occurring, possibly resulting in financial loss.
174
What is payback?
The amount of time required for the earnings from a project to recover the costs of initial investment.
175
What does the accounting rate of return (ARR) represent?
Percentage rate of return on each possible investment.
176
What is discounting in finance?
Adjusting the value of future earnings to reflect their present value.
177
Define present value.
The current worth of a cash flow or amount of money.
178
What is the role of a chief financial officer?
The senior manager responsible for the financial affairs of an organization.
179
What are key performance indicators (KPIs)?
Measures of how well a business is meeting its targets, such as revenue or profit per customer.
180
Define overtrading.
When a business expands quickly without organizing the long-term finance necessary to fund the expansion.
181
What is a dividend strategy?
A company’s long-term approach to allocating a proportion of its profits to shareholders as dividend payments.
182
What does capital structure refer to?
The way in which a business has raised the capital it requires to purchase its assets.
