General Definitions Flashcards
Define a business
The organised effort of individuals to produce and sell, for a profit, the products that satisfy individuals’ needs and wants
Define product
A good or service that can be bought or sold
Define good
An item that can be seen or touched (tangible)
Define service
A thing done for you by others
Define finished product
A product that is ready for customers to buy and use
Define production
Activities undertaken by the business that combine the resources to create products that satisfy customers’ needs and wants
Define shareholders
People who are part owners of a company because they own a number of shares
Define dividend
A part of a business’s profit that is divided among shareholders
Define research and development (R&D)
A set of activities undertaken to improve existing products, create new products, and improve production
Define market share
The business’s share of the total industry sales for a
particular product
Define transnational (multinational) corporation (TNC/MNC)
A business that has branches in various different countries whereby finance, assets, technology, information, employees and goods and services flow freely from one country to another
Define a small to medium enterprise, according to the ABS
Firms with fewer than 200 full-time equivalent employees and/or less than $10 million turnover according to the Australian Bureau of Statistics
Define a micro business, according to the ABS
A business that employs fewer than 5 people (including the owner)
Define geographical spread
The presence of a business and the range of its products across a suburb, city, state or country or the globe
Define local business
A business with a very restricted geographical spread; it serves the surrounding area; frequently used by consumers who live nearby
Define national business
A business that operates within just one country
Define primary industry
Businesses in this industry are involved in the collection of natural resources
Define secondary industry
Businesses in this industry are involved in taking a raw material and making it into a finished or semi-finished product
Define tertiary industry
Businesses in this industry are involved in performing a service for other people
Define quaternary industry
Businesses in this industry are involved in providing services that involve the transfer and processing of information and knowledge
Define quinary industry
Businesses in this industry are involved in providing all services that have traditionally been performed in the home
Define incorporated
The process businesses go through to become a registered company and a separate legal entity from the owner(s)
Define unincorporated
The business has no separate legal existence from its owner/s; sole trader or partnership. When the owner dies, so too does the business entity
Define privatisation
The process of transferring the ownership of a government business to the private sector
Define sole trader
A business that is owned and operated by a singular person
Define unlimited liability
When the business owner is personally responsible for all the debts of his or her business
Define partnership
A legal business structure that is owned and operated by 2 – 20 people with the aim of making a profit
Define limited liability
A feature of corporate ownership that limits each owner’s financial liability to the amount of money he or she has paid for the business’s shares; i.e. shareholders do not have to cover the debts of the business when it ceases
Define proprietary (private) company
An incorporated business and usually has 2 – 50 private shareholders
Define public company
An incorporated business that is listed on the stock exchange; for Australia, it is the Australian Securities Exchange (ASX)
Define company
A business that is incorporated; private or public
Define prospectus
A document giving details and the financial security of a company in order to invite the public to buy shares in it
Define float
The raising of capital in a company through the sale of shares to the public; shares publicly owned, unrestricted and available on the open market – available to the general public
Define venture capital
Money that is invested in small and sometimes struggling businesses that have the potential to become very successful
Define venture capitalist
Investors who invest in small and/or struggling business and take an equity position in the business (become part-owners) and provide supplementary finance
Define franchise
The act of an individual or business buying the rights from another business to distribute its product under its name
Define franchisor
An individual or business that grants a franchise
Define franchisee
An individual or business that purchases a franchise
Define business environment
The surrounding (external and internal) conditions in which the business operates
Define complementary business
A business is one that sells a similar range of goods and services
Define distribution channel
A chain of businesses or intermediaries through which the final buyer, usually a consumer, purchases a good or service
Define support services
The activities needed to assist the core operations or prime function of a business, e.g. accountants, solicitors and government agencies such as Austrade and the Business Enterprise Centre
Define human resources
The employees of the business and are generally its
most important asset
Define information resources
The knowledge and data required by the business, such as market research, sales reports, economic forecasts, technical material and legal advice
Define physical resources
The equipment, machinery, buildings and raw materials of the business
Define financial resources
The funds that business uses to meet its obligations to various creditors
Define business (corporate) culture
The values, ideas, expectations and beliefs shared by members of the organisation
Define voluntary cessation
When the owner ceases to operate the business of their own accord
Define involuntary cessation
When the owner is forced to cease trading by the creditors of the business
Define creditors
People or other businesses who the business owes money to
Define bankruptcy
A declaration that a business or person is unable to pay his or her debts. Only applicable for unincorporated businesses
Define realisation
The process of converting the assets of a business into cash
Define voluntary administration
The appointment of an independent administrator to operate the business in the hope of trading out of the present financial problems.
Define liquidation
When an independent and suitably qualified person – the liquidator – is appointed to take control of the business with the intention of selling all the company’s assets in an orderly and fair way in order to pay the creditors. Only applicable to incorporated businesses
Define receivership
When a business has a receiver take charge of the affairs of the business. Unlike liquidation, the business the business may not necessarily be wound up
Define receiver
Someone appointed by creditors or the Courts to take charge of the affairs of the business
Define management (traditional)
The process of coordinating a business’s resources to achieve its goals
Define manager
Someone who coordinates the business’s limited resources in order to achieve specific goals
Define management (contemporary)
The process of working with and through other people to achieve business goals in a changing environment. Crucial to this process is the effective and efficient use of limited resources
Define stakeholder engagement
The action of businesses sharing information with and seeking input from stakeholders, and involving them in decision-making
Define profit maximisation
The greatest possible difference between the total revenue (that is, the number of sales made multiplied by the price) coming into the business and total costs being paid out
Define share
A part ownership of a public company
Define intrapreneur
An individual who takes on the entrepreneurial roles within a business
Define mass production
The process of manufacturing standardised goods on a huge scale by automation
Define classical-scientific management approach
An approach that studies a job in great detail to discover the best way to perform it
Define classical-bureaucratic management approach
An approach that emphasises how businesses should be organised or structured
Define strategic planning
Planning for the following 3 – 5 years. This level of planning will assist in determining where in the market the business wants to be, and what the business wants to achieve in relation to its competitors
Define tactical planning
Flexible, adaptable planning, usually over 1 – 2 years, that assists in implementing the strategic plan
Define operational planning
Planning that provides specific details about the way in which the business will operate in the short term/on a daily basis
Define management hierarchy
The arrangement that provides increasing authority at higher levels of the hierarchy
Define specialisation of labour
The degree to which tasks are divided into separate jobs
Define chain of command
A system that determines responsibility, supervision and accountability of members of the organisation
Define autocratic leadership style
A style where a manager tends to make all the decisions, dictates work methods, limits worker knowledge about what needs to be done to the next step to be performed, frequently checks employee performance and sometimes gives feedback that is punitive
Define participative or democratic leadership style
A style in which the manager consults with employees to ask their suggestions and then seriously considers those suggestions when making decisions
Define outsourcing
The use of external sources or businesses to undertake business functions or activities for the business
Define interdependence
The mutual dependence that objects and people have on one another
Define manufacturer
Someone that transforms inputs into goods
Define service organisation
Someone transforms inputs into services
Define inputs
The resources used in the transformation (production) process
Define tansformed resources
Inputs that are changed or converted in the operations process
Define transforming resources
Inputs that carry out the transformation process
Define transformation
The conversion of inputs (resources) into outputs (goods or services)
Define outputs
The end product of a business’s efforts that is delivered or provided to the consumer
Define quality management
The strategy which a business uses to make sure that its products meet customer expectations
Define quality control
A reactive process that uses inspections at various points in the production process to check for problems and defects in the product
Define quality assurance
The use of a proactive system so that a business achieves set standards in production
Define total quality management
An ongoing, business-wide commitment to excellence that is applied to every aspect of the business’s operation
Define quality circles
Groups of workers who meet to solve problems relating to quality
Define target market
A group of customers with similar characteristics who presently, or who may in the future, purchase the product
Define mass markets
Markets where the seller can mass-produces, mass-distributes and mass-promotes one product to all buyers
Define market segmentation
The subdivision of the total market into groups of people who share one or more common characteristics
Define niche market
A narrowly selected target market segment
Define primary target market
The market segment at which most of the marketing resources are directed
Define secondary target market
Usually a smaller and less important market segment
Define marketing mix
The combination of the 4 elements of marketing that make up the marketing strategy
Define cost-based price strategy
A pricing method derived from calculating the total cost of producing or purchasing a product and then adding a mark-up for profit
Define market-based price strategy
A pricing method of setting prices according to the interaction between the levels of supply and demand — whatever the market is prepared to pay
Define competition-based pricing strategy
A pricing method that is chosen in relation to competitors
Define personal selling
Activities of a sales representative directed to a customer in an attempt to make a sale
Define relationship marketing
Development of long-term, cost-effective and strong relationships with individual customers
Define sales promotion
Free samples, coupons and point-of-purchase displays
Defnie public relations
Activities aimed at creating and maintaining favourable relations between a business and its customers
Define advertising
Print or electronic mass media used to communicate a message about the product
Define publicity
Free news stories about a business’s products
Define contingencies
Unanticipated events that can lead to financial difficulty
Define accounting
A managerial and administrative tool for recording financial transactions, so that a summary of business money can be traced
Define accountability
An acceptance of responsibility for honest and ethical conduct towards others in a business setting
Define finance
The manner that a business funds its activities as well as the costs, risks and benefits of different types of borrowings
Define cash flow statement
A financial statement that indicates the movement of cash receipts and cash payments resulting from transactions over a period of time
Define liquidity
The amount of cash a business has access to and how readily it can convert its assets into cash so that debt can be paid
Define income statement
A summary of the income earned and the expenses incurred over a period of trading and as a result, the net profit
Define the cost of goods sold (COGS)
The value of stock that a business has sold to its customers
Define opening stock
The value of stock (or inventory) that the business has at the start of the financial year (July 1)
Define closing stock
The value of stock on hand at the end of the financial year (June 30)
Define balance sheet
A financial document that represents a business’s assets and liabilities at a particular point in time, expressed in money terms, and represents the net worth of the business
Define assets
Items of value owned by the business that can be given a monetary value
Define liabilties
Items of debt owed to other organisations
Define owner’s equity
The funds contributed by the owner(s) to establish and build the business
Define human resource/employment cycle
All stages in the process of employing staff, from initial planning through to recruitment, selection, induction, training and development, performance management, and eventual separation of employment
Define job analysis
A systematic study of each employee’s duties, tasks and work environment
Define job description
A written statement describing the employee’s duties, tasks and responsibilities associated with the job
Define job specification
A list of the key qualifications needed to perform a particular job in terms of education, skills and experience
Define learning organisation
A business that monitors and interprets its environment, seeking to improve its understanding of the relationship between its actions and its environment
Define action learning
Learning by experience solving real workplace problems
Define competency-based training
Training that identifies skill strengths and areas where further training is required
Define employment contract
A legally binding, formal agreement between an employer and an employee
Define award
A legally binding agreement that sets out the minimum wages and conditions for a group of employees
Define enterprise agreements
Collective agreements made at a workplace level between an employer and a representative of the employees (a union or the employees themselves) about terms and conditions of employment
Define separation
The ending of the employment relationship
Define redundancy
When a person’s job no longer exists, usually due to technological changes, an organisational restructure or a merger or acquisition
Define retrenchment
The dismissal of an employee because there is not enough work to justify paying him or her
Define summary dismissal
Immediate dismissal due to one’s behaviour; does not require a notice
Define dismissal on notice
Dismissal when an employee is not performing their job satisfactorily
Define triple bottom line
The economic, environmental and social performance of a business
Define audit
An independent check of the accuracy of financial records and accounting procedures
Define Corporate Code of Conduct
A set of ethical standards for managers and employees to abide by
Define transformational change
A complete restructure throughout the whole organisation
Define incremental change
Minor changes, usually involving only a few employees
Define structural change
Changes in the business’s structure — the organisation chart
Define flexible manufacturing
The production by computer controlled machines that can adapt to various versions of the same operation
Define management consultant
Someone who has specialised knowledge and skills within an area of business
Define actively trading businesses
Businesses that have an Australian Business Number (ABN) and are actively paying the Goods & Services Tax (GST)
Define balance of payments
The difference between all money flowing into the country in a particular period of time and the outflow of money to the rest of the world
Define competition
Rivalry among businesses that seek to satisfy a market
Define cost strategy
Attract market share by producing a good or service at the lowest possible cost and thus sell at the lowest price
Define market analysis
The action of collecting, summarising and analysing information about the state of the market, customers, the threats and opportunities that the market presents, and any advantages or disadvantages that the business is likely to have over its competitors
Define zoning
A mean by which local councils allocate land for different uses, such as residential, commercial, recreational, and industrial
Define equity
The value of the shares issued by a business. Exchanges ownership for funds
Define debt finance
The short-term and long-term borrowing from external sources by a business
Define overdraft
An allowance from the bank to let a business overdraw their account up to an agreed limit for a specified time, to overcome a temporary cash shortfall.
Define mortgage
A loan secured on some type of asset
Define on-costs
Payments for non-wage benefits
Define wage
A weekly payment based on hours worked and an hourly rate of pay
Define salary
An annual rate of pay, divided into equal pay periods
Define WHS requirements
Work health and safety requirements
Define long service leave
A national workplace entitlement that most long serving employees, including casuals, are eligible for
Define sick leave
An entitlement of all full and part-time employees when they or a family member is sick
Define superannuation
(10.5%) A compulsory system of placing a minimum percentage of your income into a fund to support your financial needs in retirement
Define holiday pay
An entitlement of full-time, permanent employees when they take time off work. 4 paid weeks
Define leave loading
(17.5%) An extra payment that some workers are entitled to receive from their employer while on annual leave, on top of their base rate of pay
Define study leave
Leave that allows time, inside or outside of the workplace, for formal learning that meets the requirements of the curriculum and personalised training objectives. Upskilling workers
Define parental leave
An entitlement of employees who can take unpaid 12 months off due to the birth of a child. 90 days are paid. They can also request up to an additional 12 months of leave
Define worker’s compensation
A form of insurance payment to employees if they are injured at work or become sick due to their work
Define goods and services tax (GST)
A broad-based tax of 10% on the supply of most goods and services consumed in Australia
Define input tax credit
An allowable tax deduction that a business can claim for any GST included in the price of business inputs
Define business activity statement (BAS)
A record of a business’s claim for input tax credits and accounts for GST payable
Define the Australian Business Number (ABN)
A single identifying number that a business uses when dealing with government departments and agencies
Define skills audit
A process that establishes the current skills levels of employees and future skills requirements
Define skills inventory
A database containing information on the skills, abilities and qualifications of existing staff
Define trend analysis
A process of investigating changes over time and looking for a pattern (trend) in order to predict the future
Define forecasting
Predicting the future prospects of the business
Define competitive advantage/edge
Areas where a business has an ‘edge’ over its competitors
Define leasing
A long-term source of borrowing for businesses. It involves the payment of money for the use of equipment that is owned by another party
Define just-in-time (JIT) method
A form of inventory management that requires working closely with suppliers so that raw materials arrive as production is scheduled to begin, but no sooner; limited storage required
Define E-business (electronic business)
The use of the internet to conduct business
Define E-commerce
The buying and selling of goods and services via the internet
Define government enterprises (GBEs)
Businesses that are owned and operated by the government
Define stakeholder
Any group or individual who has an interest in or is affected by the activities of a business
Define under-capitalisation
A lack of sufficient funds to operate a business normally
Define insolvency
When a company is not able to pay its debts as and when they fall due
Define sustainable development
When the needs of the present population are met without endangering the ability of future generations to meet their own needs
Define bureaucracy
The set of rules and regulations that control a business
Define behavioural management approach
This approach stresses that people (employees) should be the main focus of the way in which the business is organised
Define contingency management approach
This management approach stresses the need for flexibility and adaptation of management practices and ideas to suit changing circumstances
Define cash from operating activities (cash flow statement)
Cash inflows and outflows relating to the provision of goods and services (the main activity of the business)
Define cash from investing activities (cash flow statement)
Cash flows related to the purchase and sale of non-current assets and investments
Define cash from financing activities (cash flow statement)
Cash flows related to the acquisition and repayment of both debt and equity finance
Define current assets/liabilties
Items that the business can expect to use within a year
Define non-current assets/liabilties
Items that the business expects to have a lifespan longer than a year
Define goodwill
The monetary value attached to the reputation of a particular business
Define revenue
The total value of the sales of products a business earns
Define turnover
The rate a business uses or makes assets
Define input tax credit
An allowable tax deduction that a business can claim for any GST included in the price of business inputs
Define Australian Business Number
A single identifying number that a business uses when dealing with government departments and agencies
Define oligopoly
A market structure that consists of a small number of firms, who together have substantial influence over a certain industry or market
Define monopoly
A market structure where a single business dominates the industry or market
Define perfect competition
A theoretical market structure where all elements of a monopoly are not exist
Define monopolistic competition
A market structure where many companies offer competing products or services that are similar, but not perfect, substitutes
Define selling expense (income statement)
Expenses related to the process of selling the good or service and is directly traced to the need for sales
Define administrative expenses (income statement)
Expenses directly related to the general running of the business
Define finance expenses (income statement)
Expenses associated with borrowing funds
Define change agent
A person or group of people who act as catalysts,
assuming responsibility for managing the change process.
Define driving forces
Those forces that support the change
Define restraining forces
Those forces that work against the change
Define inertia
An unenthusiastic response to proposed change.
Define return on investment
An approximate measure of an investment’s profitability
