Section 1 Flashcards
Market failure
When markets fail to achieve the most efficient allocation of resource, resulting in under or over production of certain goods or services
External costs
The costs of an economic activity that are not paid for by the producer or consumer but by the rest of society
Macroeconomic objectives
The goals a government is aiming to achieve for the whole economy
Economic growth
The increase in a county’s productive potential, measured by an increase in real GDP
Gross domestic product (GDP)
The total value of goods and services produced in a country in one year
Real GDP
Gross domestic product data adjusted for the effects of inflation
Inflation
An increase in the average price level of goods and services resulting in a fall in the value of money
Unemployment
When members of the working population are willing and able to work but are unable to find a job
Imports
Goods and services purchased from other countries
Exports
Goods and services sold to consumers and businesses in other countries
Exchange rate
The price of one currency in terms of another
Recession
A decline in real GDP of two or more quarters (at least 6 months)
Business investment
Expenditure by businesses on capital equipment, new technology and research and development
Labour productivity
Average output per employee in a given time period
Business cycle
The regular swings in output, measured by real GDP, that occur in most economies, varying from boom conditions to recession.
Deflation
A fall in the average price level of goods and services.
Hyperinflation
Very high and accelerating inflation, which quickly erodes the real value of the local currency.
Working population
All those in the population of working age who are willing and able to work
Cylical unemployment
Unemployment caused by low demand for goods and services during a period of slow economic growth or a recession
Structural unemployment
Unemployment caused by the decline in important Industries, leading to significant job losses in one sector of the industry
Frictional unemployment
Unemployment caused by workers losing or leaving jobs and taking a substantial period of time to find alternative employment
Monetary policy
Decisions about the level of interest rates and supply of money in the economy
Fiscal policy
Decisions about government expenditure, tax rates and government borrowing
Budget deficit
The value of government spending exceeds revenue from taxation
Budget surplus
The value of taxation revenue exceeds the value of government spending
Supply side policies
Government measures that aim to improve the competitiveness of markets and the economy
Exchange rate depreciation
A fall in the external value of a currency as measured by its exchange rate against other countries
Exchange rate appreciation
A rise in the external value of a currency has measured by its exchange rate against other countries
Common currency
A currency that is used by more than one country
Eurozone
Countries in the reopen Union that all use the Euro currency
Strategic management
Analysis of the current business situation, setting long-term objectives, deciding on business strategies to achieve them and then implementing this strategies
Strategic analysis
The process of conducting research into the business environment and into the business itself, in order to help identify future strategies
Strategic choice
The process that leads to a decision to choose a particular strategy from various alternatives in the techniques used to help make the choice
Strategic implementation
The process of planning, allocating and controlling resources to support the chosen strategy
Blue Ocean strategy
One that exploits uncontested market space through product differentiation and low cost
Red ocean strategy
One that competes with rivals and existing markets
Scenario planning
Identifying possible future situations and how the business might respond to them
SWOT analysis
A form of Strategic analysis that identifies and analyzes the main internal strengths and weaknesses, and external opportunities and threats, that will influence the future Direction and success of a business
PEST analysis
The strategic analysis of a firm’s macro environment, including political, economic, social and technological factors
Porter’s five forces model
A technique for analyzing competitive forces within an industry
Core competence
An important business capability that gives the Firm competitive advantage
Core product
Product based on a business’s core competencies, but not necessarily for the final consumer or end user
Ansoff Matrix
A model used to show the degree of risk associated with the four growth strategies of market penetration, market development, product development and diversification
Market penetration
Achieving higher market shares in existing markets with existing products
Product development
The development and sale of new products on new development of existing products in existing markets
Market development
The strategy of selling existing products in a new market
Diversification
The process of selling different, and unrelated goods or services in new Markets
Force field analysis
A technique for identifying and analyzing the positive faactors that support a decision (driving forces) and the negative factors that constrain it (restraining forces)
Decision tree
A diagram that sets out the options connected with a decision in the outcomes in economic Returns that may result
Expected value
The Likely financial result of an outcome obtained by multiplying the probability of an event occurring by the forecast economic return if it does occur
Corporate plan
A plan containing details of a business’s central objectives and the strategies to achieve them
Corporate planning
The process used by companies to set long-term plans to meet certain objectives, such as business growth and higher return On Capital employed
Corporate culture
The values, attitudes and beliefs of the people working in an organization that affect the way the interact with each other, and with external stakeholders
Power culture
A culture that concentrates power amongst just a few people
Role culture
A culture in which members of staff has a clearly defined job title and role
Task culture
A culture based on cooperation and teamwork
Person culture
A culture in which individuals are given the freedom to express themselves fully and make decisions for themselves
Entrepreneurial culture
A culture that encourages management and workers to take risk, to come up with new ideas and test out new Business Ventures
Transformational leadership
The leader works with the teams to identify the Need For Change, creates a vision to inspire people to accept change and implements change with the cooperation of the team
Change management
Planning, implementing, controlling and reviewing the movement of an organization from its current state to a new one
Business process re–engineering
Fundamental event thinking and redesigning the process of a business to achieve a dramatic improvement in performance
Project champion
A person appointed to support a project and drive It Forward by explaining the benefits of change and assisting in supporting the team putting change into practice
Project groups
Groups created by an organization to address a problem that requires input from different specialists
Contingency plan
A plan for preparing an organizations resources for unlikely events
Crisis management
The process of dealing with the sudden emergency event
Continuity plan
Preparing resources so that the business can continue operations after a major crisis
