Theme 3 - All Keyword definitions Flashcards
Corporate objectives?
The objectives of a medium to large-sized business as a whole.
Departmental and functional objectives?
The objectives of a department within a business.
Mission statement?
A brief statement, written by the business, describing its purpose, objectives and present operations.
Objective?
A target or outcome for a business that allows it to achieve its aims.
SMART?
The acronym for a good’s attributes.
Specific Measurable Agreed Realistic Time
Corporate strategy?
The plans and policies developed to meet a company’s objectives. It’s concerned with what range of activities the business needs to undertake in order to achieve its goals,
Distinctive capability?
A form of competitive advantage that is sustainable because it can’t be easily replicated by a competitor.
Diversification?
Developing new products in new markets.
Market development?
The marketing of existing products in new markets.
Penetration?
Using tactics such as the marketing mix to increase the growth of existing products in an existing market.
Portfolio analysis?
A method of categorising all the products and services of a firm to decide where each fits within the strategic plans.
Product development?
Marketing new or modified products in existing markets.
External audit?
An audit of the external environment in which a business finds itself, such as the market and government it operates under.
Internal audit?
An analysis of the business itself and how it operates.
SWOT analysis?
An analysis of the strengths, weaknesses, opportunities and threats presented by its external environment.
Trade association?
An organisation whose members are all involved in the same industry and pursue the interests of these businesses.
Monopoly?
A market dominated by a single business.
Oligopoly?
A market dominated by a few large businesses.
PESTLE analysis?
Analysis of the political, economic, social, technological, legal and environmental factors affecting a business.
Diseconomies of scale?
Rising long-run average costs as a business expands beyond its minimum efficient scale.
Economies of scale?
The reduction in average costs enjoyed by a business as output increases.
External economies of scale?
The cost reductions available to all businesses as the industry goes.
Internal economies of scale?
The cost reduction ps enjoyed by a business as it grows.
Minimum efficient scale?
The output that minimises long-run average costs.
Backward vertical integration?
Joining with a business in the previous stage of production.
Forward vertical integration?
Joining with a business in the next stage of production.
Horizontal integration?
The joining of businesses that are in exactly the same line of business.
Integration?
The joining together of two businesses as a result of a merger or takeover.
Merger?
Occurs when two (or more) businesses join together and operate as one.
Synergy?
The combining of two or more activities or businesses creating a better outcome than the sum of the individual parts.
Takeover?
The process of one business buying another.
Vertical integration?
The joint of two businesses at different stages of production.
Centring?
A method used in the calculation of a moving average where the average is plotted or calculated in relation to the central figures.
Correlation?
The relationship between two sets of variables.
Correlation coefficient?
A measure of the extent of the relationship between two sets of variables.
Moving average?
A succession of averages derived from successive segments of a series of values.
Scatter graph?
A graph showing the performance of one variable against another independent variable on a variety of occasions. It’s used to show whether a correlation exists between the variables.
Time series analysis?
A method that allows a business to predict future levels from past figures.
Average rate of return (ARR)?
A method of investment appraisal that measures the net return per annum as a percentage of the initial spending.
Capital cost?
The amount of money spent when setting up a new venture.
Discounted cash flow?
A method of investment appraisal that takes interest rates into account by calculating the present value of future income.
Investment?
The purchase of capital goods.
Investment appraisal?
The evaluation of an investment project to determine whether or not it’s likely to be worthwhile.
Net cash flow?
Cash inflow - cash outflow
Net present value?
The present value of future income from an investment project, minus the cost.
Payback period?
The amount of time it takes to recover the cost of an investment project.
Present value?
The value today of a sum of money available in the future.
Decision tree?
A technique which shows all possible outcomes of a decision. The name comes from the similarity of the diagrams to the branches of trees.
Overtrading?
Where a business grows too fast and accepts more orders than it can cope with, and this ultimately results in cash flow problems.
Inorganic growth?
A business growth strategy that involves two (or more) businesses joining together to form one much larger one.
Organic growth?
A business growth strategy that involves a business growing gradually by its own resources.
