Unit Definitions Flashcards
Consumer goods:
the physical and tangible goods sold to the public
Consumer services
the non-tangible products sold to the general public
Capital goods
the physical goods used by industry to aid in the production of other goods and services
Added value
the difference between the cost of purchasing the raw materials and the price the finished products are sold for
Entrepreneur
someone who takes the financial risk of starting and managing a new venture
Social enterprise:
a business that reinvests most of its profits into benefiting society rather than maximizing the returns to owners
Triple bottom line
the three objectives of social enterprises – economic, social and environmental
Private sectors
businesses owned and controlled by individuals or groups of individuals
Public sector
organisations accountable to and controlled by central or local government
Mixed economy
economic resources are owned and controlled by both private and public sector
Free-market economy
economic resources owned largely by the private sector with little or no government intervention
Command economy
economic resources owned, planned and controlled by the state
Sole trader
a business where one person provides the permanent finances and in return gets full control of the business
Partnership
a business formed by two or more people that share the capital and responsibility
Private limited company
a small to medium sized business that is owned by shareholders who are often friends or members of the sae family. They cannot sell shares to the general public
Shareholder
a person or institution owning shares in a limited company
Public Limit Company:
a large business that has the right to sell shares to the general public on the stock exchange
Memorandum of Association
this states the name and all its contact details
Articles of Association
this document covers the internal workings and control of the business
Franchise
a business that uses the name, logo and trading system of an existing successful business
Joint venture
two or more businesses agree to work closely together on a particular project and create a separate business division to do so
Holding company
a business organisation that owns and controls a number of separate businesses
Public corporation
a business enterprise owned and controlled by the state also known as nationalised industry
Privatisation
selling state-owned and controlled business organisations to investors in the private sector
Public-private partnerships (PPP)
these are government services or business ventures that are funded and managed through a partnership of government and one or more private-sector companies
Free trade
no restrictions or trade barriers exist that might prevent or limit trade between countries
Tariffs
taxes imposed on imported goods to make them more expensive than they would otherwise be
Quotas
limits on physical quantity or value of certain goods that may be imported
Voluntary export limits
an exporting country agrees to limit the quantity of certain goods sold to one country
Protectionism
using barriers to free trade to protect a countries own domestic industries
Globalisation:
the increasing freedom of movement of good, capital and people around the world
Multinational business
a business organisation that has its headquarters in one country but has operating branches, factories or assembly parts in other countries
Sales turnover:
total value of sales made by a business in a given period of time
Capital employed
the total value of all long-term finance invested in the business
Market capitalisation
the total value of a company’s issued shares
Market share
sales of the business as a proportion of total market sales
Internal growth
expansion of a business by means of opening new branches, shops or factories
External growth
: business expansion achieved by means of merging with or taking over another business, from either the same or different industry
Horizontal integration
integration with firms in the same industry and at the same stage of production
Vertical integration – forward
integration with a business in the same industry but a customer of an existing business
Vertical integration – backward
integration with a business in the same industry but a supplier of an existing business
Conglomerate integration
integration with a business in a different industry
Merger
an agreement by shareholders and managers of two businesses to bring both firms together under a common board of directors with shareholders of both businesses owning shares in the newly merged business
Takeover
when a company buys over 50% of the shares of another company and becomes the controlling owner of it
Synergy
the whole is greater than the sum of parts, therefore within integration, the new business will be better then what the two businesses were apart
Mission statement
a statement of the business’s core aims, phrased in a way to motivate employees and to stimulate interest by outside groups
Corporate social responsibility
the business considers the interest of society by taking responsibility for the impact of their decisions and activities on customers, employees, communities and the environment
Management by objectives
a method of coordinating and motivating all staff in an organisation by dividing its overall aim into specific targets for each department, manager and employee
Ethics
are the moral guidelines that determine decision making
Ethical code (code of conduct)
a document detailing a company’s rules and guidelines on staff behaviour that must be followed by all employees
Stakeholders:
people or groups of people who can be affected by, and therefore have an interest in any action by an organisation
Stakeholder Concept
the view that businesses and their managers have responsibilities to a wide range of groups, not just shareholders
Social Audit
a report on the impact a business has on society. It covers pollution levels, health and safety, sources of supplies, customer’s satisfaction and contribution to the community
Monopoly
where there is one supplier to a market
Information Technology
the use of electronic technology to gather, store, process and communicate information
Computer-aided design
using computers and IT when designing products
Computer-aided manufacturing
the use of computers and computer controlled machinery to speed up the production process and make it more flexible
Environmental audits
assess the impact of a business’s activities on the environment
Pressure group
organisations created by people with a common interest or aim who put pressure on business and governments to change policies so that an objective is reached
Gross domestic product (GDP)
the total value of goods and services produced in a country in one year
Economic growth
an increase in a country’s productive potential measured by an increase in its real GDP
Business Investment
expenditure by businesses on capital equipment, new technology and research and development
The business cycle
the regular swings in economic activity which is measured by real GDP. It includes Boom, Recession, Slump and Recovery
Inflation
an increase in the average price level of goods and services. Results in a fall of the value of money
Deflation
a fall in the average price level of goods and services
Unemployment
when members of the working population are willing and able to work, but are unable to find a job
Working population
all those of age who are willing and able to work
Cyclical unemployment:
unemployment resulting from low demand for goods and services in the economy during a period of slow economic growth or a recession
Structural unemployment
unemployment caused by the decline in important industries, leading to significant losses in one sector of industry
Frictional unemployment:
unemployment resulting from workers losing or leaving jobs and taking a substantial period of time to find alternative employment
Balance of payments
this account records the value of trade in goods and services between one country and the rest of the world. A deficit means that the value of goods and services imported exceeds the value of goods and services
Imports
goods and services purchased from other countries
Exports
goods and services sold to consumers and business in other countries
Exchange rate:
the price of one currency in the terms of another
Exchange rate depreciation
a fall in the external value of a currency as measured by its exchange rate against other currencies
Fiscal policy
is concerned with decisions about government expenditure, tax rates and government borrowing
Government budget deficit
the value of government spending exceeds revenue from taxation
Government budget surplus
taxation revenue exceeds the value of government spending
Monetary policy
is concerned with decisions about the rate of interest and supply of money in the economy
Market failure
when markets fail to achieve the most efficient allocation of resources and there is under or over production of certain goods and services
External costs
costs of an economic activity that are not paid for by the producer or consumer but by the rest of society
Income elasticity of demand
measures the responsiveness of demand for a product after a change in consumer income
Manager:
responsible for setting objectives, organising resources and motivating staff so that the organisations aims are met
Leadership
the art of motivating a group of people towards achieving a common objective
Autocratic leadership
a style of leadership that keeps all decision making at the centre of the organisation
Democratic leadership
a leadership style that promotes the active participation of workers in taking decisions
Laissez – faire leadership
a leadership style that leaves much of the decision making to the workforce
Paternalistic leadership
a leadership style based on the approach that the manager is in a better position than the workers to know what is best for an organisation
Informal leader
a person who has no formal authority but has respect of colleagues and some power over them
Emotional intelligence (EI)
the ability of managers to understand their own emotions and those of the people they work with to achieve better business performance
Motivation:
the internal and external factors that stimulate people to take actions that lead to achieving a goal
Self-actualisation
a sense of self—fulfilment reached by feeling enriched and developed by what one has learned and achieved
Job enrichment
aims to use the full capabilities of workers by giving them the opportunity to do more challenging and fulfilling work
Motivating factors (Motivators)
): aspects of a workers job that can lead to positive job satisfaction such as achievement, recognition, meaningful and interesting work and advancement at work
Hourly wage rate
payment to worker made for each hour worked
Piece rate
a payment to a worker for each unit produced
Salary
: annual income that is usually paid on a monthly basis
Commission
a payment to a sales person for each sale made
Performance-related pay
a bonus scheme to reward staff for above average work performance
Profit sharing
a bonus for staff based on the profits of the business
Job rotation
increasing flexibility of workforce and the variety of work they do by switching from one job to another
Job enlargement
: attempting to increase the scope of a job by broadening or deepening the task undertaken
Quality circles
they are voluntary groups of workers who meet regularly to discuss work-related problems and issues
Worker participation
workers are actively encouraged to become involved in decision making within the organisation
Team working
production is organised so that groups of workers undertake complete units of work
Human resource management (HRM)
the strategic approach to the effective management of an organisation’s workers so that they help the business gain a competitive advantage
Workforce planning
analysing and forecasting the numbers of workers and the skills of those workers that will be required by the organisation to achieve its objectives
Workforce audit:
a check on the skills and qualifications of all existing workers/managers
Recruitment:
the process of identifying the need for a new employee, defining the job to be filled and the type of person needed to fill it, attracting suitable candidates for the job and selecting the best one
Job description
a detailed list of the key point about the job to be filled, stating all its key tasks and responsibilities
Person specification
a detailed list of the qualities, skills and qualifications that a successful applicant will need to have
Staff appraisal
: the process of assessing the effectiveness of an employee judged against pre-set objectives
Employment contract
a legal document that sets out the terms and conditions governing a workers job
Dismissal
being dismissed from a job due to incompetence or breach of discipline
Unfair dismissal
: ending a workers employment contract for a reason that the law regards as being unfair
Redundancy
when a job is no longer required, therefore the employee’s skills are no longer required
Temporary employment contract
employment contract that lasts for fixed time period
Part-time employment contract
employment contract this is for less than the normal full working week
Flexi-time contract
employment contract that allows staff to be called in at times most convenient to employers and employees
Outsourcing
not employing staff directly but by using an outside agency
Teleworking
staff working from home but keeping contact with the office by means of modern IT communication
Hard HRM
an approach to managing staff that focuses on cutting costs
Soft HRM
: an approach to managing staff that focuses on developing staff so that they reach self-fulfilment and are motivated to work hard and stay with the business
Labour productivity
the output per worker in a given time period: total output in time period / total staff employed
Absenteeism
measures the rate of workforce absence as a proportion of the employed total: no. of staff absent / total no. of staff x 100
Labour turnover
: measures the rate at which employees are leaving an organisation: number of staff leaving in time period / average no. of staff employed x 100
Trade union
an organisation of working people with the objective of improving the pay and working conditions of their members and providing them with support and legal services
Conciliation
the use of a third party in industrial disputes to encourage both employer and union to discuss an acceptable compromise solution
Arbitration
resolving an industrial dispute by using an independent third party to judge and recommend an appropriate solution
Organisational structure
the internal, formal framework of a business that shows the way in which management is organised and linked together and how authority is passed through the organisation
Matrix structure
an organisational structure that creates project teams that cut across traditional functional departments
Level of hierarchy
a stage of the organisation structure at which the personnel on it have equal status and authority
Chain of command
this is the route through which authority is passed down an organisation
Span of control
the number of subordinates reporting directly to a manager
Delegation
passing authority down the organisational hierarchy
Centralisation
keeping all of the important decision-making powers within head office or the centre of organisation
Decentralisation:
decision-making powers are passed down the organisation to empower subordinates and regional/product managers
Delayering
removal of one or more of the levels of hierarchy from an organisational structure
Line managers
managers who have direct authority over people, decisions and resources within the hierarchy of an organisation
Staff managers
managers who, as specialists, provide support, information and assistance to line managers
Informal organisation
too many messages and too much information received that the most important ones can’t be identified and acted on
Effective communication
the exchange of information between people or groups with feedback
Information overload
: too many messages and too much information received that the most important ones can’t be identified and acted on
Communication barriers
reasons why communication fails
Formal communication networks
the official channels and routes used within an organisation
Informal communication
unofficial channels of communication that exists between informal groups within an organisation
Marketing
the management task that links the business to the customer by identifying and meeting the needs of customers profitably
Consumer markets
markets for goods and services bought by the final user of them
Industrial market
markets for goods and services bought by businesses to be used in the production process of other products
Marketing objectives
the goals set for the marketing department to help the business achieve its overall objectives
Marketing strategy
long-term plan established for achieving marketing objectives
Market orientation
an outward-looking approach basing product decisions on customer demand, as established by market research
Product orientated
an inward-looking approach that focuses on making products that can be made and then trying to sell them
Asset-led marketing
an approach to marketing that bases strategy on the firms existing strengths and assets instead of purely what the customers want
Societal marketing
this approach considers not only the demands of customers but also the effects on all members of the public involved in some way when firms meet these demands
Demand:
the quantity of a product that consumers are willing and able to buy at a given price in a time period
Supply
the quantity of a product that firms are willing and able to supply at a given price in a time period
Equilibrium price
the market price that equates supply and demand of a product
Market size
the total level of sales of all producers within a market
Market growth
the percentage change in the total size of a market (volume or value) over a period of time
Market share
: the percentage of sales in the total market sold by one business
Product differentiation
making a product distinctive so that it stands out from competitors’’ products in consumers’ perception
Unique selling point (USP
the special feature of a product that differentiates it from competitors’ products
Niche marketing
identifying and exploiting a small segment of a large market by developing products that suit it
Mass marketing
: selling the same products to the whole market with no attempt to target groups within it
Market segmentation
: a sub-group of a whole market in which consumers have similar characteristics
Market segmentation
identifying different segments within a market and targeting different products or services to them
Consumer profile
a qualified picture of consumers of a firms products, showing proportions of age groups, income levels, location, gender and social class
Market research
this is the process of collecting, recording and analysing data about the customers, competitors and the market
Primary research
the collection of first hand data that is directly related to a firms needs
Secondary research:
collection of data from second hand sources
Qualitative research
research into the in-depth motivations behind consumers buying behaviour or opinions
Focus groups
a group of people who are asked about their attitude towards a product, service, advertisement or new style of packaging
Quantitative research
: research that leads to numerical results that can be statistically analysed
Sample:
the group of people taking part in a market research survey selected to be representative of the overall target market
Random sampling
every member of the target population has an equal chance of being selected
Systematic sampling
every nth item in the target population is selected
Stratified sampling
this draws a specified sub-group or segment of the population and uses random sampling to select an appropriate number from each stratum
Quota sampling
when the population has been stratified and the interviewer selects an appropriate number of respondents from each stratum
Cluster sampling
using one or a number of specific groups to draw samples from and not selecting from the whole population
Arithmetic Mean
calculating by totalling all the results and dividing by the number of results
Mode
the value that occurs most frequently in a set of data
Median
the value of the middle when data have been ordered or ranked
Range
the difference between the highest and lowest value
Inter-quartile range
the range of the middle 50% of the data
Marketing mix:
the four key decisions that must be taken in the effective marketing of a product
Customer relationship marketing (CRM)
using marketing activities to establish successful customer relationships so that existing customer loyalty can be maintained
Product:
the end result of the production process sold on the market to satisfy a customer’s needs
Consumer durable
: manufactured product that can be reused and is expected to have a reasonably long life
Brand
: an identifying symbol, name, image or trademark that distinguishes a product from its competitors
Product positioning
the consumer perception of a product or service as compared to its competitors
Product life cycle
the pattern of sales recorded by a product from launch to withdrawal from the market
Extension strategies
these are marketing plans to extend the maturity stage of the product before a new one is needed
Price elasticity of demand
measures the responsiveness of demand following a change in price
Mark up pricing
adding a fixed mark up for profit to unit price of a product
Target pricing
setting a price that will give a required rate of return at a certain level of output/sales
Full-cost pricing
setting a price by calculating a unit cost for the product and then adding a fixed profit margin
Contribution cost pricing
setting prices based on the variable costs of making a product in order to make a contribution towards fixed costs and profit
Competition-based pricing
a firm will base its price upon the price set by its competitors
Penetration pricing
setting a relatively low price often supported by strong promotion in order to achieve a high volume of sales
Market skimming
setting a high price for a new product when a firm has a unique or highly differentiated product with low price elasticity of demand
Promotion
the use of advertising, sales promotion, personal selling, direct mailing, trade fairs, sponsorship and public relations to inform consumers and persuade them to buy
Promotion mix
the combination of promotional techniques that a firm uses to sell a product
Advertising
paid-for communication with consumers to inform and the combination of promotional techniques that a firm uses to sell a product persuade
Above the line promotion
a form of promotion that is undertaken by a business by paying for communication with consumers
Sales promotion
: incentives such as special offers or deals directed at consumers or retailers to achieve short-term sale increases and repeated purchases by consumers
Below the line promotion
promotion that is not a directly paid for means of communication but based on short term incentives to purchase
Personal selling
a member of staff communicates with one customer with the aim of selling the product and establishing a long term relationship between the company and consumer
Sponsorship
payment by a company to the organisers of an event so that the company name becomes associated with the event
Public relations
the deliberate use of free publicity provided by newspapers, TV, and other media to communicate with and achieve understanding by the public
Marketing or promotion budgeting
the financial amount made available by a business for spending on marketing/promotion during a certain time period
Channel of distribution
this refers to the chain of intermediaries a product passes through from producer to final consumer
Internet marketing
the marketing of products over the internet
Viral marketing:
the use of social networking sites or text messages to increase brand awareness or sell products
Integrated marketing mix:
the key marketing decisions complement each other and work together to give customers a consistent message about the product
Marketing plan
: it is a detailed, fully researched written, report on marketing objectives and the marketing strategy to be used to achieve them
Promotional elasticity of demand
this measures the responsiveness of demand for a product following a change in the amount spent on promoting it
Cross elasticity of demand
this measures the responsiveness of demand for a product following a change in the price of another product
AIDA
: this is a model that explains the successive stages a customer passes through in buying a product: Attention Interest Desire Action
DAGMAR
a process of establishing goals for a promotion campaign so that it is possible to determine whether it has been successful or not: Defining Advertising Goals for Measured Advertising Results
New product development (NPD):
the design, creation and market of new goods and services
Test marketing
the launch of the product on a small scale market to test consumers’ reactions to it
Research and Development
the scientific research and technical development of new products and processes
Sales forecasting
predicting future sales levels and sales trends
Sales-force composite
a method of sales forecasting that adds together all of the individual predictions of future sales of all of the sales representatives working for a business
Delphi method
a long-range qualitative forecasting technique that obtains forecasts from a panel of experts
Jury of experts
the jury of experts uses the specialists within a business to make forecasts for the future
The trend
: this is the underlying movement in a time series
Seasonal fluctuations
: these are the regular and repeated variations that occur in sales data within a period of 12 months
Cyclical fluctuations
: these variations in sales occur over periods of time of much more than a year and are due to the business cycle
Random fluctuations
these can occur at any time and will cause unusual and unpredictable sales figures
Globalisation
the growing trend towards worldwide markets in products, capital and labour, unrestricted by barriers
International marketing
selling products in markets other than the original domestic market
Pan global marketing
adopting a standardised product across the globe as if the entire world were a single market
Global localisation
adapting the marketing mix, including differentiated products, to meet national and regional tastes and cultures
