IB Business Management SL Terms

Below the line promotion (BTL)

Form of promotion that refers to all forms of advertising or promotion that do not use external media agents.

Above the line promotion (ATL)

Form of promotion that refers to any form of paid-for promotional technique through independent consumer media.

Development

The section of R&D that is concerned with adapting existing ideas and products in order to commercialise new products in a financially feasible way.

Consumer to consumer (C2C)

The third type of e-commerce is called C2C, which involves customers selling directly to other consumers.

Delegation

The act of line managers entrusting and empowering employees with authority to successfully complete a particular task, project or job role.

BCG matrix

Developed by the Boston Consulting Group (BCG), this visual marketing management tool is used to analyse a firm's product portfolio.

Business

A decision-making organization established to produce goods and/or provide services.

Debt factoring

A financial service provided to businesses that are struggling to collect money from their debtors and face liquidity problems, involving the third party financier taking over the collection of the firm's outstanding (unpaid but issued) invoices.

Consumer panel

A focus group comprised of people who belong to the firm's target segment(s), referred to in order to gather their expert feedback.

Advertising

A form of visual and/or audio marketing communication used to inform and persuade people to buy a certain good or service.

Ageing population

A higher average age of the population, which has ramifications for workforce planning.

Deed of Partnership

A legally binding contract that all joint owners of a partnership sign, stating the purpose of the business, the formal rights of the partners, and how any profits should be split.

Cash flow forecasting

A quantitative technique used to predict how cash is likely to flow into and out of the business for a particular period of time.

Current ratio

A short-term liquidity ratio used to calculate the ability of an organization to meet its short-term debts (within the next twelve months of the balance sheet date).

Creditor

A supplier that allow a business to purchase goods and/or services on trade credit.

360-degree appraisal

A type of appraisal system that provides feedback from a range of people who work with or interact with the appraisee, such as their line manager, co-workers, subordinates and even customers.

Debtor

A type of current asset, referring to individual or business customers that owe money to the organization as they have bought goods or services on trade credit, i.e. they need to pay within 30 and 60 days.

Continuous market research

A type of market research that is conducted on an ongoing basis, rather than a one-off basis.

Cost-plus pricing (or mark-up pricing)

Adds a profit margin to the costs of production, thereby ensuring that each unit sold contributes towards the profits of the firm.

Appraisal

Also known as a performance review, this is the formal procedure of assessing the performance and effectiveness of an employee, in relation to his/her job description.

Cellular production

Also known as cell production, this production technique involves teams of people working on a certain section of the production process, completing a whole unit of work.

Academic journals

Also known as scholarly journals, these are publications that contain the latest educational research and academic theory for market research purposes.

Acid test ratio

Also known as the quick ratio, this is a short-term liquidity ratio used to measure an organization's ability to pay its short-term debts (within the next 12 months of the balance sheet date), without the need to sell any stock (inventories).

Accounting rate of return (ARR)

Also referred to as the average rate of return, this method of investment appraisal calculates the average annual profit of an investment project expressed as a percentage of the amount of invested.

Business plan

An official document with details of an organization and the proposals for reaching its aims and objectives (goals).

Crisis

Any unpredicted event that has widespread negative consequences, causing major disruptions to the normal operations of an organization.

Business to business (B2B)

B2B refers to e-commerce that takes place between two or more organizations, rather than between businesses and consumers.

Business to consumer (B2C)

B2C refers to online businesses selling goods and services directly to consumers, i.e. the end users of the products.

Culture

Concept referring to the norms, attitudes, values, goals, and practices that characterises an organization, a country or a region of the world.

Bulk-reducing industries

Describes the businesses that need to be located near to the raw materials needed to produce a certain good, e.g. breweries should locate where there is a readily available supply of barley and water, as the weight of the final output is less than that of the raw materials.

Bulk-increasing industries

Describes the businesses that need to be located near to their customer as the final product (such as hand-made home furniture) is bulkier and heavier than the raw materials used to make it.

Business cycle

Describes the regular fluctuations in the level of economic activity in an economy, over time.

Differentiated piece rate

Financial payment system advocated by F.W. Taylor to reward workers based on the level of their output or productivity.

Closing balance

Found in a cash flow forecast, this refers to the value of cash held by a business at the end of a trading period (usually on the last trading day of the month).

Cowboy products

Goods or services that are perceived by customers to be of low quality but high price.

Bargain products

Goods or services that are those perceived by customers to be of high quality but sold at a low price.

Autocratic management

Management style that involves centralised and autonomous decision-making, without input from others in the organization.

Ad-hoc market research

Market research conducted as and when required for a specific problem that the organization is facing.

Commercial marketing

Marketing strategies that focus on meeting the demands (needs and wants) of customers in a profitable way. The main purpose is to generate benefits for the owners of the business, such as shareholders.

Bar graph

Method of visual presentation of data, used to compare figures in a market research study, such as sales figures during different time periods.

Balance sheet

Part of a firm's final accounts that shows the value of a firm's assets, liabilities and the owners' investment (or equity) in the business, at a particular point in time.

Brand development

Part of a firm's marketing strategy in communicating the value of a brand and what the brand stands for.

Batch production

Production method that involves producing a set of identical products, with work on each batch being fully completed before production switches to another batch.

Cash cows

Products in the Boston Consultancy Group Matrix with high market share in a low growth (mature) market. They are the largest cash earners for a business.

Capital expenditure

Refers to an orgaization's sources of finance being used for spending on fixed assets or capital equipment of the business, i.e. investment expenditure. This includes spending on buildings, machinery and tools.

Cybercrime

Refers to online fraudulent activities, such as hacking of personal data and exploitation of internet security.

Capacity utilization

Refers to the extent to which an organization operates at its maximum level (known as the firm's productive capacity).

Customer loyalty schemes

Reward systems used to encourage customers to make repurchases, such as price discounts or free gifts for members.

Cluster sampling

Sampling method that involves identifying the population by geographical areas (clusters), and then interviewing people within certain clusters randomly.

Convenience sampling

Sampling method that refers to the practice of using people that are within easy reach, in an unplanned way, to conduct market research.

Current assets

Short-term assets belonging to an organization which will last in the business for up to 12 months, such as cash, debtors and stock (inventory).

Bureaucracy

The administrative systems within an organization, such as the formal policies and procedures of the business. It includes the formal rules, regulations and procedures of the organization.

Costs

The charges that an organization incurs from its operations, such as rent, wages, salaries, and insurance.

Brand loyalty

The degree of customer devotion to a particular brand.

Brand awareness

The degree of customer knowledge and recognition of a particular brand in order to gain more customers.

Consumer profiles

The demographic and psychographic characteristics of consumers in different market segments.

Brand value

The expected earning potential of a brand, i.e. the likely future earning potential (value) of a particular brand.

Depreciation

The fall in the value of a fixed asset over time, mainly due to wear and tear (usage) and obsolescence.

Chain of command

The formal lines of authority in an organization. It can be seen via an organizational chart, which shows the formal path through which commands and decisions are communicated from senior managers to subordinates.

Credit control

The process of monitoring and management of debtors, such as ensuring only suitable customers are given trade credit and that customers do not exceed the credit period.

Democratic management / Demoractic leadership

The management / leadership style that actively involves the participation of employees in the decision-making process.

Crisis management

The management process of responding to an actual crisis facing an organization.

Cash

The money a business has, either "in hand" (at its premises) and/or "at bank" (i.e. in its bank account). It is the most liquid of a firm's current assets and is easily accessible.

Cash flow

The movement of an organization's cash inflows (cash received from the sale of goods and services) and cash outflows (used to pay for the costs of running the business).

Adding value

The process of producing a particular good or service that is worth more than the cost of the resources used to produce it.

Assets

The possessions owned by a business, which have a monetary value, such has buildings, land, machinery, equipment, inventories and cash.

Differentiation

The process of distinguishing an organization's products from those of other firms in the same industry.

Break-even quantity (BEQ)

The quantity of sales (sales volume) required for a firm to reach break-even. It is found by using the formula: BEQ = Fixed costs / (Price - Average variable cost).

Current liabilities

The short-term debts of a business, which need to be repaid within twelve months of the balance sheet date, e.g. overdrafts, trade creditors and short-term loans from banks.

Decentralization

The situation in an organization where decision-making authority is delegated throughout, rather from a central authoritative group.

Centralization

The situation where decision-making is predominantly made by a very small group of senior managers at the top of the organizational hierarchy.

Demography

The study of population trends, which has ramifications for human resource planning.

Communication

The transfer of information from one entity to another. It is vital to how a business operates.

Celebrity endorsement

The use of famous people (such as film stars, musicians and sports personalities) to promote a brand or organization.

Charities

These are altruistic organizations that operate predominantly in the private sector with the goal of promoting a worthwhile social cause.

Cooperatives

These are for-profit social enterprises owned and run by their members (usually employees, managers or customers). Their primary goal is to create value for their member-owners.

Competitors

These are the firm's rivals, which operate in the same industry and contest for the same customers.

Aims

These are the long-term aspirations of an organization.

Customers

These external stakeholders are a firm's clients, individuals and other businesses, who purchase the organization's goods and/or services. Their interests include competitive prices, fit-for-purpose products and overall value for money.

Agents

These independent intermediaries help to sell a vendor's products in return for commission, such as real estate agents.

Copyrights

These intangible fixed assets give the registered owner the legal rights to creative pieces of work, such as the works of authors, musicians, conductors, playwrights (scriptwriters) and directors.

Break-even

This condition exists when a firm's sales revenues cover all of its production costs.

Ansoff Matrix

This is a strategic management tool, used to devise product and market growth strategies for an organization.

Corporate social responsibility (CSR)

This is an organization's decisions and actions that impact society in a positive way.

Average revenue (AR)

This is the amount a business receives from its customers per unit of a good or service sold. Mathematically, AR = TR ÷ Q = P

Average costs (AC)

This is the cost per unit of output. It is calculated by the formula: AC = TC ÷ Q.

Break-even point (BEP)

This is the point on a break-even chart where the firm's total costs equal its total revenue, shown by the intersection of the total revenue (TR) and total cost (TC) curves.

Break-even revenue

This is the value of the output needed to break-even.

Capital productivity

This measures how efficiently an organization's fixed assets are used to generate output for the business.

Bad debt

This occurs when a debtor is unable to pay outstanding invoices to the business. The result is it reduces the cash inflows for the vendor (seller).

De-layering

This occurs when an organization removes one or more layers in its hierarchical structure, i.e. the number of layers of management is reduced, or made flatter.

Clustering

This occurs when businesses choose to locate near other firms operating in related industries in order to benefit from passing trade and demand for products in complementary markets.

Companies (or corporations)

This refers to any business organisation that is owned by its shareholders, who have limited liability.

Cultural exports

This refers to the extensive availability and consumption of traditionally domestic products in overseas markets.

Business etiquette

This refers to the mannerisms and customs by which business is conducted in different parts of the world.

Conflict

This refers to the mutually exclusive and incompatible interests of different stakeholder groups. If this is not managed, it often leads to protracted disagreements, disputes and arguments in the workplace.

Behavioural training

Type of training that focuses on developing the interpersonal and intrapersonal skills of workers.

Commission

Type of financial payment system that rewards workers a certain percentage of the sales of each good or service that they are responsible for completing.

Business angels

Wealthy and successful private individuals who risk their own money in a business venture that has high growth potential.

Capital-intensive

When an organization relies on machinery and equipment to produce its output, rather than labour.