all a-level business key terms

Brand

A "promise of an experience" and conveys to consumers a certain assurance as to the nature of the product or service they will receive

Employee welfare

A broad term covering a wide range of facilities that are essential for the well-being of a business's employees

Company

A business organisation that has its own legal identity and that has limited liability

Sole trader

A business that is owned and managed by one person, but it may employ other people

Industrial dispute

A disagreement between an employer and its employees, usually represented by a trade union, over some aspect of the terms and conditions of employment

Variable pay

A flexible form of pay that offers employees a highly individual pay system related to their performance at work

Works council

A forum within a business where workers and management meet to discuss issues such as working conditions, pay and training

Product

A general term which includes goods and services

Sample

A group of people or items selected to represent the target population

Viral marketing

A marketing technique that uses social media and networks to raise brand awareness and boost sales by getting users to recommend the promotional campaign to others

Profit for the year

A measure of a business' profits that takes into account a wider range of expenditures and incomes including taxation

Profitability

A measure of financial performance that compares a business' profits to some other factors such as revenue

Commission

A method of payment in which the amount paid is related to the value of goods or services that an employee sells

Conciliation

A method of resolving individual or collective disputes in which a neutral third party encourages the continuation of negotiations

Decision tree

A model that represents the likely outcomes for a business of a number of courses of action on a diagram showing the financial consequences of each

Market conditions

A number of features of a market, such as the level of sales, the rate at which they are changing and the number and strength of competitors

Good

A physical product such as a house or a designer suit

Arbitration

A procedure for the settling of a dispute, under which the parties agree to be bound by the decision of a third party

Stakeholder engagement

A process by which managers involve individuals and groups who may be affected by their decisions in those decisions

Consultation

A process by which one group discovers the views of another one

Organisational design

A process to ensure that the organisation is appropriately designed to deliver organisational objectives in the short and long term

Training

A process whereby an employee gains job related skills and knowledge

Profit margin

A ratio that expresses a business' profit as a percentage of its revenues over some trading period

Empowerment

A series of actions designed to give employees greater control over their working lives

Dividends

A share in the profits of a company that are distributed to the holders of certain types of company shares

Trade mark

A sign which can distinguish the goods and services of a business from those of its competitors

Uncertainty

A situation in which there is a lack of knowledge and events, outcomes or consequences are unpredictable

Fair trade

A social movement that exists to promote improved trading terms and living conditions for producers of products in less developed countries

Internal source of finance

A source of finance that exists within the business

Piece rate

A system whereby employees are paid according to the quantity of a product they produce

Marketing objective

A target set for the marketing function, for example to increase sales by 10% within

Demand

A term used by economists to indicate the amount of a particular good or service that consumers or organisations want, and can afford, to buy at given prices

Big data

A term used to describe a massive volume of both organised and non-organised information that is very large

Target population

All the items or people that are relevant to the market research being undertaken

Mass market

An approach that aims to provide products that meet some of the needs of the a large proportion of the market

Relationship marketing

An approach to marketing in which a company seeks to build long term relationships with its customers by providing consistent satisfaction

Balanced portfolio

An appropriate mix of products in terms of their market shares and market growth

External source of finance

An injection of funds into the business from individuals, other businesses or financial institutions

Service

An intangible item such as insurance or decorating

Shareholder

An investor in and one of the owners of a company

Trade union

An organisation of workers established to protect and improve economic position and working conditions of its members

Boston Matrix

Analyses all of the firm's products in terms of their market share and the growth of the market

Market mapping

Analyses market conditions to identify the position of one product or brand relative to others in the market in terms of given criteria

Total costs

Are made up of fixed costs and variable costs

Unit costs

Are the cost per unit, that is total cost/number of units

Human resource plan

Assesses the current and future capacity of a business's workforce and sets out actions necessary to meet the business's future human resource needs

Scientific decision making

Based on data and uses logical, rational approach to decision making

The external environment

Comprises those external forces (such as changes in competition or consumers' incomes) that can influence a business's activities

Variable costs

Costs that alter directly with the business's level of output, for example, fuel costs

Fixed costs

Costs that do not alter when a business alters its level of output. Examples include rent and rates.

Operations management

Describes the activities, decisions and responsibilities of the managing production and delivery of products and services

Employee engagement

Describes the connection between a business's employees and its mission, goals and objectives

Big data

Describes the enormous quantity of structured and unstructured data that is difficult to process using traditional techniques such as databases

Motivation

Describes the factors that arouse, maintain and channel behaviour towards a goal

Kotter and Schlesinger's six ways of overcoming resistance to change

Education and communication; participation and involvement; facilitation and support; negotiation and agreement; manipulation and co-optation; explicit and implicit coercion

Collective bargaining

Entails negotiations between management and employee's representatives, often trade unions, over pay and other conditions of employment

Product portfolio analysis

Examines the market position of all of the products of a business, for example in terms of market share or market growth

Employee involvement

Exists in a business in which people are able to have an impact on decisions and actions that affect their working lives

Overdraft

Exists when a business is allowed to spend more than it holds in its current bank account up to an agreed limit

Direct costs

Expenditure that can clearly be allocated to a particular product or area of the business e.g. raw materials and components

Indirect costs

Expenditure that relates to all aspects of a business' activities, such as maintenance costs for buildings or senior managers' salaries

Programmed decisions

Familiar and routine decisions

Share capital

Finance invested into a company as a result of the sale of shares in the business

Short term finance

Finance needed for a limited period of time, normally less than one year

Budgets

Financial plans that forecast revenue from sales and expected costs over a time period

Total costs

Fixed and variable costs added together

Niche marketing

Focuses on a particular segment of the market

Venture capital

Funds advanced to businesses thought to be relatively high risk in the form of share and loan capital

Primary market research

Gathers data for the first time for a specific purpose

Financial objective

Goal or target pursued by the finance department (or function) within an organisation

Consumer products

Goods bought for consumption by the general public

Industrial products

Goods bought for use in business processes

Stakeholders

Groups or individuals who have an interest in a business

Positioning

Identifies the benefit and price combination of a product relative to competitors

Leadership

Includes the functions of ruling, guiding and inspiring other people within an organisation in pursuit of agreed objectives

Gross profit

Income received from sales minus the cost of goods and services sold

Real incomes

Incomes that are adjusted for the rate of inflation (or increase in prices) to show changes in purchasing power

Stakeholders

Individuals or groups (such as employees, customers and local residents) who have an interest in the business

Marketing research

Involves gathering and analysing data relevant to the marketing process

Primary market research

Involves gathering data for the first time

Operations objective

Is a target set for the operations function such as to improve the proportion of deliveries on time by 5% within two years.

Competitive advantage

Is a way in which a business offers superior value to its competitors

Quality

Is measured by the extent to which an operation meets its customer requirements

Efficiency

Is measured by the inputs used to generate output

Labour productivity

Is the amount of output per employee

Vertical integration

Is the combination of two or more stages of production normally operated by separate companies

Inventory

Is the goods or stock it holds

Quality assurance

Is the maintenance of target quality by attention to detail at every stage of the process

Capacity

Is the maximum output of a business at a moment in time given its resources

Supply chain

Is the series of activities involved in taking the initial resources to providing the final product

Quality control

Is the system of maintaining standards by testing or inspecting the output against standards

Mass customisation

Is the term for producing on a large scale while still enabling individual customer preferences to be met

Outsourcing

Is when a business uses an outside supplier

Non-current assets

Items that a business owns and which it expects to retain for one year or longer

Non programmed decisions

Less structured decisions that require unique solutions

Debentures

Loans with fixed interest rates that are long term and may not even have a repayment date

Mortgages

Long term loans, repaid over periods of up to 50 years, and used to purchase property

Aims

Long term plans of the business from which its corporate objectives are derived

Labour intensive

Means a relatively high proportion of labour in the production used compared to capital equipment, for example hairdressing

Multichannel distribution

Means that customers can buy the product in several ways, for example in store, online or 'click and collect'

Limited liability

Means that in an event of financial difficulties, the personal belongings of shareholders are safe

Unit labour costs

Measure the labour cost per unit of output produced

Time-and-motion study

Measures and analyses the ways in which jobs are completed, with a view to improving these methods

Income elasticity of demand (YED)

Measures how responsive demand is to changes in the income, all other factors constant

Price elasticity of demand (PED)

Measures how responsive demand is to changes in the price, all other factors constant

Margin of safety

Measures the amount by which a business' current level of output exceeds break-even output

Capacity utilisation

Measures the existing output over a given period as a percentage of the maximum output

Competitiveness

Measures the extent to which a business offers good value for money relative to competitors

Profit

Measures the extent to which revenues from selling a product exceed the costs incurred in producing it over time

Profit

Measures the extent to which revenues from selling a product over some time period exceed the costs incurred in producing it

Sales value

Measures the level of sales in a given period in pounds sterling (in the UK)

Sales volume

Measures the level of sales in a given period in terms of units sold

Labour productivity

Measures the output of a firm in relation to its number of employees

Market share

Measures the sales of one brand or business as a percentage of total market sales in a given period

Gross Domestic Product (GDP)

Measures the value of a country's total output of goods and services over a period of time, normally one year

Objectives

Medium to long term goals established to coordinate the business

Ethics

Moral principles, which should underpin business decisions and actions

Market conditions

Number of features of a market such as the level of sales, the rate at which they are changing and the number and strength of competitors

Targeting

Occurs when a business decides which segments it wants to operate in

Redeployment

Occurs when an employee is offered suitable alternative employment within the same business

Unlimited liability

Occurs when an individual or group of individuals is personally responsible for all the actions of their business

Job enrichment

Occurs when employee's jobs are redesigned to provide them with more challenging and complex tasks

Lean production

Occurs when managers reduce waste and therefore operations become more efficient

Takeover

Occurs when one company acquires control of another company by buying more than 50% of its share capital

Segmentation

Occurs when similar customer needs and wants are grouped within a market

Sustainable production

Occurs when the supply of a product does not impose costs on future generations by, for example, depleting non-renewable resources

Trade credit

Offered when purchasers are allowed a period of time (frequently 30,60 or 90 days) to pay for products they have bought

Delegation

Passing authority down the organisational hierarchy

Decentralisation

Passing authority from the centre of the organisation to those working elsewhere in the business

Management

Planning, organising, directing and controlling all or part of a business enterprise

Crowdfunding

Practice of funding a project or venture by raising many small amounts of money from a large number of people, typically via the internet

Patent

Protects new inventions and covers how things work, what they do, how they do it, what they are made of and how they are made

Empowerment

Provides subordinates with the means to exercise power or control over their working lives

Diversity

Recognising the differences between individual employees and also the differences that may exist between different groups of employees

Income statement

Records a business' sales revenue over a trading period and all relevant costs incurred as well as the business' profit or loss

Levels of hierarchy

Refer to the number of layers of authority within an organisation i.e. how many levels exist between the CEO and the shop floor employee

Business ethics

Refer to whether a business decision is perceived as morally right or wrong

Supply chain

Refers to all of the providers of resources (such as money, people, finance, machinery, equipment) at different stages of the operations process

Big data

Refers to large and complex data sets

Corporate social responsibility

Refers to the extent to which a business takes into account its stakeholder views and accepts its obligations to society over and above the legal requirements

Social media

Refers to the social interaction among people where they create, share or exchange information and ideas in virtual communities

Capital structure

Refers to the way in which a business has raised the capital required to purchase its assets

Mission statement

Sets out a business's overall purpose to direct and stimulate the entire organisation

Product life cycle model

Shows the sales of a product over its life

Performance related pay

Some part of an employee's pay is linked to the achievement of targets at work

Long term finance

Sources of finance that are needed over a longer period of time, usually over a year

Capital expenditure

Spending undertaken by businesses to purchase non-current assets such as vehicles and property (it is another form of investment)

Cash flow forecasts

State the inflows and outflows of cash that the managers of a business expect over some future period

Redundancy

Takes place when an employee is dismissed because a job no longer exists

Dismissal

Takes place when an employer terminates an employee's contract of employment and leads to employees exiting the human resource flow

Break even output

That level of output or production at which total costs exactly equal revenue from sales

Cash flow

The amount of money moving into and out of a business over a time period

Bank loan

The amount of money provided by a business for a stated purpose in return for a payment in a the form of interest charges

Division of labour

The breaking down of production into a series of small tasks carried out repetitively by relatively unskilled labour

Employer brand

The business's reputation as an employer

E-commerce

The buying and selling of products through an electronic medium such as the internet

Probability

The chance of a particular event occurring

Risk

The chance of incurring misfortune or loss

Marketing mix

The combination of marketing choices that can be used by a business to influence consumers to buy products

Talent development

The development and guidance of outstanding or star employees who have the potential to make major contributions to an organisation's performance and success

Contribution

The difference between revenue and variable costs

Social responsibility

The duties a business has towards stakeholder groups such as employees, customers and the government

Revenue

The earnings or income generated by a firm as a result of its trading activities (also called turnover or sales revenue)

Communication

The exchange of information or ideas between two or more parties

Net gains

The expected values of a course of action minus the costs associated with it

Labour retention

The extent to which a business holds onto its employees

Quality

The extent to which a product meets the customers needs

Expected values

The financial outcomes from a specific course of action adjusted to allow for the probability of it occurring

Operating profit

The financial surplus arising from a business' normal trading activities and before taxation

Market segments

The groups of similar needs and wants within a market

Globalisation

The increasing trade between countries and the growing internationalisation of businesses

Chain of command

The line of communication and authority existing within a business i.e. a shop floor worker reports to a supervisor, who is responsible to a departmental manager and so on

Cash flow

The movement of cash into and out of a business over time

Human resource flow

The movement of employees through an organisation, starting with recruitment

Opportunity cost

The next best alternative foregone

Opportunity cost

The next best alternative that is foregone

Span of control

The number of subordinates directly responsible to a manager

Delegation

The passing down of authority (but not responsibility) down the organisational structure

Sales growth

The percentage change in sales volume or value over a given period

Market growth

The percentage change in the total sales in the market over a given period

Trade union wage premium

The percentage difference in average gross hourly earnings of union members compared with non-members

Labour turnover

The percentage of a business's employees who leave the business over some period of time (normally a year)

Trade credit

The period of time given by suppliers before customers have to pay for goods and services

Confidence interval

The possible range of outcomes for a given confidence level

Authority

The power or ability to carry through an action

Authority

The power to give orders, make decisions and to control events and people

Interest rates

The price of borrowed money

Confidence level

The probability that the research findings are correct

Appraisal

The process of considering and evaluating the performance of an individual employee

Incorporation

The process of establishing a business as a separate legal entity that allows it to benefit from limited liability

Recruitment and selection

The process of filling an organisation's job vacancies by appointing new staff

Job design

The process of grouping together or dividing up tasks and responsibilities to create complete jobs

Variance analysis

The process of investigating any differences between forecast data and actual figures

Privatisation

The process under which the state sells businesses that it has previously owned and managed to private individuals and businesses

Investment

The purchase of assets such as property, vehicles and machinery that will be used for a considerable time by the business

Profit

The surplus of total revenue over total costs for a business over a trading period

Human resource objectives

The targets pursued by the HR function or department of the business

Market capitalisation

The total value of the issued shares of a public limited company

Communication

The transfer of information between people

Organisational structure

The way a business is arranged to carry out its activities

Average costs

Total costs of production divided by the level of production or output to give the cost of producing a single unit of output

Capital intensive

Uses a relatively high proportion of capital equipment relative to labour, for example a bottling process

Secondary market research

Uses data that already exists

Teamworking

When an organisation breaks down its production processes into large units instead of relying upon the use of the division of labour

Temporary staff

Work for a limited period of time, for example for the summer only

Part time staff

Work less than a full working week, for example 20 hours per week

Competitive advantage

a benefit (or benefits) that a firm has in comparison to its rivals, allowing it to achieve greater sales and profits and retain more customers than its competitors

Licensing

a business arrangement whereby one company gives another company permission to0 manufacture its goods, offers its servi9ces, and use its technology, brand or expertise for a specified fee or royalty

Multinational

a business that operates in several countries but is managed from one (home) country; examples include Nike, Coca-Cola, Wal-Mart, Toshiba, Honda; the term is often abbreviated to MNC (multinational company/cooperation)

Enterprise resource planning (ERP)

a business's use of its information's systems so that it can automate and integrate its cores business processes

Person culture

a culture where the organisation exists as a vehicle for people to develop their own careers and expertise; the individual is the central point; if there is a structure, it exists only to serve the needs of the individuals within it

Balance sheet

a document describing the financial position of a company at a particular point in time. It compares the value of items owned by the company (its assets) with the amounts that it owes (its liabilities)

Balance sheet

a financial statement that summarizes are companies assets, liabilities, and shareholders' equity at a particular point in time

Solvency

a measure of a firm's ability to pay its debts on time. A firm that can meet its financial commitments is described as 'solvent'; a firm that cannot meet its financial commitments is described as 'insolvent'

Gross domestic product (GDP)

a measure of economic activity ; the total value of a country's output over a given period of time , usually provided as quarterly or annual figures.

Ratio analysis

a method of assessing a firm's financial situation by comparing two sets of linked data

Network analysis

a method of planning business operations in order to identify the most efficient way of completing an integrated task or project.

Greiners model of growth

a model describing different phases of company growth, each of which includes calm periods of evolutionary development and growth that ends with a period of crisis and revolution.

Porter's five forces (or competitive forces)

a model developed by Michael Porter to analyse the competitive environment in which a business operates; the five forces are: the threat of entry, buyer power, supplier power, competitive rivalry and substitute threat.

Hofstede's national cultures

a model of cultural dimensions that distinguishes one country's culture from another; the model measures and compares the cultural dimensions of different countries and demonstrates that there are national and regional cultural groupings that affect the behaviour of organisations

Porter's Generic Strategies

a model which identifies marketing strategies ie cost leadership, differentiation or focussed cost leadership/ focussed differentiation based on whether the target market is mainstream or niche and whether the strategic advantage comes from low cost production or high perceived value

Kaizen (or continuous improvement)

a policy of implementing small, incremental changes In order to achieve innovation, better quality and/ or greater efficiency. These changes are invariably suggested by employees and emanate from a corporate culture that encourages employees to identify potential improvements

Carroll's CSR pyramid

a pyramid illustrating four tiers; economic responsibilities (to be profitable), legal responsibilities (to obey laws), ethical responsibilities (to be ethical and do what is fair and just) and philanthropic responsibilities (to be good corporate citizens and support the quality of life in the community).

Purchasing economies of scale

a reduction in unit costs as a result of buying in large quantities; these are sometimes called buying economies of scale

The business cycle

a regular pattern of ups and downs in demand and output within an economy over a period of time. (boom / recession-downturn / slump / recovery-upturn)

Investment appraisal

a scientific approach to investment decision making, which investigates the expected financial consequences of an investment, in order to assist the company in its choices

Corporate governance

a set of relationships between a company's management, its board, its shareholders and other stakeholders; a system for protecting the interests of the owners (shareholders) of a company

Strategic drift

a situation where a company responds too slowly to changes in its external and competitive environments; a company continues with a strategy that may have served it very well in the past but it no longer suited to the current circumstances

Ansoff's matrix

a strategic or marketing planning model that can be used to help a business decide its strategic direction in terms of its product portfolio and target markets

Kaplan and Norton's balanced scorecard

a strategic planning and management system used to ensure that a business's activities are linked to its vision statement. Uses 4 different perpectives - financial, customer, internal business processes, learning and growth

SWOT analysis

a technique that allows an organisation to assess its overall position, or the position of one of its divisions, products or activities. It uses an internal audit to assess its strengths and weaknesses, and an external audit to assess its opportunities and threats

Sensitivity analysis

a technique used to examine the impact of possible changes in certain variables on the outcome of a project or investment

Short-termism

a tendency for businesses to prioritise current performance rather that the long-term sustainability of the business

Intrapreneurship

acting like an entrepreneur within a large organisation

Technological change

adapting new applications of practical or mechanical sciences to industry and commerce; it includes information and communication technology (ICT), which is the creation, storing and communication of information using microelectronics, computers and telecommunications

Alliances

agreements between two or more companies to combine their strengths and expertise in order to undertake a mutually beneficial project - in this context , involving entry to an international market; alliances can include strategic alliances and joint ventures

Enterprise

almost any business or organisation can be called an enterprise, but the term usually refers to the process by which new businesses are formed and new goods and services created and brought to the market. Enterprises are usually led by an entrepreneur. Increasingly the term 'enterprise' is sued when discussing the development of skills relevant to becoming a successful entrepreneur and establishing a successful business enterprise, including the importance of risk taking.

Income statement

an account showing the income and expenditure (and thus the profit or loss) of a company over a period of time

Inflation

an increase in the general level of prices within an economy. Inflation also means that there is a fall in the purchasing power of money. In contrast, deflation is a decrease in the general level of prices within an economy or a rise in the purchasing power of money

Patent

an official document granting the holder the right to be the only user or producer of a newly invented product or process for a specified product.

Flexible organisation

an organisation that can respond quickly to changes taking place in the external environment; includes a flexible workforce structure that allows capacity to be increased or reduced quickly and easily in response to external pressures.

Mission

an organisations aims or long-terms intentions, its ultimate purpose; a business mission is sometimes the same as its corporate aims

Intellectual property

any intangible assets that arise from human knowledge and ideas

Social change

any significant change over time in behaviour patterns and cultural values and norms

Non-current liabilities

are debts due for re-payment after more than one year

Current liabilities

are debts scheduled for repayment within one year

Strategic decision making

concerns the general direction and overall policy of an organisation. Strategic decisions have significant long-term effects on an organisation and therefore require detailed consideration and approval at the senior management level. They can be high risk because the outcomes are unknown and will remain so for some time

Monetary policy

controlling the money supply and the rate of interest in order to influence the level of spending and demand in the economy

Economies of scope

cost advantages that result from firms providing a variety of products rather than specialising in the production or delivery of a single product

Liabilities

debts owed by an organisation to suppliers, shareholders, investors or customers who have paid in advance

Elkington's The triple bottom line

describes a means of assessing business performance that considers three different factors; financial returns (profit) social responsibility (people) and environmental values (planet)

Emerging economies (emerging markets)

developing countries that have potential to grow and develop in the terms of productive capacity and market opportunities ; from an investment point of view they are seen as developing countries , in which investment would be expected to achieve higher returns but be accompanied by greater risk

Digital technology

electronic technology which uses binary numbers (1 or 0) to store, generate and process data

Organic structures

features include flat organisational structures; horizontal communication and interactions; low levels of specialisation because knowledge resides wherever it is most useful; decentralisation involving a great deal of formal and informal participation in decision making

Mechanistic structures

features include hierarchical and bureaucratic organisational structures; highly centralised authority; formalised procedures and practices; highly specialised functions

Bartlett and Ghoshal's global strategy

focuses on increasing profitability by benefiting from costs reductions that come from economies of scale, experience curve effects and location economies; it is most appropriate when there is high pressure for cost reduction and low pressure for local responsiveness; the strategy is sometimes known as global standardisation strategy.

Bartlett and Ghoshal's multi-domestic strategy

focuses on increasing profitability by customising a firms products so that they provide a good match to tastes and preferences in different international markets ; most appropriate when there is a high pressure for local responsiveness and low pressure for cost reduction; this is sometimes known as a localisation strategy

Total equity or total shareholders' equity (capital)

funds provided by shareholders to set up the business, fund expansion and purchase fixed assets

International markets

geographically, markets outside the international border of a company's home country; the opposite of an international market is a domestic markets, which is the geographic region within the national boundary of a company's home country.

Corporate objectives

goals of the whole organisation rather than of different elements of the organisation. They are set in order to co-ordinate the activities of, give a sense of direction to , and guide the actions of the whole organisation. They are dictated by the mission or corporate aims of an organisation

Export

goods or services produced in one country are sold in another country

The experience curve

indicates that the higher the cumulative volume of production, the lower the direct cost per new unit produced; essentially, the more experienced a firm gets at making a product, the better, faster and cheaper it is likely to be making it at

Bartlett and Ghoshal's international strategy

involves taking products first produced for the domestic market and then selling them internationally with only minimal local customisation; it is most appropriate when pressures for cost reduction and for local responsiveness are low.

Assets

items that are owned by a business

Big data

large pools of data that can be captured, communicated, aggregated, stored and analysed

Managerial economies of scale

larger firms have greater scope to benefit from the specialisation of labour at supervisory and manager level in each of the functional areas of the firm

Copyright

legal protection against copying for authors, composers and artists

Performance metrics

measure a business's activities and performance. These measures should be suited to the needs of stakeholders as a whole, rather than focus on the needs of shareholders and managers

Profitability (or performance) ratios

measure the efficiency with which a business makes profit, in relation to its size

Current ratio

measures liquidity by expressing current assets as a ratio to current liabilities

Liquidity ratio

measures the ability of a business to stay solvent (pay its liabilities) in the short term

Return on capital employed

measures the profitability of a business by calculating its operating profit as percentage of the capital that a business has at its disposal - that is, its capital employed.

Kotter and Schlesinger's four reasons for resistance to change

parochial self-interest; misunderstanding and lack of trust; different assessments; and low tolerance for change

Contingency planning

planning for unexpected and, usually, unwelcome events that are, however, reasonably predictable and quantifiable; the objective is to reduce the risks and costs of such events on an organisation

Power culture

power is concentrated in a small group or central figure, who determines the dominant culture

Task culture

power is derived from the expertise required to complete a task or project; it is usually associated with a small team approach or small organisations co-operating to deliver a project; the emphasis is on results and getting things done

Role culture

power is hierarchical and clearly defined in a company's job descriptions; a person's power derives from their place or role within a highly structures organisation; detailed rules indicate how people and departments interact with each other, customers and suppliers

Non-current assets

resources that can be used repeatedly in the production process, although they do wear out (depreciate) or lose value over time. These are often known as fixed assets. Examples are land, buildings, machinery and vehicles

Gross profit

revenue minus cost of sales. The gross profit shows how efficiently a business is converting its raw materials or stock into finished products.

Divorce of ownership control

separation of the two functions of ownership and control in public limited companies; ownership entails providing finance and therefore taking risks; control involves managing the organisation and making decisions

Current assets

short-term items that circulate in a business on a daily basis and can be expected to be turned into cash within one year

Trademark

signs, logos, symbols or words displayed on a company's products or on its advertising, including sound or music, which distinguish its brands from those of its competitors

Incremental change

small adjustments made, usually over a long period of time, towards a desired end result; it usually does not alter current working practices in any significant way

Overtrading

takes place when a business grows too quickly without organising sufficient long-term funds to support the expansion. This puts a strain on working capital.

Functional decision making

tends to short to medium term and is concerned with a specific functional area rather than overall policy. Functional decisions are usually taken to support the implementation of strategic decisions and are usually made by middle management.

Infrastructure

the 'economic arteries and veins ; roads , ports , railways , airports , power lines , pipes and wires that enable people goods , commodities , water , energy and information to move about efficiently'. Also defined as 'the physical assets underpinning the UK's network for transports, energy, generation and distribution, electronic communication, solid waste management, water distribution and waste water treatment.

Lewin's force field analysis

the 'force field' consists of two opposing forces - one set of forces, the driving forces, are working for change, and the other set, the restraining forces, are working against change occurs when driving forces are stronger than the restraining forces

Competitiveness

the ability of businesses to sell their products successfully in the market in which they are based

E-commerce

the buying and selling of goods and services and/or transmission of funds or data, using an electronic network, such as the internet

Vertical integration

the coming together of firms in the same industry but at different stages of the production process; vertical integration can be backwards or forwards. Forwards - a manufacturer integrating with the retailer selling its product. Backwards - a manufacturer integrating with the supplier of raw materials

Horizontal integration

the coming together of firms operating at the same stage of production and in the same market

Conglomerate integration

the coming together of firms operating in unrelated markets

Integration

the coming together of two or more businesses via a merger or a takeover

Product innovation

the creation and launch of a good or service that is new, or a significant change to an earlier good or service

Process innovation

the creation of a new way of making, providing or delivering a particular or service

Management accounting

the creation of financial information for use by internal users in a business , to predict , to plan , to review and control the financial performance of the business.

Retrenchment

the cutting back of an organisation's scale of operations

Product differentiation

the degree to which consumers see a particular brand as being different from other brands , for example because of a unique selling point/proposition (USP). A USP is a feature of a product or service that allows it to be differentiated from other products

Corporate social responsibility (CSR)

the duties of an organisation towards employees, customers, society and the environment ; companies that accept their corporate social responsibility usually do so by integrating social and environmental concerns into their business operations and their interactions with stakeholders

Protectionism

the extent to which a government uses controls to restrict the amount of imports entering the country

Share capital

the funds provided by shareholders through the purchase of shares

Internationalisation

the growing tendency of companies to operate across national boundaries; all activities that a company undertakes with regards to its relations with foreign markets, whether buying supplies from abroad ,exporting, licensing products abroad , entering into alliances or directly investing in operations abroad.

Urbanisation

the increase in the proportion of people living in towns and cities

Globalisation

the increased integration and independence of national economies; it involves increased international trade, increased inward investment and an increased role for global multinational companies.

Payback period

the length of time that it takes for an investment to pay for itself from net returns provided by that particular investment

Technical economies of scale

the lower unit costs that arise because larger firms are able to use more efficient techniques of production and to benefit from the law or principle of increased dimensions

Tactics

the means by which a strategy is carried out; a range of different tactics may be used as a part of the single strategy

Strategy

the medium to long term plan through which an organisation aims to attain its objectives

Net present value NPV

the net return on an investment when all revenues and costs have been converted to their current worth

Total float for an activity

the number of days that an activity can be delayed without delaying the project (LFT - EST - duration of the activity)

Migration

the permanent movement of people from one region to another. Migration can be internal, that is within a country and for which urbanisation is an example or international, that is between countries

Knowledge and information management (KIM)

the practice of organising, storing and sharing vital knowledge and information, so that everyone in an organisation can benefit from its use

Exchange rates

the price of one's country currency in terms of other currencies.

Risk and uncertainty

the probability of unforeseen circumstances that may harm the success of a business decision

Investment decisions

the process of deciding whether or not to undertake capital investment (the purchase of non-current assets) or major business projects

Strategic planning

the process of determining an organisation's long-term goals and then devising a plan (strategy) to achieve them

Critical path analysis (CPA)

the process of planning the sequence of activities in a project in order to discover the most efficient and quickest way of completing it

Benchmarking

the process of setting competitive standards, based on the achievements of other firms, against which a firm will monitor its progress. The benchmarking firm tends to focus on the companies that are the best in its industry ('best in class') but for specific functions a company may compare itself with firms in other industries

Data mining

the process whereby a business transforms raw data into useful information, to support the various activities of the business

Financial accounting

the provision of financial information to show external users the financial performance of the business. It concentrates on historical data

Delayering

the removal of one or more layers of hierarchy from the management structure of an organisation; it leads to a flatter hierarchical structure with a wider span of control

Operating profit

the revenue earned from everyday trading activities minus the costs involved in carrying out those activities. It is also gross profit minus expenses.

Re-shoring

the reverse of off-shoring; the transfer of business operations back to the country of origin; also knows as on-shoring

Research and development (R&D)

the scientific investigation necessary to discover new products or manufacturing processes , and the procedures necessary to ensure that these new products and processes are suited to the needs of the market.

Critical path

the sequence of activities in a project that must be completed within a designated time in order to prevent any delay in overall completion of the project

Strategic implementation

the stage when a strategic plan is put into effect in order to achieve the objectives for which it has been designed; the stage where strategies are translated into policies, rules, procedures and operational targets within the different functional areas

Innovation

the successful exploitation of new ideas. Innovation enables businesses to compete effectively in an increasingly competitive global environment

Direct investment

the taking of a controlling ownership in a company in one country by a company based in another country; this can be via organic growth or by the takeover of a foreign business; sometimes known as foreign direct investment.

Ventures

the term used for a range of different arrangements between two or more firms ; most usually involve companies in the early stage of development with high growth potential ; venture capitalists or larger companies invest in these companies knowing that the risk is high but the rewards are equally high.

Core competences (often known as core competencies)

the unique ability or abilities of a business that enable it to achieve a competitive advantage

Organisational culture

the unwritten code that affects the attitudes and behaviour of staff, approaches to decision making and the leadership style of management; the shared values of an organisation, including the beliefs and norms that affect every aspect of work life, from how people greet each other to hoe major policy decisions are made

Fiscal policy

the use of taxation and government expenditure to influence the economy

Strategic positioning

the view people take of a business that results from the business's strategic decision making

Investment criteria

the ways in which a business will judge whether an investment should be undertaken

Synergy

the whole is greater than the sum of parts; synergy is sometimes summarised as '1+1=3'

Reserves and retained earnings

those items that arise from increases in the value of the company, which are not distributed to shareholders as dividends, but are retained by the business for future use

Average rate of return ARR

total net returns divided by the expected lifetime of the investment (usually a number of years), expressed as a percentage of the initial cost of the investment.

Bartlett and Ghoshal's transnational strategy

tries simultaneously to achieve lower costs through location economies, economies of scale and experience curve effects and to differentiate products across different international markets; most appropriate when there are high pressures for cost reduction and for local responsiveness.

Emergent strategy

unplanned strategy that emerges in response to unexpected opportunities and challenges; a response to internal and external changes that were not envisaged at the time of the original planned strategy

Franchise

when a business (the franchisor) gives another business (the franchisee) the right to supply its product or service

External growth

when a firm expands by integrating with another firm as a result of either a merger or a takeover

Organic (internal) growth

when a firm expands its existing capacity or range of activities by extending its premises or building new factories from its own resources, rather than integration with another firm

Off-shoring

when companies outsource or subcontract business activities overseas, largely because labour and other production costs are much cheaper there; also knowns as outsourcing off-shore

Takeover (also known acquisition)

where one firm buys the majority shareholding in another firm and therefore assumes full management control.

Planned strategy

where the main elements of the strategy have been planned in advance and implementation involves putting the precise plan into effect in order to achieve the previously agreed objectives; also known as intended strategy

Merger

where two or more firms agree to come together under one board of directors

Flexible employment contracts

working arrangements that give some degree of flexibility about how long, where, when and at what times employees work; the flexibility can be in terms of working time, working location or the pattern of working