
Ansoff’s Matrix
A model used to show the degree of risk associated with the four growth strategies of market penetration, market development, product development and diversification
Backward vertical integration
Integration with a business in the same industry but a supplier of the existing business
Business plan
A written document that describes a business, its objectives and its strategies, the market it is in and its financial forecasts
Business process re-engineering
Fundamentally rethinking and redesigning the processes of a business to achieve a dramatic improvement in performance
Capital goods
Physical goods that are used by industry to aid in the production of other goods and services
Change Management
Planning, implementing, controlling and reviewing the movement of an organisation from its current state to a new one
Command economy
Economic resources are owned, planned and controlled by the state
Computer-aided Design (CAD)
Using computers and IT when designing products
Computer-aided Manufacturing (CAM)
The use of computers and computer-controlled machinery to speed up the production process and make it more flexible
Conglomerate integration
Merger with or takeover of a business in a different industry
Consumer goods
The physical and tangible goods sold to the general public
Consumer services
Non-tangible products that are sold to the general public
Corporate or strategic objectives
Important, broadly defined targets that a business must reach to achieve its overall aim
Corporate Social Responsibility
Concept that businesses consider the interests of society by taking responsibility for the impact of their decisions and activities on the world
Cost-push inflation
Caused by rising costs forcing businesses to increase prices
Decision tree
A diagram that sets out the options connected with a decision and the outcomes and economic returns that may result
Demand-pull inflation
Caused by excess demand in an economy
Diseconomies of scale
Factors that cause average costs of production to rise when the scale of operation is increased
Diversification
The process of selling different, unrelated goods or services in new markets
Economies of scale
Reduction in a firm’s unit (average) costs of production that result from an increase in the scale of operations
Economic growth
Increases in the level of a country’s Gross Domestic Product (GDP)
Entrepreneur
Someone who takes the financial risk of starting and managing a new venture
Environmental audit
Assesses the impact of a business’s impact on the environment
Ethical code (Code of conduct)
A document detailing a company’s rules and guidelines on staff behaviour that must be followed by all employees
Ethics
Moral guidelines that determine decision making
Exchange rate
The value of one currency in terms of another currency
Expected value
The likely financial result of an outcome obtained by multiplying the probability of an event occurring by the forecast economic return if it does occur
External constraints
Limiting factors in decision-making that are beyond the organisation’s control
External growth
Business expansion achieved by means of merging with or taking over another business (from either the same or a different industry)
Fishbone diagram
A visual identification of many potential causes of a problem
Fiscal Policy
Changes in government spending levels and tax rates
Force field analysis
An analytical process used to map the opposing forces within an environment (such as a business) where change is taking place
Forward vertical integration
Integration with a business in the same industry but a customer of the existing business
Franchise
A business that uses the name,logo and trading systems of an existing successful business
Free international trade
International trade that is allowed to take place without restrictions such as ‘protectionist’ tariffs and quotas
Free-market economy
Economic resources are owned largely by the private sector with very little state intervention
Globalisation
The growing trend towards worldwide markets in products, capital and labour, unrestricted by barriers
Horizontal integration
Integration with firm in the same industry and at the same stage of production
Inflation
The rate of change in the average level of prices
Information technology
The use of electronic technology to gather, store, process and communicate information
Internal constraints
Limiting factors in decision-making that can be controlled by the organisation
Internet
The worldwide web of communication links between computers
Intuitive decision-making
Involves making decisions based on instinct or ‘gut feeling’ for a situation (perhaps based on the manager’s experience)
Joint venture
Two or more businesses agree to work closely together on a particular project and create a separate business division to do so
Limited Liability
The potential loss a shareholder has if the company fails is the amount invested in the company
Market development
The strategy of selling existing products in new markets
Market Penetration
The objective of achieving higher market shares in existing markets with existing products
Merger
An agreement by shareholders and managers of two businesses to bring both firms together under a common board of directors
Mission Statement
A statement of the business’s core aims, phrased in a way to motivate employees and to stimulate interest by outside groups
Mixed economy
Economic resources are owned and controlled by both private and public sectors
Monetary Policy
Changes in the level of interest rates which make loan capital more or less expensive
Multinational companies
Business organisations that have their headquarters in one country but with operating branches, factories and assembly plants in other countries
Non-governmental organisation (NGO)
A legally constituted body with no participation or representation of any government
Non-profit organisation
Any organisation that has aims other than making and distributing profit
Partnership
A business formed by two or more people to carry on a business together with share capital investment and responsibility
PEST analysis
Analytical framework for external environment factors affecting business objectives and strategies
Primary sector business activity
Firms engaged in extracting natural resources so they can be used and processed by other firms
Private limited company
A small to medium sized business that is owned by shareholders who are often member of the same family
Private sector
Comprises businesses owned and controlled by individuals or groups of individuals
Privatisation
The sale of public sector organisations to the private sector
Pressure group
An organisation created by people with a common interest or objective who lobby businesses and governments to change policies so that the objective is reached
Public corporation
A business enterprise owned and controlled by the state also known as nationalised industry
Private Finance Initiative (PFI)
Investment by private sector organisations in public sector projects
Product Development
The development and sale of new products or new developments of existing products in existing markets
Project Champion
a person assigned to support and drive a project forward
Project groups
Created by an organisation to address a problem that requires input from different specialists
Public limited company (plc)
A limited company often a large business with the legal right to sell shares to the public
Public-private Partnership (PPP)
Involvement of the private sector, in the form of management expertise and/or financial investment, in public sector projects aimed at benefiting the public
Public sector
Comprises organisations accountable to and controlled by central or local government (the state)
Quota
A physical limit placed on the quantity of imports of certain products
Recession
Six months (two quarters) of falling GDP (negative growth)
Secondary sector business activity
Firms that manufacture and process products from natural resources
Scale of operation
The maximum output that can be achieved using the available inputs (resources)
Share
A certificate confirming part ownership of a company
Shareholder
A person or institution owning shares in a limited company
Social audit
An independent report on the impact a business has on society
Social enterprise
A business with mainly social objectives that reinvests most of its profits into benefiting society rather than maximising returns to owners
Sole trader
A business in which one person provides the permanent finance and, in return, has full control of the business and is able to keep all of the profits
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
Strategic Alliance
Agreements between firms in which each agrees to commit resources to achieve an agreed set of objectives
SWOT analysis
A form of strategic analysis that identifies and analyses the main internal strengths and weaknesses and external opportunities and threats
Tactical or operational objectives
Short or medium term goals or targets which must be achieved for an organisation to attain its corporate objectives
Takeover
When a company buys over 50% of the shares of another company and becomes the controlling owner (often referred to as acquisition)
Tariff
Tax imposed on an imported product
Tertiary sector business activity
Firms that provide services to consumers and other businesses
Triple bottom line
The three objectives of social enterprises which are economic, social and environmental
Unemployment
The numbers of people in an economy willing and able to work who cannot find employment
Vision Statement
A statement of what the organisation would like to achieve or accomplish in the long term