List of Key Terminology by topic
Marketing
● Mass marketing - targeting the entire market appealing to all customer groups
● Niche marketing - targeting smaller segments of a larger market with specific
characteristics
● Market orientation - centring marketing strategy on the needs of the customer
● Product orientation - centring marketing strategy on the strengths of the business
and their products
● Primary research - collecting first hand information for a specific purpose
● Secondary research - using market research information which has already been
collected by other sources
● Qualitative data - based on thoughts and opinions
● Quantitative data - numerical information which can be manipulated and used to
make calculations
● Market segmentation - classifying customers into subgroups based on how they will
respond to marketing approaches. (Geographic, demographic, income, behavioural)
● Market mapping - map which identifies position in the market by features which
distinguish different products or firms
● Competitive advantage - anything which allows a business to stand out from its
rivals (low cost or differentiation)
● Adding value - increasing the worth of resources by modifying them
● Demand - quantity of a product consumers are willing and able to purchase
● Supply - quantity of a product producers are willing and able to provide
● Price elasticity of demand - responsiveness of quantity demanded to a change in
price
● Income elasticity of demand - responsiveness of quantity demanded to a change in
income
● Branding - differentiating a product from competitors using name, logo etc.
● Cost plus pricing - adding desired profit margin onto the cost of making each
product
● Price skimming - setting high price (which may later be reduced) to take advantage
of early adopters
● Penetration pricing - setting low price (which may later be raised) on launch to
attract customers and build market share
● Competitive pricing - setting prices in line with those charged by direct rivals
● Predatory pricing - setting very low prices (often below cost) to drive out a
competitor
● Psychological pricing - pricing just below significant price points to give a feel for
better value
● Distribution channel - method used to get a product or service from producer to
final consumer
● Product life cycle - the stages a product goes through over time from development,
introduction, growth, maturity to decline
● Extension strategies - used to keep a product in the maturity phase of the PLC for
as long as possible, preventing decline
● Boston matrix - shows a business product portfolio by market growth and market
share
○ Star - high growth high share
○ Cash cow - low growth high share
○ Question mark - high growth low share
○ Dog - low growth low share
Human Resources
● Flexible working - adapting patterns of work to better suit employees needs and
thus empower and motivate them
● Multiskilling - training staff in a wider variety of tasks
● Part time staff - working fewer hours or days
● Temporary staff - working on short term contracts
● Dismissal - worker loses their job due to incompetence or misconduct
● Redundancy - workers job ceases to exist due to lack of demand or changes in
technology
● Collective bargaining - when groups of employees team up to negotiate with
employers, usually through a trade union
● Job description - outlines roles, tasks and responsibilities of a job
● Person specification - outlines characteristics and qualifications of the desired
candidate
● Internal recruitment - filling vacancies from within the organisation
● External recruitment - filling vacancies from outside the organisation
● Induction training - given when first starting job
● On the job training - given within the workplace
● Off the job training - given through external providers outside the workplace
● Span of control - number of subordinates a supervisor directly manages
● Chain of command - path that communication travels from top of organisation
hierarchy to bottom
● Delegation - passing authority for tasks to lower level in organisational structure
● Centralised structure - decisions made at head office with individual branches given
instructions
● Decentralised - day to day decision making delegated from head office to individual
branches
● Tall structures - large number of levels of hierarchy with narrow spans of control
● Flat structures - few levels of hierarchy with wide spans of control
● Matrix structure - teams from different departments are created to run different
projects in parallel with each other
● Motivational theories
○ Taylor - workers motivated narrowly by money, tasks should be broken down
and piece rate pay used
○ Maslow - hierarchy of needs, physiological and safety needs should be met
first before can think about belonging, esteem and self-actualisation
○ Herzberg - two factor theory, motivators have a positive impact, hygiene
factors demotivate if they are removed
○ Mayo - human relations and team working crucial
Entrepreneurs and leaders
● Leadership styles
○ Autocratic - leader holds power, communication is top down, rewards and
penalties used to motivate
○ Paternalistic - decisions made by the leader but based on what is best for
employees
○ Democratic - greater involvement for employees in decision making with
power shared among the group
○ Laissez-faire - leader has little input and delegates power
● Sole trader - business owned and run by one person (unlimited liability)
● Partnership - business owned and run by two or more people (unlimited liability)
● Private limited company (ltd) - company owned by shareholders, but shares only
sold privately
● Public limited company (plc) - company owned by shareholders with shares
bought and sold on open stock market
● Limited liability - when business is separate legal entity to owners and therefore
responsibility for debts ends with the business
● Unlimited liability - when business and owner are same legal entity so owner holds
responsibility for debts of business
● Franchise - agreement allowing someone to trade under another business name in
exchange for a share of the profits
● Opportunity cost - the next best alternative which is foregone when a choice is
made
Finance
● Sources of finance - where funding comes from to start up or expand a business. To
include: family and friends, loans, overdrafts, peer-to-peer funding, venture capital,
share capital, leasing, trade credit and grants
● Cash flow - short term money inflows and outflows for a business (not to be
confused with profit)
● Sales revenue - all income earned by a business (selling price x quantity)
● Sales volume - total units sold by a business
● Fixed costs - costs which do not change directly with output
● Variable costs - costs which change directly with output
● Break even - the level of output where total cost exactly equals total revenue
● Margin of safety - the difference between actual and break even output
● Budget - plan for expenditure, income or profit over a period of time
● Historical budget - using past figures to construct future plan for expenditure,
income or profit
● Zero budgeting - setting all budgets to zero with every expenditure needing to be
justified
● Variance - the difference between actual and budgeted figures
● Profit - revenue minus costs (gross, operating and net in formula sheet)
● Liquidity - ease at which assets can be turned into cash, for a business shows short
term financial stability - whether they can pay short term debts
● Working capital - money available for the day to day running of the business
Resource management
● Job production is making a tailor-made product to suit an individual customers
needs
● Flow production is the continuous production of a single item
● Batch production is producing a set number of identical items
● Cell production is using production line technology to produce a range of products
flexibly
● Productivity - output per unit of input in a period of time
● Unit costs - average cost per unit of output produced
● Efficiency - making best possible use of resources by reducing waste and
minimising average costs
● Labour intensive - producing using a higher proportion of workers to machines
● Capital intensive - producing using a higher proportion of machines to workers
● Capacity utilisation - actual output as a percentage of maximum possible output
● Buffer stock - minimum stock levels a business does not want to go below - used to
meet spikes in demand
● Lead time - time taken for supplier to deliver once order has been placed
● Lean production - producing more with less, eliminating waste
● Just in time - stocks arrive only as needed, zero buffer stock
● Quality control - monitoring and checking quality at end of process using inspection
teams
● Quality assurance - right first time - embedding quality through production process
● TQM - philosophy of building quality assurance right through culture of organisation
● Quality circles - teams of employees meeting together to address issues with quality
● Competitive advantage - anything which gives the business an edge over rivals
Economic influences
● GDP - total output produced in a country in a period of time
● Business cycle - trend of peaks and troughs in GDP growth over time
● Inflation - rise in average price level
● Interest rate - cost of borrowing and return from saving
● Exchange rate - price of one currency in terms of another
● Uncertainty - when consumers and businesses are unsure about the future which
limits spending and investment
Objectives and strategy
● Mission statement - purpose of the business set out in words that inspire
● Ansoff matrix - growth strategies
○ Market penetration - existing markets and products
○ Product development - new products existing markets
○ Market development - new markets existing production
○ Diversification - new products and markets
● Porter's strategic matrix - how to gain a competitive advantage
○ Cost focus - low cost, niche market
○ Cost leadership - low cost, mass market
○ Differentiation focus - adding value standing out from rivals, niche market
○ Differentiation leadership - adding value standing out from rivals, mass market
● Distinctive capabilities - anything a firms does well that others would have difficulty
replicating - source of a competitive advantage
● Strategic decisions - complex long term decisions
● Tactical decisions - medium or short term - how will strategy be achieved
● SWOT analysis
○ Strengths - helpful, internal
○ Weaknesses - harmful, internal
○ Opportunities - helpful, external
○ Threats - harmful, external
● Porter's five forces
○ Rivalry within industry - number of firms in market and competition between
them
○ Threat of new entrants - ease for firms not currently in the market to set up.
Affected by barriers to entry
○ Threat of substitutes - possibility of consumers switching to alternatives
outside the market
○ Buyer power - influence of customers over the business
○ Supplier power - influence of suppliers over business
Business Growth
● Economies of scale - when business growth leads to falling average cost per unit
● Diseconomies of scale - when business growth leads to rising average cost per unit
● Overtrading - when a firm grows more quickly than its physical or financial resources
can cope with
● Merger - decision of two companies to combine
● Takeover - when one company purchases another
● Horizontal integration - between two firms at the same stage of the production
process
● Vertical integration - between two firms at different stages of the production process
○ Forwards - towards customer
○ Backwards - towards supplier
● Organic growth - when a firm grows using its own resources
Decision making techniques
● Extrapolation - using past data to make predictions about the future
● Correlation - measures relationship between two variables
● Investment appraisal - means of financially assessing viability of an investment
project, using ARR, payback period or NPV
● Decision tree - mathematical model of decision making using probability
● CPA - using network diagram to manage resources and identify priorities through the
duration of a project
● Float time - spare time available for completion of an activity not on the critical path
Business decisions
● Short termism - focus on more immediate goals and objectives
● Long termism - focusing more on future gains
● Corporate culture - the way things are done in an organisation including the
standards and values that define it.
● Strong culture - clear in values with all employees subscribing to them
● Weak culture - less clarity of values
● Handys cultures
○ Power - one or a few people dominate
○ Role - rigid distribution of work based on job description or rank
○ Task - teams formed with power shared evenly between members
○ Person - emphasis based on individual, their skills and expertise
● Stakeholder - anyone with an interest in the business
● Shareholder - someone who owns equity in the business
● Stakeholder concept - purpose of business is to create value for all stakeholders
● Shareholder concept - purpose of business is to narrowly focus on returns for
shareholders (profit and dividends)
● Corporate social responsibility - considering impact of business on society and
trying to do good
Assessing competitiveness
● Income statement - shows profit or loss over a period of time
● Balance sheet - shows what a business owns (assets) and what it owes (liabilities)
at a point in time
● Profitability ratios - show how effectively a business is at earning profit relative to its
size
● Liquidity ratios - show the short term financial position of a business
● Gearing - shows the proportion of a business funded by long term borrowing
● Labour productivity - output per unit of labour input
● Labour turnover - proportion of employees leaving the business in a period of time
● Labour retention - proportion of employees staying in the job in a period of time
● Absenteeism - working days lost to absence as a proportion of total working days
Managing Change
● Incremental change - happens gradually, usually with internal causes
● Disruptive change - happens rapidly, usually by external causes
● Kotter and Shesinger - how to manage resistance to change e.g. education,
participation and negotiation
● Scenario planning - visualising possible outcomes and identifying how to deal with
threats
Global business, Section 4.1
● ASEAN: Association of South-East Asian Nations; a trading bloc made up of the
smaller nations of south-east Asia, such as Vietnam and Thailand.
● Asian economies: The region of the globe where most of the world's fastest-
growing economies are clustered.
● Business specialisation: When companies decide to focus on one type of product
instead of producing too many varieties.
● China: A huge country with the fastest-ever transition from poverty to middle- income
status.
● Competitive advantage: A long-term basis for standing out from rivals, either by
lowest costs or by the highest differentiation.
● Emerging economies: Low-income countries that are enjoying sustained,
above-average growth rates.
● European Union (EU): The world's largest and most valuable trading bloc; 28
members with free movement of labour (Brexit would make it 27).
● Foreign Direct Investment (FDI): When overseas companies invest directly into
your country, e.g. by building factories or buying assets.
● GDP per capita: The value of all a country's output of goods and services divided by
the population size.
● Globalisation: The economic forces leading to more international trade, often based
on products with global appeal.
● Government legislation: Laws passed by parliaments, possibly to disadvantage
foreign exporters trying to bring goods here.
● Human Development Index: A composite index based on growth in Gross National
Income (GNI) plus measures of the population's literacy and health. International
trade: Trade between countries, often on the basis of specialisation.
● Literacy: Measurement of the population's ability to read and write.
● Migration: Population flows across borders, either outward (emigration) or inward
(immigration).
● NAFTA: North American Free Trade Agreement; the trading bloc consisting of
America, Canada and Mexico.
● Political change: The way progress towards peace can help international trade and
therefore globalisation.
● Protectionism: Government actions to protect home producers from overseas
competitors.
● Quotas: Physical limits on the number of items that are allowed into the country.
Structural change: The move to a more digital world may make it easier for global
trade to operate, e.g. ASOS.
● Subsidies: Government payments to home producers that may be regarded as a
form of protectionism.
● Tariffs: Import taxes levied at the point of entry to a country.
● Trade barriers: Obstructions to importing such as tariffs, quotas and non-tariff
barriers such as legislation
● Trade liberalisation: Actions to pull down trade barriers, such as forming bilateral
(two-way) free trade agreements.
● Trading blocs: Groupings of countries that have free trade with each other behind
external tariff walls.
● Transnational companies: Firms that operate in a truly global way, with divisions in
every significant country in the world.
● Transport costs: Falling transport costs in recent years have been important in
allowing international trade to grow rapidly.
Global business, Sections 4.2 and 4.3
● Assessment of a country as a market: Weighing up whether it's worth launching
into a new country, based on local household incomes, the quality of infrastructure,
political stability, ease of doing business and the exchange rate.
● Assessment of a country as a production location: Weighing up whether it's
worth locating a new factory in a country based on risk factors plus the likely return
on investment.
● Conditions that prompt trade: Pull factors such as growth prospects elsewhere,
and push factors such as saturated home markets.
● Cultural diversity: Recognition that groups of people across the globe have different
interests and values.
● Ease of doing business: How quickly and cheaply a new business can be formed
and usual business transactions be carried out.
● Economies of scale: Reductions in average costs as the scale of the operation
increases, e.g. due to technical economies.
● Ethnocentric marketing: Marketing based on confidence in your own ethnicity, with
no concessions to the tastes of the locals.
● Exchange rates: The value of one country's currency in terms of how much it will
buy of other currencies.
● Geocentric marketing: Basing marketing on the wants/needs of consumers globally,
perhaps adapting slightly for local tastes.
● Global competitiveness: A company's ability to compete on the basis of cost or
differentiation with the best global firms.
● Global marketing strategy: A marketing plan that treats the world as a single
market, e.g. using the same TV commercial everywhere.
● Global mergers: Mergers or takeovers between companies resident in different
countries, e.g. Chinese firm buys UK firm.
● Global niche markets: Tightly-defined markets such as for high-end luxury bags
(£5,000+) that exist worldwide.
● Glocalisation: Global localisation, e.g. using global branding such as Ronald
McDonald, but tailoring local menus to local tastes.
● Inappropriate promotion: This occurs when a western firm shows insensitivity
towards local culture, e.g. by showing models wearing bikinis.
● Infrastructure: Basic services needed by everyone, e.g. water, roads, electricity,
airports and super-fast broadband.
● Joint ventures: Time-limited agreements by two companies that they will work
together on a specific project.
● Off-shoring: Relocating work from your home country to overseas, e.g. UK call
centre closed down and work switched to India.
● Outsourcing: Taking a task you've always done 'in-house' and instead contracting a
separate, specialist supplier.
● Polycentric marketing: Marketing that is adapted to local needs, e.g. Mars pricing
Galaxy chocolate at 15p per bar in India.
● Pull factors: Factors that lure a UK company to expand overseas, e.g. China's
growth rate is treble ours.
● Push factors: Weaknesses in its home operations that push a UK company to look
to expand overseas.
● Risk spreading: Reducing your dependence on one business or market by opening
new operations overseas.
Global business, Section 4.4
● Child labour: Children being used in the supply chain; always treated as an
outrage, but worst if it's 'forced' labour.
● Controlling MNCs: MNCs may be so rich and powerful that it's hard for governments
to 'control' their actions.
● Environmental considerations: An ethical MNC would take care over emissions
and waste disposal, even if local rules and laws make it easy to ignore environmental
considerations.
● Exploitation of labour: Some critics think that labour is 'exploited' when people in
developing countries are paid wages that seem low in a UK context.
● FDI flows: 'Foreign Direct Investment' flows into a developing economy may bring
vital foreign currency, but the worry is that, in a few years' time, the MNC will decide
to move on, taking its FDI with it.
● Multinational Corporations (MNCs): Large companies that operate in many
countries, though their head office is in a single country.
● Pressure groups: Organisations formed to achieve a specific social outcome, such
as stopping the global trade in ivory.
● Skills transfer: A key benefit for a local economy from the arrival of a sophisticated
MNC.
● Stakeholder conflicts: In a global context, stakeholder conflicts include the benefits
shareholders may gain at the expense of underpaid local staff.
● Supply chain considerations: The need to audit every aspect of the supply chain,
to avoid outsourced work being done in conditions that would shame you, e.g. forced
child labour.
● Technology transfer: A key benefit for a local economy from the arrival of a
sophisticated MNC.
● Transfer pricing: Transferring profit from high tax to low-tax countries by
manipulating the prices charged between subsidiaries of the same business.
● Waste disposal: MNCs should treat the disposal of their waste the same way in
sub-Saharan Africa as they would in the UK.
