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Andover Business
AS key terms
| Question | Answer |
|---|---|
| Variance | The difference between a budgeted figure and the actual figure achieved. |
| Variance Analysis | Is the comparison by an organisation of its actual performance with its expected budgeted performance over a certain time period. |
| Favourable Variance | This is a change from a budgeted figure that leads to higher than expected profits. |
| Adverse Variance | This is a change from a budgeted figure that leads to lower than expected profits. |
| Creditors | Suppliers owed money by the business – purchases have been made on credit. |
| Credit Control | The monitoring of debts to ensure that credit periods are not exceeded. |
| Bad Debt | Unpaid customer bills that are now very unlikely to ever be paid. |
| Overtrading | Expanding a business rapidly without obtaining all of the necessary finance so that a cash flow shortage develops. |
| Profit Margin | The profit made as a proportion of sales revenue. |
| Gross Profit | This is calculated by subtracting only variable costs from sales revenue, ignoring fixed costs. |
| Net Profit | This is calculated by subtracting total costs from sales revenue. |
| Return on Capital | The proportion that the net profit is of the capital invested in the business or project. |
| Organisational Structure | The way the jobs, responsibilities and power within a business are organised. |
| Organisational Chart | A diagram showing job titles, lines of communication and responsibility within a business. |
| Levels of Hierarchy | The number of layers of management and supervision existing in an organisation. |
| Chain of Command | The lines of authority within the business. |
| Lines of Communication | How information is passed up, down and across an organisation. |
| Span of Control | The number of subordinates, one job/post holder is responsible for. |
| Work Load | How much work one employee, department or team have to complete in a given period of time. |
| Job Role | The tasks involved in a particular job. |
| Delegation | Passing the authority to make specific decisions to somebody further down the organisational hierarchy. |
| Communication Flows | How information is passed around an organisation including downwards, upwards, sideways and through the grapevine or gossip network. |
| Workforce Role | The tasks involved in a particular level or grade of job within an organisation. |
| Workforce Performance | Methods of measuring the effectiveness of employees including labour productivity, staff turnover and absenteeism. |
| Labour Turnover | Percentage of the total workforce who leave in any given time period (e.g. one year). |
| Labour Productivity | The contribution made by employees to the output of a business. |
| Absenteeism | The number of working days lost as a result of an employee’s deliberate or habitual absence from work. |
| Recruitment and Selection Process | How a business chooses the best candidate for a vacancy it has identified. |
| Job Description | A summary of the main duties and responsibilities associated with an identified job. |
| Person Specification | Identifies the skills, knowledge and experience a successful applicant is likely to have. |
| Internal Recruitment | Candidates from inside the organisation. |
| External Recruitment | Candidates from outside the organisation. |
| Methods of Selection | Ways in which businesses recruit the best candidate for an identified vacancy. These can be internal or external to the organisation and will depend upon the time available, the budget available and the specialist skills available in the organisation. |
| Training | Giving employees the knowledge, skills and techniques necessary to fulfil the requirements of a job. |
| Induction Training | Is given as an initial preparation upon taking up a post. Its goal is to help new employees reach the level of performance expected from an experienced worker. |
| Off-The-Job Training | Away from the place of work e.g. at a training centre or college. |
| On-The-Job Training | Learning by doing the job, under the guidance of an experienced member of staff or external trainer. |
| Motivation | The factors that inspire an employee to complete a task at work. |
| Job Design | Changing the nature of a job role in order to increase motivation or reduce dissatisfaction at work. |
| Empowerment | Giving employees the power to do their job: trusting them, giving them the authority to make decisions and encouraging feedback from them. |
| Job Rotation | Varying an employee’s job on a regular basis. |
| Job Enlargement | Expanding the number of tasks completed by an employee. |
| Job Enrichment | Increase the level of responsibility within a job to make work more challenging and rewarding. |
| Operational Targets | These are specific and usually measurable objectives set for each operations activity of a business. |
| Capacity | The maximum output that a firm can produce with existing resources. |
| Capacity Utilisation | This is the proportion that current output is of full capacity output. |
| Unit Cost | Is average cost per unit of output. |
| Excess Capacity | When a business has greater production capacity than is likely to be used in the foreseeable future. |
| Overtime | Staff working beyond their contracted hours in exchange for a higher hourly wage. |
| Temporary Staff | Workers employed for a fixed period of time after which the employment contract may not be renewed. |
| Part-time Staff | Workers employed on a less than full weekly hours contract e.g. 15 hours per week. |
| Sub-Contracting | Using a supplier to manufacture part or all of a firm’s product or service. |
| Stocks | Materials or finished goods held by a firm as needed to supply customers demand. |
| Rationalisation | Reorganising resources to cut costs – often leading to a cut back in capacity. |
| Quality Product | A product or service that meets customers’ expectations and is therefore ‘fit for purpose’. |
| Quality Standards | The expectations of customers expressed in terms of the minimum acceptable production or service standards. |
| Quality Control | This is based on inspection of the product or a sample of products. |
| Quality Assurance | This is a system of agreeing and meeting quality standards at each stage of production to ensure customer satisfaction. |
| ISO 9000 | This is an internationally recognised certificate that acknowledges the existence of a quality procedure that meets certain conditions. |
| Total Quality Management (TQM) | An approach to quality that aims to involve all employees in the quality improvement process. |
| Internal Customers | People within the organisation who depend upon the quality of work being done by others. |
| Customer Service | The provision of service to customers before, during and after purchase to the standard that meets customer expectations. |
| Supplier Relationships | These are links with the companies that supply a business with goods and services. |
| Service Level Agreement | Agreements or contracts with suppliers that clearly lay down the service that they must provide. |
| Information Technology | The use of electronic technology to gather, store, process and communicate information. |
| Robot | Computer controlled machine able to perform physical task. |
| Supply Chain | All the stages in the production process from obtaining raw materials to selling to the consumer – from point of origin to point of consumption. |
| Sustainability | Production systems that prevent waste by using the minimum of non-renewable resources so that levels of production can be sustained in the future. |
| Marketing | Identifying and meeting customer needs. |
| Niche Marketing | Meeting the needs of a relatively small number of potential customers. |
| Market | Anyone willing and with the financial ability to buy a product or service. |
| Mass Marketing | Meeting the needs of a very large number of potential customers. |
| Consumer Marketing | Creating and delivering products to solve consumer’s needs. |
| Business Marketing | Serving the needs of a business or businesses within one or more industries. |
| Marketing Mix | The integration of product, place, promotion and pricing designed to achieve the marketing objectives of the business. |
| Product Development | Changing aspects of goods and services to meet the changing needs of existing customers or to target a different market. |
| Product Line | A set of related goods or services. |
| Product Mix | The full range of products offered by a business, also known as product portfolio. |
| Unique Selling Point | A feature or function of a product that makes it different to any other on the market. |
| Product Differentiation | Creating a perceived difference for a product in a competitive market. |
| Product Portfolio Analysis | Analysing the existing product mix to help develop a balanced range of goods and services. |
| Boston Matrix | A method of analysing the products in a firm’s portfolio based on relative market share and market growth. |
| The Product Life Cycle | The path of a product from its introduction onto the market, to its eventual disappearance from that market. |
| Promotion | Bringing a product or range of products to the attention of existing and potential customers. |
| Sales Promotion | Offers designed to increase sales. |
| Promotional Activities | The ways in which a business can communicate with its potential and existing customers with the aim of increasing sales. |
| Direct Selling | A way of selling directly to the final consumer without another intermediary. |
| Merchandising | The visual presentation of a product to the consumer at the point of sale. |
| Advertising | The use of media to communicate with consumers. |
| Public Relations | Communicating with the media and other interested parties to enhance the image of the business and its products, and thereby increase sales. |
| Branding | Creating an identity for a business and its products to differentiate it from rivals in the market. |
| Promotional Mix | The combination of promotional activities which make up a campaign to communicate with a target market. |
| Pricing Strategies | Long-term pricing plans which take into account the objectives of the business and the value associated with the product. |
| Price Skimming | Entering a market with a high price to attract early adopters and recoup high development costs. |
| Penetration Pricing | Below market pricing to gain a foothold in an established and competitive market. |
| Price Leader | A product that has significant market share and can influence the market price. |
| Price Taker | A firm which sets its prices at the same or similar level to those of the dominant firm in the industry. |
| Pricing Tactics | The manipulation of price to achieve a specific short-term objective. |
| Loss Leaders | Products sold at less than cost to attract customers to a product range. |
| Psychological Pricing | The use of odd number pricing to increase the value-for-money appeal of a product. |
| Price Elasticity of Demand | The responsiveness of demand for a product to a change in its price. |
| Price Inelastic Demand | The demand for a product changes relatively less than the change in price. |
| Price Elastic Demand | The demand for a product changes relatively more than the change in price. |
| Distribution Channel | Method by which a product is sold to the customer. |
| Direct Sale | Where no intermediaries are used. |
| Intermediaries | Organisations involved in the distribution of goods and services on behalf of other businesses. |
| Business to Business Markets | Companies meeting the needs of other businesses in the market place. |
| Business to Consumer Markets | Companies meeting the needs of final consumers of goods and services. |
| Degree of Competition | The number and size of businesses operating in a given market, be it local, regional, national or international. |
| Market Conditions | The nature of the product, the needs of consumers, the number of firms and the ease of entry to the market. |
| Competitiveness | Characteristics that permit a firm to compete effectively with other businesses. |
| Competitive Advantage | The difference between a budgeted figure and the actual figure achieved. |
Created by:
helen davies
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