BUSINESS MANGAEMNt

Goods

Physical products produced and sold to customers, such as laptops, books, contact lenses, perfumes, and children's toys.

Needs

The basic necessities that a person must have to survive, including food, water, warmth, shelter, and clothing.

Primary sector

Businesses involved in the cultivation or extraction of natural resources, such as farming, mining, quarrying, fishing, oil exploration, and forestry.

Production

The process of creating goods and/or services, adding value in the process.

Quaternary sector

Sub-category of the tertiary sector, businesses involved in intellectual and knowledge-based activities that generate and share information, such as research organizations.

Secondary sector

Businesses concerned with the construction and manufacturing of products.

Services

Intangible products sold to customers, such as services provided by airlines, restaurants, cinemas, banks, health and beauty spas, schools, and hospitals.

Tertiary sector

Businesses involved with the provision of services to customers.

Adding value

The practice of producing a good or service that is worth more than the cost of the resources used in the production process.

Wants

People's desires, or things they would like to have, such as new clothes, smartphones, and overseas holidays.

Businesses

Organizations involved in the production of goods and/or the provision of services.

Consumers

The people or organizations that actually use a product.

Customers

The people or organizations that buy the product.

Entrepreneurs

People who manage, organize, and plan the resources needed for business activity in pursuit of organizational objectives; risk takers who exploit business opportunities for profit.

Entrepreneurship

The collective knowledge, skills, and experiences of entrepreneurs.

Cooperatives

For-profit social enterprises set up, owned, and run by their members, who might be employees and/or customers.

A company

A limited liability business owned by shareholders, with a separate legal identity from its owners.

Deed of partnership

The legal contract signed by the owners of a partnership that specifies the name, responsibilities, and profit/loss proportions of each partner.

Incorporation

A legal distinction between the owners of a company and the business, ensuring owners are protected by limited liability.

An initial public offering (IPO)

When a business sells all or part of its business to shareholders on a public stock exchange for the first time.

Limited liability

A restriction on the amount of money that owners can lose if the business goes bankrupt; shareholders cannot lose more than their investment in the company.

Non-governmental organizations (NGOs)

Private sector not-for-profit social enterprises that operate for the benefit of others rather than primarily aiming to earn a profit.

Partnerships

A type of private sector business entity owned by 2-20 people (partners) who share responsibilities and burdens.

The private sector

The part of the economy run by private individuals and businesses, rather than by the government.

A privately held company

A business owned by shareholders with limited liability, whose shares cannot be bought or sold on a Stock Exchange.

A publicly held company

An incorporated limited liability business that allows shareholders to buy and sell shares via a public Stock Exchange.

The public sector

The part of the economy controlled by the government, including state healthcare and education services.

A sole trader

A self-employed person who runs the business on his/her own, having exclusive responsibility for its profits or losses.

Social enterprises

Revenue-generating businesses with social objectives at their core, reinvesting profits for social purposes.

A stock exchange

A marketplace for trading stocks and shares of publicly held companies.

Unlimited liability

A feature of sole traders and partnerships where they are personally responsible for all debts.

Business plan

The document that sets out a business idea or proposition, including the objectives, resources (marketing, operations, personnel and finance) and corporate strategies.

Executive summary

A synopsis or abstract of the information provided in the main section of a business plan, highlighting the key points and conclusions.

Corporate social responsibility (CSR)

The conscientious consideration of ethical and environmental practice related to business activity. A business that adopts CSR acts morally towards all of its various stakeholder groups and the well-being of society as a whole.

Ethical Code of Practice

The documented beliefs and philosophies of an organisation, so that people know what is considered acceptable or not acceptable within the organisation.

Ethical Objectives

Organisational goals based on moral guildlines, determined by the business and/or society, which direct and determine decision-making.

Ethics

The moral principles that guide decision-making and business strategy. Morals are concerned with what is considered to be right or wrong, from society’s point of view.

Mission Statement

The declaration of an organization's overall purpose. It forms the foundation for setting the objectives of a business.

Objectives

What an organization strives to achieve. They are the goals of an organization, such as growth, profit, protecting shareholder value and ethical objectives.

Strategic Objectives

The longer-term goals of a business, such as profit maximization, growth, market standing and increased market share.

Strategies

The various plans of action that businesses use to achieve their targets. They are the long-term plans of the organization as a whole.

Tactical Objectives

Short-term goals that affect a unit of the organization. They are specific goals that guide the daily functioning of certain departments or operations.

Tactics

The short-term plans of action that businesses use to achieve their objectives.

Vision Statement

An organization's long-term aspirations, i.e. where the business ultimately wants to be.

Conflict

Situations where stakeholders have disputes or differences regarding certain issues or matters. This can lead to arguments and tensions between various stakeholders groups.

Customers

The clients of a business. As a key external stakeholder group, customers seek to have value for money, such as competitive prices and good quality products.

Directors

Senior executives who have been elected by the company’s shareholders to address business activities on behalf of their owners.

Employees

Staff of an organisation. They have a stake (an interest and involvement) in the organisation they work for.

External Stakeholders

Individuals and organisations not part of the business but have a direct interest in its activities and performance. Examples include customers, suppliers, and the government.

Fiananciers

The financial institutions and individual investors who provide sources of finance for an organisation. They are interested in the organisation’s ability to generate profits and to repay debts.

Government

The ruling authority within a state or country. As an external stakeholder group, the government is interested in businesses complying with the law with regards to the conduct of business activities.

Internal stakeholders

Members of the organization, namely the employees, managers, directors and shareholders (owners) of the business.

The local community

The general public and local businesses that have a direct interest in the activities of an

organization, namely to create jobs and to conduct business activities in a socially responsible way.

Managers

Internal group of stakeholder responsibly for overseeing the daily operations of the business.

Pressure Groups

Individuals with a common concern (such as environmental protection) who seek to place demands on organizations to act in a particular way or to influence a change in their behaviour.

Stakeholder Conflict

Differences in the varying needs and priorities of the various stakeholder groups of a business.

Stakeholder mapping

A model that assesses the relative interest of stakeholders and their relative influence (or power)

Shareholders (or stockholders)

The owners of a limited liability company. Shares in a company can be held by individuals and other organizations.

Stakeholders

Individuals or organizations with a direct interest (known as a stake) in the activities and performance of a business, such as shareholders, employees, customers and suppliers.

Suppliers

An external stakeholder group that provide a business with stocks of raw materials, component parts and finished goods needed for production. They can also provide

commercial services, such as maintenance and technical support.

Acquisition

A method of external growth that involves one company buying a controlling interest (majority stake) in another company, with the agreement and approval of the target company's Board of Directors.

Average cost

The cost per unit of output.

Backward vertical integration

A business amalgamates with a firm operating in an earlier stage of production, such as a car manufacturer taking over a supplier of tyres or other components.

Conglomerates

Businesses that provide a diversified range of products and operate in a range of different industries.

Demerger

A company sells off a part of its business, thereby separating into two or more businesses. It usually happens due to conflicts, inefficiencies and incompatibilities following an earlier merger of two or more companies.

Diseconomies of scale

The cost disadvantages of growth. Average costs are likely to eventually rise as a firm grows due to a lack of control, coordination and communication.

Economies of scale

Lower average costs of production as a firm operates on a larger scale due to gains in productive efficiency, such as easier and cheaper access to source of finance.

External diseconomies of scale

Due to factors beyond its control which cause average costs of production to increase as an industry grows.

External economies of scale

An organization's average cost falls as the industry grows. Hence, all firms in the industry benefit.

External growth

Also known as inorganic growth, it is a business grows and evolves by collaborating with, buying up or merging with other organizations.

Financial economies of scale

Cost savings made by large firms as banks and other lenders charge lower interest (for overdrafts, loans and mortgages) because larger businesses represent lower risk.

Forward vertical integration

A growth strategy that occurs with the amalgamation of a firm operating at a later stage in the production process, such as a book publisher acquiring book retailers.

Franchising

An agreement between a franchisor selling its rights to other businesses (franchisees) to allow them to sell products under its corporate name in return for a fee and regular royalty payments.

Horizontal integration

An external growth strategy that occurs when a business amalgamates with a firm operating in the same stage of production.

Internal diseconomies of scale

Internal problems of mismanagement, causing average costs of production to increase as a firm grows.

Internal economies of scale

A particular organization (rather than the industry as a whole) as it grows in size.

Internal growth

Also known as organic growth, it is a business grows using its own capabilities and resources to increase the scale of its operations and sales revenue.

Joint venture

A growth strategy that combines the contributions and responsibilities of two or more different organizations in a shared project by creating a separate legal enterprise.

Lateral integration

External growth of firms that have similar operations but do not directly compete with each other, such as PepsiCo acquiring Quakers Oats Company.

Marketing economies of scale

Larger businesses can afford to hire specialist managers, thereby improving the organization's overall efficiency and productivity.

Merger

A form of external growth whereby two (or more) firms agree to form a new organization, thereby losing their original identities.

Optimal level of output

The most efficient scale of operation for a business. This occurs at the level of output where the average cost of production is minimized.

Purchaser

The acquiring company in an acquisition or the buyer of another company in a takeover.

Purchasing economies of scale

Larger organizations can gain huge cost savings per unit by purchasing vast quantities of stocks (raw materials, components, semi-finished goods and/ or finished goods).

Risk bearing economies of scale

Large firms can bear greater risks than smaller ones due to having a greater product portfolio.

Specialization economies of scale

Larger firms can afford to hire and train specialist workers, thus helping to boost their level of output, productivity and efficiency.

Strategic alliances

Two or more organizations join together to benefit from external growth, without having to set up a new separate legal entity.

Synergy

A benefit of growth which occurs when the whole is greater than the sum of the individual parts when two or more business operations are combined. Synergy creates greater output and improved efficiency.

Takeover

Also referred to as hostile takeover, it is a company buys a controlling interest in another firm without the prior agreement or approval of the target company's Board of Directors.

Target company

The organization that is purchased by another in an acquisition or takeover deal.

Technical economies of scale

Cost savings by greater use of large-scale mechanical processes and specialist machinery, such as mass production techniques which help to cut average costs of production.

Vertical integration

Takes place between businesses that are at different stages of production.

Vertical integration

Takes place between businesses that are at different stages of production.

GDP

It stands for gross domestic product, it is value of a country's annual output or national income.

A host country

Any nation that allows a multinational company to set up in its country.

MNC

It stands for multinational company, it is an organization that operates in two or more countries, with its head office usually based in the home country.

Protectionist policies

Measures imposed by a country to reduce the competitiveness of imports, such as tariffs (import taxes), quotas and restrictive trade practices.

Protectionist policies

Measures imposed by a country to reduce the competitiveness of imports, such as tariffs (import taxes), quotas and restrictive trade practices.

Opportunities

The external possibilities (prospects) for future development.

Strengths

Internal factors that are favourable compared with competitors.