Business Management Definitions

360-degree feedback

A process in which an employee receives feedback from all of the people with whom they come into contact.

360-degree marketing

A marketing campaign that reaches customers at all possible points of contact.

Above the line promotion (ATL)

Promotion aimed at mass audiences, generally not targeted.

Absorption costing

A cost accounting method that allocates indirect costs among products, departments or regions based on predetermined criteria.

Accountability

Being responsible for one's own and others' actions and results.

Accountant

A person who maintains, inspects and analyzes financial accounts.

Accounting

The process of recording money flows and assets of a business.

Acid test (quick) ratio

A liquidity ratio that measures the value of current assets without stock included, relative to current liabilities.

Acquired needs theory

A theory claiming that human beings have three dominant needs that drive motivation.

Acquisition

A form of external growth where one company purchases another company.

Adaptation

Changes in the marketing mix to better meet the needs of consumers in different markets.

Adverse variance

A situation where actual income and expenditure figures are worse for the business than expected.

After-sales service

The maintenance, help, and information a business provides to the customer after they purchase a product.

Agent

A person who acts on behalf of another person or group.

Agility

The ability to move quickly in reaction to changing conditions.

Algorithm

A set of instructions to solve a problem or to complete a task or computation.

Antitrust laws

Laws that limit the market power of individual companies, encouraging competition.

Appraisal

An assessment of an employee's performance; can take many forms.

Arbitration

A method of conflict resolution where management and employees present arguments to a third party.

Artificial intelligence

The ability of a computer or robot to carry out tasks previously done by humans.

Copyright

Legal protection granting exclusive rights to reproduce work for a specific period.

Corporate social responsibility (CSR)

Businesses actively seek ways to improve society and the environment through core business activities and business designs.

Cost

All expenses required to produce a good or service.

Cost centre

Department in a business incurring costs but no revenue.

Cost focus strategy

Business becoming low-cost producer in a niche market.

Cost leadership strategy

Business becoming low-cost producer in the industry.

Cost of sales

Cost of goods actually sold over a period.

Cost-plus (markup) pricing

Pricing reflecting markup on production costs.

Cost to buy (CTB)

Total cost if production is subcontracted to a supplier.

Cost to make (CTM)

Total cost if manufacturing is kept in-house.

Cradle-to-cradle design and manufacturing

Design aiming to eliminate waste and mimic nature.

Creativity

Generating new ideas and considering existing ones from new perspectives.

Creditor days

Average days for a business to pay debts.

Crisis management

Steps to limit damage from an unpredicted event.

Critical path

Minimum time needed for project completion.

Critical path analysis (CPA)

Tool showing minimum project completion time.

Crowdfunding

Finance form where many invest small amounts in a business.

Cultural clash

Conflict when multiple cultures compete for dominance.

Current assets

Cash and assets convertible to cash in less than a year.

Current liabilities

Debts and payables due within a year.

Current ratio

Ratio measuring current assets relative to liabilities.

Customer loyalty programmes

Strategy rewarding repeat customers.

Cybercrime

Criminal activity using computers and digital tech.

Cybersecurity

Technologies blocking access to tech systems by criminals.

Cyclical variations

Data variations due to cyclical economic changes.

Extension strategy

Selling overseas without establishing production units in another country; the simplest form of international expansion.

External diseconomies of scale

The increased unit cost of production for a business due to the expansion of the industry in which the business operates.

External economies of scale

Cost-saving benefits of large businesses in their region or industry that are not under the control of the business.

External growth

Expansion of a business by relying on external resources, typically with another organisation.

External recruitment

When a business fills a job vacancy by recruiting an employee from outside the organisation, usually because the company needs certain skills that it lacks in its current employees.

External sources of finance

Money for a business that is raised from outside the business, such a bank loan.

External stakeholder

An individual or group that affects, or is affected by, an organisation, but who is not directly involved inside the organisation.

Extrapolation

A forecasting method used by businesses to identify trends using past data and extending this information and trend to predict future data.

Extrinsic motivation

Where a person engages in an activity because of a reward outside the activity itself, such as being paid.

Favourable variance

A situation whereby actual income and expenditure figures are better for the business than expected.

Internal economies of scale

Cost reductions experienced by a business when it expands its output.

Internal growth

Expansion of a business with its own resources.

Internal recruitment

Filling a job vacancy from within the business by promoting and retraining an existing employee.

Internal source of finance

Money raised from the business’s or owner's existing assets.

Internal stakeholder

Individual or group directly involved inside an organization.

International marketing

Selling goods and services in more than one country.

Internet of things (IoT)

Connections of physical objects using software to communicate and exchange data.

Intrapreneur

Person developing new ideas for a business they work for.

Intrinsic motivation

Engaging in an activity for the reward or pleasure in the activity itself.

Introduction stage

First stage of the product life cycle when the product is launched.

Intuitive thinking/management

Fast reasoning by experienced managers combining emotional intelligence and past learning.

Inventory

Raw materials used in production and goods available for sale.

Investment

Spending on non-current assets.

Investment appraisal

Evaluation of an investment decision.

Iteration

Process of creating a new version of something.

Jargon

Terminology used in specific professions or industries.

Job enlargement

Adding more tasks to an employee’s job description.

Job enrichment

Giving challenging tasks to make work more interesting for an employee.

Job production

Producing unique items tailored to individual customer needs.

Job rotation

Rotating employees into different positions to gain experience.

Joint venture

Two businesses creating and operating a third organization.

Just-in-case (JIC)

Holding buffer stocks to continue operations during unforeseen events.

Just-in-time (JIT)

Ordering and delivering inputs immediately to minimize stock.

Labour intensive

Production process using more human labor relative to physical capital.

Labour mobility

Workers' ability to move to new locations or change careers.

Labour productivity

Output per worker over a defined period.

Labour turnover

Percentage of workers leaving the business in a period.

Laissez-faire leadership

Leadership style allowing group members to make decisions.

Leadership

Strategic and creative thinking inspiring people to meet challenges and goals.

Lead time

Time taken for a supplier to deliver from ordering.

Lean production

Strategies to reduce waste in the production process.

Leasing

Renting a fixed asset over a period instead of buying.

Levels of hierarchy

Number of layers of authority within an organization.

Liability

Being legally responsible for something.

Limited liability

Owners not personally responsible for business debts if it fails.

Linear production

Taking resources, making products, and disposing of them.

Line of best fit

Line expressing the relationship between data points.

Liquidity

Ability to convert current assets into cash.

Liquidity ratios

Measure of a business’s ability to settle short-term debt obligations.

Loan

Medium- or long-term source of finance used to buy fixed assets.

Location

Geographic position of a business.

Lock-out

Management blocking workers from entering the workplace.

Long-term financing

Funds needed for expensive equipment and facilities.

Long-term liabilities

Borrowing not due within a year.

Loss leader

Product sold at a loss to attract customers.