Cambridge International AS & A Level Business Coursebook Glossary

Flashcards containing key business terms and definitions from pages 1-17 of the AS & A Level Business Coursebook glossary.

What is the definition of absenteeism?

A measure of the rate of workforce absence as a proportion of the employee total.

How is the accounting rate of return ($ARR$) defined?

It measures the annual profitability of an investment as a percentage of the average investment (average capital cost).

What does the Ansoff matrix show?

A model used to show the degree of risk associated with the four growth strategies of market penetration, market development, product development and diversification.

What is the difference between backward vertical integration and forward vertical integration?

Backward vertical integration is integration with a supplier business, while forward vertical integration is integration with a customer business.

What is a blue ocean strategy?

One that exploits uncontested market space through product differentiation and low cost.

What are the components of the BRICS acronym?

Brazil, Russia, India, China and South Africa.

What is the level of output at which total costs equal total revenue known as?

Break-even point.

What is business process outsourcing ($BPO$)?

A form of outsourcing that uses specialist contractors to take responsibility for certain business functions, such as human resources and finance.

What is the difference between capital expenditure and revenue expenditure?

Capital expenditure is the purchase of non-current assets expected to last more than one year, while revenue expenditure is spending on all other costs and assets including wages and inventory.

What is cell production?

Flow production split into self-contained groups that are responsible for a complete unit of work.

What is the definition of corporate culture?

The values, attitudes and beliefs of the people working in an organisation that affect the way they interact with each other, and with external stakeholders.

What is the difference between a cost centre and a profit centre?

A cost centre is a section of a business that incurs costs, whereas a profit centre is a section to which both costs and revenues can be allocated so profit can be calculated.

What is intended by the process of delayering?

Removal of one or more of the levels of hierarchy from an organisational structure.

How is the dividend yield ratio calculated?

A ratio that measures the annual return from dividends as a percentage of current market share price.

What is the definition of economic growth?

An increase in a country's productive potential, measured by an increase in its real $GDP$.

What is emotional intelligence ($EI$)?

The ability to understand one's own emotions, and those of others, to achieve better business performance.

What is the difference between exchange rate appreciation and depreciation?

Appreciation is a rise in the external value of a currency, while depreciation is a fall in the external value of a currency against others.

What are the four factors of production?

The resources needed by business to produce goods or services.

What is the purpose of a force-field analysis?

A technique for identifying and analysing the positive factors that support a decision (driving forces) and negative factors that constrain it (restraining forces).

Within critical path analysis, what is free float?

The length of time an activity can be delayed without delaying the start of the following activities.

How is the gearing ratio defined?

A ratio that measures the proportion of capital employed in the business that is financed by long-term borrowing (non-current liabilities).

What is the difference between hard $HRM$ and soft $HRM$?

Hard $HRM$ focuses on cutting costs, while soft $HRM$ focuses on employee development for self-fulfilment and motivation.

What are hygiene factors in the context of motivation?

Aspects of a worker's job that have the potential to cause dissatisfaction, such as pay, working conditions, and status.

What is intellectual capital?

The intangible capital of a business including human capital, structural capital, and relational capital.

What is the difference between job enlargement and job enrichment?

Job enlargement attempts to increase the scope of a job by broadening tasks, while job enrichment aims to use full capabilities by giving more challenging work.

What does JIT inventory management aim to achieve?

It aims to avoid holding inventories by requiring supplies to arrive just as they are needed and producing completed products to order.

What is the definition of Kaizen?

A Japanese term meaning continuous improvement.

What is the difference between a labour intensive and a capital intensive process?

Labour intensive involves high labour input relative to equipment, while capital intensive involves high equipment quantity relative to labour.

How is the margin of safety defined?

The amount by which the current output level exceeds the break-even level of output.

What is market skimming?

Setting a high price for a new product when a firm has a unique or highly differentiated product with low price elasticity of demand.

What is the difference between a merger and a takeover?

A merger is a friendly agreement to bring two businesses together, while a takeover occurs when one company buys more than $50\%$ of another's shares to become the controlling owner.

What is the difference between monetary policy and fiscal policy?

Monetary policy involves interest rates and money supply, while fiscal policy involves government expenditure, tax rates, and borrowing.

How is net book value calculated?

$$\text{Net book value} = \text{original cost} - \text{accumulated depreciation}$$

What does offshoring involve?

The relocation of a business process from one country to another country.

What is the penetration pricing strategy?

Setting a relatively low price to achieve a high volume of sales.

What factors are analyzed in a PEST analysis?

Political, economic, social and technological factors.

What is Porter's five forces model?

A technique for analysing competitive forces within an industry.

What is the difference between the primary, secondary, tertiary, and quaternary sectors?

Primary extracts natural resources; secondary manufactures/processes products; tertiary provides services to consumers/businesses; quaternary provides information services and R&D.

What is the difference between a private limited company and a public limited company ($plc$)?

A private limited company is owned by shareholders (often family) and cannot sell shares to the public, while a $plc$ has shares traded on a stock exchange available to the public.

What is redundancy?

When a job is no longer required, and the employee becomes unnecessary through no fault of their own.

What is the return on capital employed ($ROCE$) ratio?

A ratio that compares operating profit (profit from operations) and the capital employed in the business.

How is revenue calculated?

$$\text{Revenue} = \text{selling price} \times \text{quantity sold}$$

What are SMART objectives?

Aims that are specific, measurable, achievable, realistic and time-specific.

What is the stakeholder concept?

The view that businesses and their managers have responsibilities to a wide range of groups, not just shareholders.

What components are identified in a SWOT analysis?

Internal strengths and weaknesses, and external opportunities and threats.

What does the term synergy literally mean?

The whole is greater than the sum of parts.

What is the difference between Theory X and Theory Y management views?

Theory X believes employees are lazy and need direction; Theory Y believes employees are internally motivated and enjoy work.

What is total quality management ($TQM$)?

An approach to quality that aims to involve all employees in quality improvement.

What is a unique selling point ($USP$)?

The special feature of a product that makes it different from competitors' products.

How is working capital defined?

The capital needed to pay for raw materials, day-to-day running costs and credit offered to customers; calculated as current assets less current liabilities.

What is zero budgeting?

A method that sets budgets to zero each year, requiring budget holders to argue their case for any finance.