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Privatisation
A transfer of ownership of the public sector (the government) to the private sector (the private owners).
Nationalisation
The transfer of ownership of a firm from the private to public sector
Innovation
The development of new ideas into new products or new methods of producing products
Regulation
The enforcement of principles or rules that result from the passing of a law or series of laws
Gig economy
A labor market characterized by the prevalence of short-term contracts or freelance work as opposed to permanent jobs
Cartel
Exists when two or more businesses collude to control prices and/or output, thereby limiting competition and increasing profits
Merger
Combination of two or more firms into a single business, following an agreement by the firms' management teams and shareholders
Takeover
Occurs when one company acquires complete control of another by purchasing more than 50 per cent of its share capital
Enterprise
The skill needed to make new ideas work
Infrastructure
Refers to the physical and organisational factors necessary to allow both society and an economy to operate effectively; e.g: transport and communication networks
Joint venture
Occurs when businesses collaborate on a project (or projects) but do not formally join together all of their activities
Market failure
A situation in which a market does not work properly and fail to allocate resources efficiently
Macroeconomics
The study of the behaviour of a whole economy and the factors that can influence it
Microeconomics
The study of smaller parts of an economy, such as the behaviour and decision-making of businesses and individual consumers
Economic growth
An increase in the value of goods and services produced by a nation's economy over a period of time
Inflation
A sustained rise in the general price level and a corresponding fall in the value of money
Unemployment
The number of people who are seeking a job but unable to secure one
Recession
Characterised by falling levels of demand and declining levels of output and employment over at least a six-month period
Slump
Takes place when production is at its lowest, unemployment is high and there are many business failures
Supply-side policies
A range of measures designed to improve the free operation of markets an, therefore, the total amount that is produced (or supplied) by an economy
Level of economic activity
Describes the general pace or speed at which productive activity is occurring nationally. Governments aim to have smooth increases in the level of economic activity over time.
Consumer Price Index (CPI)
Measure the rate of inflation based on the changes in prices of a basket of goods and services
Demand-pull inflation
Occurs when the demand for the country's goods and services exceeds its ability to supply these products
Cost-push inflation
When prices rise due to an increase in the cost of production (rising wages, increasing costs of raw materials and components)
Structural unemployment
Occurs due to fundamental changes in the economy whereby some industries reach the end of their lives
Cyclical unemployment
Caused by the operation of the business cycle, where unemployment rises during economic downturns and falls when the economy improves
Frictional unemployment
A type of unemployment caused by workers voluntarily changing jobs and by temporary layoffs; unemployed workers between jobs
Inventories
The raw materials and other items necessary for production to take place. They also include finished products that have not yet been sold.
Migration
A movement from one country or region to another with the intention of settling in the new location
Monetary policy
Controlling the amount of money and/or interest rates within the economy in order to achieve the desired level of economic activity
Exchange rate policy
The deliberate adjustment of the value of a country's currency to achieve desired changes in the prices of imports and exports
Fiscal policy
The use of taxation and public expenditure to manage the level of activity in an economy
Debt
An amount of money that has been borrowed by a business but not yet repaid
Exchange rate
The price of one currency in terms of another
Appreciation
An increase in the value of a currency against another currency(ies)
Depreciation
A decrease or loss in value of currency against another currency(ies)
Direct taxes
Taxes on income or wealth (income tax, corporation tax, inheritance tax,...)
Indirect taxes
Taxes on spending (VAT)
Demography
The study of human populations, including their size, growth rates and movements
Corporate Social Responsibility
The duties a business has towards employees, customers, society and the environment
Pressure group
A group of people with common interests who organise to influence public opinion and the decisions of businesses and governments
Dividends
Money that is paid out of profits to the company's shareholders. It is a reward to the owners of the business.
Sustainable production
Occurs when the supply of a product does not impose costs on future generations by for example, depleting non-renewable resources
Social auditing
Carrying out independent investigations into the impact of a business' activities upon society in general
Window dressing
The preparation of financial documents to present the company's performance in the best possible light
Social accounting (Corporate social responsibility reporting)
The process of communicating the social and environmental effects of a business' operations to its stakeholders
Urbanisation
The movement of people from the countryside to live in cities
Strategic decision-making
Relates to the choices made by senior managers over the long-term plans of the business
Accountability
The extent to which an individual or group is held responsible for a decision or policy
Artificial intelligence (machine learning)
Similar concepts and refer to technology that can think and act like humans
Computer-aided design (CAD)
The use of computer technology to plan, design, test, and alter products
Computer-aided manufacture (CAM)
Using computer controlled equipment to machine materials/operate
Barrier to entry
Any factor that makes it difficult for a new firm to enter a market (the need for specialists)
Patent
Provides legal protection for a new invention
Disruptive innovation
Innovation that establishes a new market by disrupting an existing market or creates a new market segment, sometimes replacing established market-leading businesses and products
Trade openness
Degree to which a country engages in international trade. It is usually calculated using the value of the economy's exports and imports expressed as a percentage of its GDP.
The Internet of Things (IoT)
Refers to the billions physical devices throughout the world that are connected to the internet and collecting and sharing data
Environmental audit
An independent assessment of a business' activities to judge the extent to which it is complying with relevant laws and its own policies
Strategic management
The process of developing and implementing a strategy
PEST analysis
A way of analysing the external macroenvironment of business (Political, Economic, Social and Technological factors)
Macroenvironment
Refers to factors largely outside the control of the business, such as the economy and legal changes. A business cannot easily influence these on its own.
Blue ocean planning
Refers to creating a new, untapped market where there is no competition. Instead of fighting for a share in an existing, crowded market, a business innovates to offer something unique that opens up new demand, making the competition irrelevant.
Scenario planning
Refers to when top management envisions different what-if scenarios to anticipate plausible futures in order to derive strategic responses.
SWOT analysis
Considers the internal and external environments of a business (strengths, weaknesses, opportunities, threats)
Boston Matrix analysis
Highlights the position of different products in their market and the growth of the market as a whole.
Porter's Five Forces analysis
Examines the five different forces which determine the likely profitability of an industry
- Rivalry (competitiveness)
- Entry threat (Existence of barriers to entry)
- Buyer/supplier power (Reliant on certain suppliers)
- Substitute threat (The ease with which a buyer can switch to an alternative type of similar product)
Core competencies framework
The things that an organisation does extremely well, and their strategy should be based on these things
- Provide access to a wide variety of markets
- Deliver a significant customer benefit
- Be difficult for competitors to copy
The Ansoff Matrix
Examines strategies in terms of the products offered and the markets a business competes in
Force Field Analysis
A technique for determining which forces drive a proposed change and which forces restrain it.
Decision trees
Graph of decisions and their possible consequences, used to create a plan to reach a goal
Usefulness of decision trees
+ shows courses of action not previously considered
+ force managers to observe risks
+ quantify the possible outcomes
+ make a decision based on logic rather than emotions
- values of the probabilities are estimates and therefore might not be accurate
- even though outcomes are assessed in financial terms, some outcomes may not be easy to value
- trees do not take account of what might/might not fit with the ethics of the businessThre
Corporate plan
Sets out where the business wants to go and how it intends to get there
Corporate culture
Refers to the values, attitudes and beliefs of a business' employees; it refers to 'how we do things around here'.
Types of culture
1. Power (one dominant person who makes all the major decisions)
2. Role (relies quite heavily on rules and procedures)
3. Task (teams are formed for particular projects based on their contributions/skills)
4. Person (groups of well-qualified individuals who respect each other's skills and knowledge)
5. Entrepreneurial (you are highly valued if you try something, even if it does not necessarily work)
Transformational leadership
Exists when leaders identify what changes are needed, create a vision and inspire employees to carry through the changes
- Idealised influence (acts as a role model and wins the respect of their team)
- Intellectual stimulation (encourages innovation and forming new ideas for the organisation and themselves)
- Inspirational motivation (increase team morale through motivational techniques and acting as inspiration for their followers)
- Individualised consideration (create a diverse and supportive environment, where every differences are respected and celebrated)
Employee readiness for change
Highlights that openness and readiness for change will depend on how dissatisfied employees are with the present situation and the extent to which they think they will suffer from the change
Contingency planning
Involves preparing for unexpected events
Three stages of strategic management
1. Strategic analysis (an assessment of the current position of the business & its environment + a forecast of the opportunities and threats which might emerge in the future)
2. Strategic choice (decide on a strategy based on their analysis)
3. Strategic implementation (implement the strategy effectively to ensure success [planning, what standards to be used,...])
