Big Business MASTER Word Bank

This is the Guinness Worlds Biggest IB Business Word Bank.

3-point moving average

The arithmetic mean of three consecutive numbers, such as sales revenue figures for the past three months.

360-degree appraisal

A type of appraisal system that provides feedback from a range of people who work with or interact with the appraisee, such as their line manager, co-workers, subordinates and even customers.

4-point moving average

The arithmetic mean of four consecutive numbers, such as sales revenue figures for the past four months.

Above the line promotion (ATL)

Form of promotion that refers to any form of paid-for promotional technique through independent consumer media.

Academic journals

Also known as scholarly journals, these are publications that contain the latest educational research and academic theory for market research purposes.

Average rate of return (ARR)

Also referred to as the accounting rate of return, this method of investment appraisal calculates the average annual profit of an investment project expressed as a percentage of the amount of investment.

Acid test ratio

Also known as the quick ratio, this is a short-term liquidity ratio used to measure an organization’s ability to pay its short-term debts (within the next 12 months of the balance sheet date), without the need to sell any stock (inventories).

Adaptive creativity

Refers to incremental innovation, which adjusts or develops a product or process that already exists.

Ad-hoc market research

Market research conducted as and when required for a specific problem that the organization is facing.

Adding value

The process of producing a particular good or service that is worth more than the cost of the resources used to produce it.

Adverse variance

This discrepancy in the budget occurs when profit is lower than expected, due to costs being higher than expected and/or revenues being lower than predicted.

Advertising

A form of visual and/or audio marketing communication used to inform and persuade people to buy a certain good or service.

Ageing population

A higher average age of the population, which has ramifications for workforce planning.

Agents

These independent intermediaries help to sell a vendor’s products in return for commission, such as real estate agents.

Aims

These are the long-term aspirations of an organization.

Andon

This is a method of lean production that uses audio-visual controls and warning systems to indicate the status of particular aspects of the production process.

Ansoff Matrix

This is a strategic management tool, used to devise product and market growth strategies for an organization.

Appraisal

Also known as a performance review, this is the formal procedure of assessing the performance and effectiveness of an employee, in relation to his/her job description.

Arbitration

Method of stakeholder conflict resolution with all stakeholder groups in conflict agreeing to accept the decision or judgment of the independent arbitrator.

Assets

The possessions owned by a business, which have a monetary value, such has buildings, land, machinery, equipment, inventories and cash.

Autocratic management

Management style that involves centralised and autonomous decision making, without input from others in the organization.

Average costs (AC)

This is the cost per unit of output. It is calculated by the formula: AC \= TC ÷ Q.

Average revenue (AR)

This is the amount a business receives from its customers per unit of a good or service sold. Mathematically, AR \= TR ÷ Q \= P

Bad debt

This occurs when a debtor is unable to pay outstanding invoices to the business. The result is it reduces the cash inflows for the vendor (seller).

Balance sheet

Part of a firm’s final accounts that shows the value of a firm’s assets, liabilities and the owners’ investment (or equity) in the business, at a particular point in time.

Bar graph

Method of visual presentation of data, used to compare figures in a market research study, such as sales figures during different time periods.

Bargain products

Goods or services that are those perceived by customers to be of high quality but sold at a low price.

Batch production

Production method that involves producing a set of identical products, with work on each batch being fully completed before production switches to another batch.

BCG matrix

Developed by the Boston Consulting Group (BCG), this visual marketing management tool is used to analyse a firm’s product portfolio.

Behavioural training

Type of training that focuses on developing the interpersonal and intrapersonal skills of workers.

Below the line promotion (BTL)

Form of promotion that refers to all forms of advertising or promotion that do not use external media agents.

Benchmarking

The routine process of an organization comparing its products, processes (operations) and performance to that of its competitors or its own historical standards.

Brand awareness

The degree of customer knowledge and recognition of a particular brand in order to gain more customers.

Brand development

Part of a firm’s marketing strategy in communicating the value of a brand and what the brand stands for.

Brand loyalty

The degree of customer devotion to a particular brand.

Brand value

The expected earning potential of a brand, i.e. the likely future earning potential (value) of a particular brand.

Break-even

This condition exists when a firm’s sales revenues cover all of its production costs.

Break-even point (BEP)

This is the point on a break-even chart where the firm’s total costs equal its total revenue, shown by the intersection of the total revenue (TR) and total cost (TC) curves.

Break-even quantity (BEQ)

The quantity of sales (sales volume) required for a firm to reach break even. It is found by using the formula: BEQ \= Fixed costs / (Price – Average variable cost).

Break-even revenue

This is the value of the output needed to break-even.

Budget

A detailed financial plan for the future, usually involving the expected costs and revenues or a cash flow forecast, for a pre-determined period of time.

Buffer stock

The minimum stock level that a firm wishes to hold at any point in time. The buffer stock is held as a contingency in case of unexpected orders for the firm's output and/or in case of any delays from suppliers of raw materials, components or finished goods.

Bulk-increasing industries

Describes the businesses that need to be located near to their customer as the final product (such as hand-made home furniture) is bulkier and heavier than the raw materials used to make it.

Bulk-reducing industries

Describes the businesses that need to be located near to the raw materials needed to produce a certain good, e.g. breweries should locate where there is a readily available supply of barley and water, as the weight of the final output is less than that of the raw materials.

Bureaucracy

The administrative systems within an organization, such as the formal policies and procedures of the business. It includes the formal rules, regulations and procedures of the organization.

Business

A decision-making organization established to produce goods and/or provide services.

Business angels

Wealthy and successful private individuals who risk their own money in a business venture that has high growth potential.

Business cycle

Describes the regular fluctuations in the level of economic activity in an economy, over time.

Business etiquette

This refers to the mannerisms and customs by which business is conducted in different parts of the world.

Business plan

An official document with details of an organization and the proposals for reaching its aims and objectives (goals).

Business to business (B2B)

B2B refers to e-commerce that takes place between two or more organizations, rather than between businesses and consumers.

Business to consumer (B2C)

B2C refers to online businesses selling goods and services directly to consumers, i.e. the end users of the products.

Capacity utilization

Refers to the extent to which an organization operates at its maximum level (known as the firm’s productive capacity).

Capacity utilization rate

Measures a firm’s actual output as a percentage of its capacity (maximum potential output), at a particular point in time.

Capital employed is the value of all sources of finance for a business, including internal and external finance. It is calculate as Capital employed \= Loan capital (or long-term liabilities) + Share capital + Accumulated retained profits.

Capital expenditure

Refers to an orgaization's sources of finance being used for spending on fixed assets or capital equipment of the business, i.e. investment expenditure. This includes spending on buildings, machinery and tools.

Capital-intensive

When an organization relies on machinery and equipment to produce its output, rather than labour.

Capital productivity

This measures how efficiently an organization’s fixed assets are used to generate output for the business.

Cash

The money a business has, either “in hand” (at its premises) and/or “at bank” (i.e. in its bank account). It is the most liquid of a firm’s current assets and is easily accessible.

Cash cows

Products in the Boston Consultancy Group Matrix with high market share in a low growth (mature) market. They are the largest cash earners for a business.

Cash flow

The movement of an organization’s cash inflows (cash received from the sale of goods and services) and cash outflows (used to pay for the costs of running the business).

Cash flow forecasting

A quantitative technique used to predict how cash is likely to flow into and out of the business for a particular period of time.

Celebrity endorsement

The use of famous people (such as film stars, musicians and sports personalities) to promote a brand or organization.

Cellular production

Also known as cell production, this production technique involves teams of people working on a certain section of the production process, completing a whole unit of work.

Centralization

The situation where decision-making is predominantly made by a very small group of senior managers at the top of the organizational hierarchy.

Chain of command

The formal lines of authority in an organization. It can be seen via an organizational chart, which shows the formal path through which commands and decisions are communicated from senior managers to subordinates.

Chance node

A chance node is shown as circles on a decision tree diagram, this represents the probable outcome of different decisions.

Change management

Refers to processes and techniques used to plan, implement and evaluate changes in business operations.

Charities

These are altruistic organizations that operate predominantly in the private sector with the goal of promoting a worthwhile social cause.

Closing balance

Found in a cash flow forecast, this refers to the value of cash held by a business at the end of a trading period (usually on the last trading day of the month).

Closure

This occurs when employers temporarily shuts the business in response to extreme industrial action of its employee (such as strike action).

Cluster sampling

Sampling method that involves identifying the population by geographical areas (clusters), and then interviewing people within certain clusters randomly.

Clustering

This occurs when businesses choose to locate near other firms operating in related industries in order to benefit from passing trade and demand for products in complementary markets.

Cognitive training

Method of training that focuses on improving an employee’s thinking skills in order to improve their performance and effectiveness in the workplace.

Collective bargaining

The process of negotiation of working conditions and pay between employer and employees, or their representatives (such as a trade union and a senior management team).

Commercial marketing

Marketing strategies that focus on meeting the demands (needs and wants) of customers in a profitable way. The main purpose is to generate benefits for the owners of the business, such as shareholders.

Commission

Type of financial payment system that rewards workers a certain percentage of the sales of each good or service that they are responsible for completing.

Communication

The transfer of information from one entity to another. It is vital to how a business operates.

Companies (or corporations)

This refers to any business organisation that is owned by its shareholders, who have limited liability.

Competitors

These are the firm’s rivals, which operate in the same industry and contest for the same customers.

Conciliation

Method of stakeholder conflict resolution which aims to align the incompatible interests of different stakeholder groups by helping different parties to better understand each other’s interests.

Conflict

This refers to the mutually exclusive and incompatible interests of different stakeholder groups. If this is not managed, it often leads to protracted disagreements, disputes and arguments in the workplace.

Consumer panel

A focus group comprised of people who belong to the firm’s target segment(s), referred to in order to gather their expert feedback.

Consumer profiles

The demographic and psychographic characteristics of consumers in different market segments.

Consumer to consumer (C2C)

The third type of e-commerce is called C2C, which involves customers selling directly to other consumers.

Contingency planning

The management process of devising and developing pre-arranged plans to deal with a crisis, in case it actually occurs.

Continuous market research

A type of market research that is conducted on an ongoing basis, rather than a one-off basis.

Control

One of the factors that affects the effectiveness of crisis management, about using a crisis management team to handle a crisis and ensure there is leadership and governance.

Convenience sampling

Sampling method that refers to the practice of using people that are within easy reach, in an unplanned way, to conduct market research.

Cooperatives

These are for-profit social enterprises owned and run by their members (usually employees, managers or customers). Their primary goal is to create value for their member-owners.

Copyrights

These intangible fixed assets give the registered owner the legal rights to creative pieces of work, such as the works of authors, musicians, conductors, playwrights (scriptwriters) and directors.

Corporate culture (or organizational culture)

Refers to an organization’s set of core values and beliefs, which shape the firm’s attitudes, behaviour and norms.

Corporate social responsibility (CSR)

This is an organization’s decisions and actions that impact society in a positive way.

Correlation

The relationship between two sets of numbers or variables, such as sales revenue at different times of the year.

Cost centre

A section or division of a business that has responsibility for its own operational costs. It is held accountable for its departmental expenditure.

Cost-plus pricing (or mark-up pricing)

Adds a profit margin to the costs of production, thereby ensuring that each unit sold contributes towards the profits of the firm.

Cost to buy (CTB)

In a ‘make or buy decision’, this method calculates the total cost of subcontracting production to a third-party supplier.

Cost to make (CTM)

In a ‘make or buy decision’, this method calculates the total cost of producing the product in-house, instead of using a third-party provider.

Costs

The charges that an organization incurs from its operations, such as rent, wages, salaries, and insurance.

Cowboy products

Goods or services that are perceived by customers to be of low quality but high price.