Business Enterprise
Any operation established to produce or supply goods/services desired by consumers generally with a view to making a profit.
Factors of Production
The inputs of land, labour, capital and entrepreneurship required to produce or supply goods/services.
Entrepreneurial Characteristics
These are common traits found in successful entrepreneurs and examples may include innovative, visionary, flexibility, knowledgeable, risk taker, decisiveness, goal orientated, motivated and committed.
Adding Value
A business will add value to raw materials used in its production process so that there will be a significant difference between the cost of purchasing raw materials and the selling price of the finished article. Can also refer to 'extra' feature(s) of an item of interest (product, service, person etc.) that go beyond the standard expectations and provide something 'more' while adding little or nothing to its cost.
Competitive Advantage
A favourable situation that a business organisation has over its rivals arising from a marketing opportunity such as price or cost or both. Achieving competitive advantage strengthens and positions a business better within the business environment.
Sole Trader
A business organisation which has a single owner and in which there is no legal distinction between the owner and the business. The owner receives all profits (subject to taxation specific to the business) and has unlimited responsibility for all losses and debts.
Partnership
A business relationship of two or more entities conducting business for mutual benefit. Partners, manage the business and are equally liable for its debts; other individuals called limited partners may invest but not be directly involved in management and are liable only to the extent of their investments. In a partnership each partner shares equal responsibility for the company's profits and losses, and its debts and liabilities.
Deed of Partnership
A binding legal document which states the formal rights of partners in the business.
Silent/Sleeping Partner
A partner who contributes capital and shares in profits/losses but does not participate in decision making.
Limited Partnership
A partnership which has at least one ordinary partner who has unlimited liability. A limited partner contributes capital, share in profits but has limited liability. A limited partner cannot participate in decision making.
Limited Company
A business organisation which has a separate legal entity from those of its owners. The liability of the members or subscribers of the company is limited to what they have invested or guaranteed to the company.
Shareholders
Investors who have a bought a share in the company.
Limited Liability
Each shareholder is only liable for the original amount of money invested in the business.
Franchise
An agreement between two parties, which gives one party (the franchisee) the rights to market a product or service using the trademark of another business (the franchisor).
Social Enterprises
A business venture established to address a social issue within a community or to improve the quality of life for citizens or the environment. All profit made is reinvested to help achieve the social objective of the business.
Stakeholder Groups
Specific groups of people who have a genuine interest in the activities of a particular business and who will be affected by the activities of the business. Examples include owner/s, employees, customers, creditors, government, suppliers, management and community.
Consumer Goods & Services Market
This is where households purchase the goods/services they desire and businesses try to meet their demand by selling the goods/services in store, online etc.
Capital Goods Market
This is an industrial market selling tangible goods required by businesses who supply the consumer goods market. Items include machinery, equipment, vehicles and tools.
Labour Market
This is where those seeking work can interact with employers who are competing to hire them.
Demand
The desire to own anything, the ability to pay for it, and the willingness to pay.
Supply
The quantity of products which suppliers make available to the market at any given price.
Equilibrium Price
The price at which the quantity demanded by consumers is equal to the quantity supplied.
Mass Market
A broad, non-targeted, non-segmented market.
Niche Market
A business aims their product at a narrow or focused subset of a larger market sector.
Quality
Providing goods/services that satisfy the consumers' needs and expectations.
TQM
A culture of quality embraced by everyone within an organisation. The emphasis is on 'getting it right' first time to make the organisation more cost efficient and to build up a good reputation for high quality products/services.
Quality Assurance
Processes established throughout the organisation to ensure that all activities associated with producing/supplying goods or services meet the highest possible standard of quality for customers.
Quality Control
Operational checks carried out at various stages of the product's manufacture to ensure all errors are eliminated and the highest standards of quality has been maintained.
ISO 9000
A series of quality standards developed by the International Organisations for Standardisation that are designed as a guide to ensure quality of products, services and management in a wide range of organisations.
Productivity
This is a measure of how efficient a firm is in providing its product/service.
Investment
This refers to the purchase of capital goods which are used to produce further wealth. Also investment can refer to expenditure by a business that is likely to yield a return in the future e.g. research and development.
Job Production
A method of production which involves employing all factors to complete one unit of output at a time to customer specifications.
Batch Production
A method of production which involves completing one operation at a time on all units before performing the next.
Flow Production
Very large production of a standard product, where one unit of production is performed continuously, one after the other, usually on a production line.
Business Structure
The way in which a business is organised.
Hierarchy
This refers to the order or levels of management in a business from the lowest to the highest.
Chain of Command
The system of reporting relationships within the organisation.
Span of control
The number of subordinates working under a superior.
Organisation Chart
A diagram illustrating the structure of an organisation.
Delegation
The authority/responsibility passed down from a superior to a subordinate.
Centralisation
The process by which the activities of an organisation, particularly those regarding planning and decision-making, become concentrated within a particular location and/or group
De-centralisation
The policy of delegating decision-making authority down to the lower levels in an organization, relatively away from and lower in a central authority. A decentralized organization shows fewer tiers in the organizational structure, wider span of control, and a bottom-to-top flow of decisionmaking and flow of ideas.
De-layering
The removal of managerial layers in the hierarchical structure of an organisation.
Downsizing
The process of reducing capacity, this is done usually by making staff redundant.
Outsourcing
Transferring the responsibility for some business activities to an outside firm e.g. catering/cleaning services.
Succession Planning
This is undertaken by the human resources department to ensure the organisation has the correct number of staff with the appropriate level of qualifications, skills and experience to meet its objectives in the future.
Skills Audit
This is a process undertaken by a business to help them identify any skills gaps within the organisation. This information is used to develop future training programmes.
Induction Training
New recruits will undergo a programme to welcome them into the business. This can include a tour of the organisation, health & safety training, security systems, meeting key personnel, rules and regulations and terms of employment.
On-the-job training
Learning the job by observing an experienced worker i.e. 'sitting next to Nellie'
Off-the-job training
Employee education relating to the job is carried out away from the normal working environment.
CDP - Continuous Professional Development
A process of tracking and recording the knowledge, skills and experience gained by an employee. This may be formal/informal and internal/external to the business.
Labour Turnover
The number of employees leaving the organisation. It may be calculated by expressing the number of staff leaving the organisation during a period in time by the average number of staff in post during the period.
Effective Recruitment
The selection and retention of the best candidate for the job.
Internal Recruitment
Filling a vacancy by appointing someone from within the organisation.
External Recruitment
Filling a vacancy by appointing someone from outside the organisation.
Job analysis
A study of what the job entails such as the skills, tasks and performance expected.
Job Description
A general outline of the duties to be undertaken, the reporting relationships and reference may be made to remuneration for the successful candidate.
Job/Person Specification
A list of all the qualifications, skills, qualities and experience required from a suitable applicant.
Psychometric testing
A selection strategy used to assess the suitability of a candidate for higher positions within the organisation. The test may include knowledge, verbal and numerical reasoning and personality traits.
Appraisal
The process used by management to examine and evaluate employee performance against pre-set standards.
Motivation
This is the process of encouraging people to think and want to achieve the objectives set by management.
Maslow
He produced a theory based on the classification of needs and their relationship with each other. He 9 placed these in a Hierarchy of Needs and presented it as a pyramid
Herzberg
He developed the 2-Factor Theory consisting of Hygiene Factors (dis-satisfiers) and Motivators (satisfiers). The theory was based around the design of the actual job.
Taylor
He developed the Scientific Management theory as a way of increasing productivity and lowering costs.
Motivators
Incentives given to workers to encourage greater productivity and satisfaction at work.
Monetary Motivators
Financial incentives used to encourage greater productivity.
Performance-related Pay
Remuneration paid to an employee based on preagreed targets usually in the form of a bonus or an increase in salary.
Time Rates
A system of rewarding employees for the amount of time spent doing a particular job based on a specific rate per hour.
Commission
Money paid to an employee based on the amount of products sold or for completing a particular task.
Fees
A payment made in return for professional advice or service to the business.
Profit sharing
A bonus paid to an employee which is calculated on the level of profit made by the business
Non-Monetary Motivators
Incentives that focus on job design used by management to encourage greater productivity
Fringe Benefits
Additional benefits given to workers e.g. company car for executives, private health care, company pension, car parking or luncheon vouchers.
Job Enlargement
The increase in scope of the role of an employee i.e. doing more of the same. It simply increases the number of tasks without changing the challenge.
Job Rotation
Transferring between jobs allows employees to gain more experience and become multi-skilled.
Empowerment
Official authority given by managers to employees to make decisions and control their own activities.
Quality Circles
Small groups of workers in the same area of production who meet regularly to study and solve problems related to their job.
Team Working
Work carried out by a group of motivated, multiskilled employees who have a shared team objective.
Management
People in authority who are responsible for 'getting things done' usually through other people.
Leadership
A manager may have a leadership style, but not always, as this involves demonstrating the ability to adapt to changing situations and persuading others to follow.
Authoritarian
The manager has total power over decision making and communication is one way only.
Paternalistic Style
The manager dictates what has to be done but indicates the benefits to the employees of a particular course of action.
Democratic Style
The manager provides opportunities and encourages employees to participate in decision making.
Laissez-Faire Style
Translated, this means 'leave well alone', so the manager encourages employees to make their own decisions with few restrictions.
Motivation
This is the process of encouraging people to think and want to achieve the objectives set by management.