AICE Business AL (All Chapters)
Terms in this set (207)
No restrictions or trade barriers exist that might prevent or limit trade between countries.
The increasing freedom of movement of goods, capital and people around the world.
Business organization that has its headquarters in one country, but with operating branches, factories and assembly plants in other countries.
Selling state-owned and controlled business organizations to investors in the private sector..
Using barriers to free trade to protect a country's own domestic industries.
Limits on the physical quantity or value of certain goods that may be imported.
Taxes imposed on imported goods to make them more expensive than they would otherwise be.
Voluntary Export Limits
An exporting country agrees to limit the quantity of certain goods sold to one country (possibly to discourage the setting of tariffs/quotas).
Integration with a business in a different industry.
Business expansion achieved by means of merging with or taking over another business, from either the same or different industry.
Integration with firms in the same industry and at same stage of production.
An agreement by shareholders and managers of two businesses to bring both firms together under a common board of directors with shareholders in both businesses owning shares in the newly merged business.
Literally means that 'the whole is greater than the sum of parts', so in integration it is often assumed that the new, larger business will be more successful than the two, formerly separate, businesses were.
When a company buys over 50% of the shares of another company and becomes the controlling owner of it (also referred to as an acquisition).
Integration with a business in the same industry but a supplier of the existing business.
Integration with a business in the same industry but a customer of the existing business.
Computer-Aided Design (CAD)
Using computers and IT when designing products.
Computer-Aided Manufacturing (CAM)
Use of computers and computer-controlled machinery to speed up the production process and make it more flexible.
Assesses the impact of a business's activities on the environment.
The use of electronic technology to gather, store, process and communicate information.
Creating more effective processes, products or ways of doing things in a business.
Theoretically a situation in which there is only one supplier, but this is very rare. A much more flexible and realistic definition is needed for government policy purposes and, in the UK, this is when one firm has control of at least 25% of the market.
Organizations created by people with a common interest or aim who put pressure on businesses and governments to change policies so that an objective is reached.
A report on the impact a business has on society. This can cover pollution levels, health and safety record, sources of supplies, and contributions to the community.
Balance of Payments (Current Account)
This account records the value of trade in goods and services between one country and the rest of the world. A deficit means that the value of goods and services imported exceeds the value of goods and services exported.
The regular swings in economic activity, measured by real GDP, that occur in most economies, varying from boom conditions to recession when total national output declines.
Expenditure by businesses on capital equipment, new technology and research and development.
Unemployment resulting from low demand for goods and services in the economy during a period of slow economic growth or a recession.
A fall in the average price level of goods and services.
An increase in a country's productive potential measured by an increase in its real GDP.
The price of one currency in terms of another.
Exchange Rate Appreciation
A rise in the external value of a currency as measured by its exchange rate against other currencies.
Exchange Rate Depreciation
A fall in the external value of a currency as measured by its exchange rate against other currencies.
Goods and services sold to consumers and businesses in other countries.
Costs of an economic activity that are not paid for by the producer or consumer, but by the rest of society.
Is concerned with decisions about government expenditure, tax rates and government borrowing. These operate largely through the government's annual budget decisions..
Unemployment resulting from workers losing or leaving jobs and taking a substantial period of time to find alternative employment.
Government Budget Deficit
The value of government spending exceeds revenue from taxation.
Government Budget Surplus
Taxation revenue exceeds the value of government spending.
Gross Domestic Product (GDP)
Total value of goods and services produced in a country in one year- real GDP has been adjusted for inflation.
Goods and services purchased from other countries.
Income Elasticity of Demand
Measures the responsiveness of demand for a product after a change in consumer incomes (% change in demand for product/% change in consumer incomes)
Increase in the average price level of goods and services. results in a fall in the value of money.
When markets fail to achieve the most efficient allocation of resources and there is under- or overproduction of certain goods and services.
Is concerned with decisions about the rate of interest and the supply of money in the economy.
A period of six months or more of declining real GDP.
Anemployment caused by the decline in important industries, leading to significant job losses in one sector of industry.
This exists when members of the working population are willing and able to work, but are unable to find a job.
All those in the population of working age who are willing and able to work.
Measures the rate of workforce absence as a proportion of the employee total. It is measured by: absenteeism (%) = # of employees absent/total # of employees x 100
The process of negotiating terms of employment between an employer and a group of workers who are usually represented by a trade union official.
Employment contract that allows staff to be called in at times most convenient to employers and employees.
An approach to managing staff that focuses on cutting costs, e.g. temporary and part time employment contracts, offering maximum flexibility but with minimum training costs.
Measures taken by the workforce or trade union to put pressure on management to settle an industrial dispute in favor of employees.
The output per worker in a given time period. It is calculated by: total output in time period, e.g. 1 year/ total workers employed.
Unions agree to sign a no-strike agreement with employers in exchange for greater involvement in decisions that affect the workforce.
Using another business to understand a part of the production process rather than doing it within the business using the firm's own employees.
Part-Time Employment Contract
Employment contract that is less than the normal full working week of, say, 40 hours.
An employer recognizes just one union for purposes of collective bargaining.
An approach to managing staff that focuses on developing staff so that they reach self-fulfillment and are motivated to work hard and stay with the business.
Staff working from home but keeping contact with the office by means of modern IT communications.
Temporary Employment Contract
Employment contract that lasts for a fixed time period.
Terms of Employment
Include working conditions, pay, work hours, shift length, holidays, sick leave, retirement benefits and health care benefits.
An organization of working people with the objective of improving the pay and working conditions of their members and providing them with support and legal services.
Trade Union Recognition
When an employer formally agrees to conduct negotiations on pay and working conditions with a trade union rather than bargain individually with each worker.
A check on the skills and qualifications of all existing workers/managers.
Analyzing and forecasting the numbers or workers and the skills of those workers that will be required by the organization to achieve its objectives.
Zero Hours Contract
No minimum hours of work are offered and workers are only called in - and paid - when work is available.
Keeping all of the important decision-making powers within the head office or the center of the organization.
Chain of Command
This is the route through which authority is passed down an organization - from the chief executive and the board of directors.
Decision-making powers are passed down the organization to empower subordinates and regional/product managers.
Removal of one or more of the levels of hierarchy form an organizational structure.
Passing authority down the organizational hierarchy.
Formal Communication Networks
The official communication channels and routes used within an organization.
The network of personal and social relations that develop between people within an organization.
Level of Hierarchy
A stage of the organizational structure at which the personnel on it have equal status and authority.
Managers who have direct authority over people, decisions, and resources within the hierarchy of an organization.
An organizational structure that creates project teams that cut across traditional functional departments.
The internal, formal framework of a business that shows the way in which management is organized and linked together and how authority is passed through the organization.
Span of Control
The number of subordinates reporting directly to a manager.
Managers who, as specialists, provide support, information, and assistance to line managers.
Reasons why communication fails.
The methods used to communicate a message (e.g.oral, written, visual, IT/web based).
The exchange of information between people or groups, with feedback.
Unofficial channels of communication that exist between informal groups within an organization.
So much information and so many messages are received that the most important ones cannot be easily identified and quickly acted on - most likely to occur with electronic media.
Cross Elasticity of Demand
This measures the responsiveness of demand for a product following a change in the price of another product.
These variations in sales occur over periods of time of much more than a year and are due to the business cycle.
A long- range qualitative forecasting technique that obtains forecasts from a panel of experts.
Jury of Experts
The jury of experts uses the specialists within a business to make forecasts for the future.
It is a detailed, fully researched written report on marketing objectives and the marketing strategy to be used to achieve them.
New Product Development
The design, creation and marketing of new goods and services.
Promotional Elasticity of Demand
This measures the responsiveness of demand for a product following a change in the amount spent on promoting it.
These can occur at any time and will cause unusual and unpredictable sales figure. Examples: exceptionally poor weather or negative public image following a high- profile product failure.
Research and Development (R&D)
The scientific research and the technical development of new products and processes.
Predicting future sales levels and sales trends.
A method of sales forecasting that adds together all of the individual predictions of future sales of all the sales representatives working for a business.
These are the regular and repeated variations that occur in sales data within a period of 12 months.
The launch of the product on a small-scale market to test consumers reactions to it.
This is the underlying movement in a time series.
The acronym for the five rapidly developing economies with great market opportunities - Brazil, Russia, India, China and South Africa.
Free International Trade
International trade that is allowed to take place without restrictions such as "protectionist" tariffs and quotas.
Adapting the marketing mix, including differentiated products, to meet national and regional tastes and cultures.
The growing trend towards worldwide markets in products, capital and labor, unrestricted by barriers.
Selling products in markets other than the original domestic market.
Businesses that have operations in more than one country.
Pan - Global Marketing
Adopting a standardized product across the globe as if the entire world were a single market- selling the same goods in the same way everywhere.
A physical limit placed on the quantity of imports of certain products.
Business-Process Outsourcing (BPO)
A form of outsourcing that used a third party to take responsibility for certain business functions, such as HR and finance.
When the demand for a business's products exceeds production capacity.
The proportion of maximum output capacity currently being achieved.
Exists when the current levels of demand are less than the full capacity output of a business - also known as spare capacity.
When a business produces at maximum output.
Reducing capacity by cutting overheads to increase efficiency of operations, such as closing a factory or office department, often involving redundancies.
It involves management identifying the best firms in the industry and then comparing the performance standards - including quality - of these businesses with those of their own business.
Splitting flow production into self-contained groups that are responsible for whole work units.
People within the organization who depend upon the quality of work being done by others.
This is an internationally recognized certificate that acknowledges the existence of a quality procedure that meets certain conditions.
Japanese term meaning continuous improvement.
Producing goods and services with the minimum of waste resources while maintaining high quality.
A system of agreeing and meeting quality standards at each stage of production to ensure consumer satisfaction.
This is based on inspection of the product or a sample of products.
A good or service that meets customers' expectations and is therefore 'fit for purpose'.
The expectations of customers expressed in terms of the minimum acceptable production of service standards.
Product development is organized so that different stages are done at the same time instead of in sequence.
Total Quality Management
An approach to quality that aims to involve all employees in the quality-improvement process.
The aim of achieving perfect products every time.
The sequence of activities that must be completed on time for the whole project to be completed by the agreed date.
Critical Path Analysis
A planning technique that identifies all tasks in a project, puts them in the correct sequence and allows for the identification of the critical path.
The diagram used in critical path analysis that shows logical sequence of activities and the logical dependencies between them - and the critical path can be identified.
A specific and temporary activity with a starting and ending date, clear goals, defined responsibilities and a budget.
Using modern management techniques to carry out and complete a project from start to finish in order to achieve pre-set targets of quality, time, and cost.
A section of a business, such as a department, to which costs can be allocated or charged.
A method of costing in which all fixed and variable costs are allocated to products, services or divisions of a business.
Marginal or Contribution Costing
Costing method that allocated only direct costs to cost/profit centers, not overhead costs.
A section of a business to which both costs and revenue can be allocated so profit can be calculated.
Exists when the difference between the budgeted and actual figure leads to lower than expected profit.
A detailed financial plan for the future.
Individual responsible for the initial setting and achievement of a budget.
Giving some delegated authority over the setting and achievement of budgets to junior managers.
Exists when the difference between the budgeted and actual figure leads to a higher than expected profit.
Costs budgets for each expense are allowed to vary if sales or production vary from budgeted levels.
Uses last year's budget as a bias and an adjustment is made for the coming year.
Calculating differences between budgets and actual performance, and analyzing reasons for such differences.
Setting budgets to zero each year and budget holders have to argue their case to receive any finance.
Any item bought buy a business and retained for more than one year, that is the purchase of fixed or non-current assets.
The decline in the estimated value of non current asset over time due to normal wear and tear and technological change making the asset, or the product it is used to make, obsolete.
An intangible asset that has been developed from human ideas and knowledge.
The estimated total value of a company if it were taken over.
Net Book Value
The current balance sheet value of a non current asset = original cost accumulated depreciation.
Net Realizable Value
The amount for which an asset can be sold minus the cost of selling it. It is only used on balance sheets when NRV is estimated to be below historical cost.
Any expenditure on costs other than non-current asset expenditure.
Straight Line Depreciation
A constant amount of depreciation is subtracted from the value of the asset each year ( original cost of asset - expected residual value/expected useful life of asset (years)).
The total value of all long term finance invested in the business (non current assets + current assets) - current liabilities.
Days Sales In Receivables Ratio
(Accounts receivable x 365 /revenue)
The share of the company profits paid to shareholders.
Dividend Cover Ratio
(Profit for the year, pre-dividends / annual dividends)
Dividend Per Share ($)
(Total annual dividends / total number of issued shares)
Dividend Yield Ratio (%)
(Dividend per share / current share price) x 100
Earnings Per Share
(Profit after tax / total number of shares). This is the amount of profit earned per share.
(Long term loans / capital employed) x100
Inventory (Stock) Turnover Ratio
Cost of goods sold/value of inventories.
Price/Earnings (PE) Ratio
(Current share price / earnings per share)
Return on Capital Employed
Net profit or operating profit/capital employed x 100.
The quoted price of one share on the stock exchange.
Accounting Rate of Return
Measures the annual profitability of an investment as a percentage of the initial investment: (average annual profit, net cash flow / initial capital cost) x100
Annual Forecasted Net Cash Flow
Forecasted cash inflows minus forecasted cash outflows.
Criterion Rates or Levels
The minimum levels set by management for investment appraisal results for a project to be accepted.
Internal Rate of Return
The rate of discount that yields a net present value of zero. The higher the IRR, the more profitable the investment project is.
Evaluating the profitability or desirability of an investment project.
Net Present Value
Todays value of the estimated cash flows resulting from an investment.
Length of time it takes for the next cash inflows to pay back the original capital cost of the investment.
A superiority gained by a business when it can provide the same value product/service as competitors but at a lower price, or can charge higher prices by providing greater value through differentiation.
A long-term plan of action for the whole organization, designed to achieve a particular goal.
The role of management when setting long-term goals and implementing cross-functional decisions that should enable a business to reach these goals.
Short-term policy or decision aimed at resolving a particular problem or meeting a specific part of the overall strategy.
A method of analyzing the product portfolio of a business in terms of market share and market growth.
An important business capability that gives a firm competitive advantage.
Product based on a business's core competences, but not necessarily for final consumer or 'end' user.
A statement if the business's core purpose and focus, phrases in a way to motivate employees and to stimulate interest by outside groups.
The strategic analysis of a firm's macro-environment, including political, economic, social and technological factors.
Porter's Five Forces
A framework for business strategy that models an industry as being influenced by five forces: Barriers to Entry, The Power of Buyers, The Power of Suppliers, The Threat of Substitutes and Competitive Rivalry.
The proves of conducting research into the business environment within which an organization operates, and into the organization itself, to help form future strategies.
A form of strategic analysis that identifies and analyses the main internal strengths and weaknesses and external opportunities and threats that will influence the future direction and success of a business.
A statement of what the organization would like to achieve or accomplish in the long term.
A model used to show the degree of risk associated with the four growth strategies of: market penetration, market development, product development, and diversification.
A diagram that sets out the options connected with a decision and the outcomes and economic returns that may result.
The process of selling different, unrelated goods or services in new markets.
The likely financial result of an outcome obtained by multiplying the probability of an event occurring by the forecast economic return if it does occur.
Technique use for identifying and analyzing the positive factors that support a decision ('driving forces') and negative factors that constrain it ('restraining forces').
The strategy of selling existing products in new markets.
Achieving higher market shares in existing markets with existing products.
The development and sale of new products or new developments of existing products in existing markets.
A written document that describes a business, its objectives and its strategies, the market it is in and its financial forecasts.
Business Process Re-Engineering
Fundamentally re-thinking and re-designing the processes of a business to achieve a dramatic improvement in performance.
Planning, implementing, controlling and reviewing the movement of an organization from its current state to a new one.
Preparing an organization's resources for unlikely events.
The values, attitudes and beliefs of the people working in an organization that control the way they interact with each other and with external stakeholder groups.
This is a methodical plan containing details of the organization's central objectives and the strategies to be followed to achieve them.
This encourages management and workers to take risks, to come up with new ideas and rest out new business ventures.
When individuals are given the freedom to express themselves fully and make decisions for themselves.
Concentrating power among just a few people.
A person assigned to support and drive a project forward who explains the benefits of change and assists and supports the team putting change into practice.
These are created by an organization to address a problem that requires input from different specialists.
Each men ever of staff has a clearly defined job title and role.
The process of allocating and controlling resources to support the chosen strategies.
This is based on co-operation and teamwork.