Business key terms

• Added value


  An amount added to the value of a product or service equal to the difference between its cost and the amount received when it is sold
• Advertising


  A paid form of non-personal communication using mass media to change the attitudes and buying behaviour of consumers
• Ansoff's matrix


  A strategic or marketing planning tool that links a business's marketing strategy to its general strategic direction
• Assets


  Anything that a business owns, benefits from or has the use of in generating income
• Authority


  The power or right to give orders or make decisions
• Average rate of return

  Calculates the average return of an investment and expresses this as a percentage of the initial outlay
• Balance sheet


  A report that summarises all of an organisation's assets, liabilities and equity at a given point in time
• Balanced Scorecard


  A strategic planning and management system that is used in organisations to align their activities to their mission and strategy
• Bartlett and Ghoshal's matrix


  Identifies four international strategies according to the pressure for local responsiveness (high or low) and the pressure for integration (high or low)
• Benchmarking


  A strategic and analytics process of continuously measuring an organisation's products, services and practices against a recognised leader
• Big data


  Refers to the ever increasing amounts of structured, semi-structured and unstructured data that have the potential to be mined for information
• Borrowing


  The money a business raises through loan capital
• Bowman's strategic clock


  Model used to explore strategic positioning in order to arrive in the most competitive position in the market
• Brand loyalty


  When consumers become committed to a particular brand and make repeat purchases over time
• Budget


  A financial plan
• Business culture (or corporate culture)


  Refers to the beliefs and behaviours that determine how a company's employees and management interact
• Business cycle (or trade cycle)


  Shows the fluctuations in economic activity as measured by GDP, that an economy experiences over time
• Capacity utilisation


  Measures the extent to which a business uses its production potential. It is usually expressed as a percentage
• Capital expenditure


  The money used to purchase, upgrade or improve the life of long-term assets
• Capital intensive


  Describes those businesses requiring a large amount of capital relative to labour
• Cartel


  Where businesses or countries act together as a single producer in order to influence the prices, production and marketing of certain goods or services
• Cash flow


  The money (cash) moving into and out of a business over a given period of time
• Centralisation


  The process of concentrating management and decision-making power at the top of an organisational hierarchy
• Chain of command


  The order in which authority and power in an organisation are exercised and delegated from top management down
• Competition and Markets Authority (CMA)


  A non-ministerial government department responsible for strengthening business competition and preventing and reducing anti-competitive activities
• Confidence interval (or margin of error)

  The plus or minus figure used to show the accuracy of results arising from sampling
• Confidence level


  The probability that research findings are correct
• Contingency planning


  Planning for the unexpected, such as natural disasters or loss of key personnel
• Contribution


  The amount of money left over after variable costs have been subtracted from sales revenue
• Copyright


  The legal protection provided for the work of authors, composers and artists
• Core competencies


  The combination of pooled knowledge and technical capacities that allow a business to be competitive in the marketplace
• Corporate businesses


  Businesses which have a legal identity that is separate from that of their owners
• Corporate governance


  A set of systems, processes and principles that ensures an organisation is governed in the best interest of all its stakeholders
• Corporate objectives


  The goals set for the business as a whole that will lead to the achievement of the mission
• Corporate social responsibility (CSR)


  A business approach that contributes to sustainable development by delivering economic, social and environmental benefits to all stakeholders
• Correlation


  A statistical technique used to establish the extent of a relationship between two variables, such as the level of sales and advertising expenditure
• Cost leadership strategy


  A strategy that aims to gain a competitive advantage by having the lowest costs in the industry
• Cost-benefit analysis


  A process by which business decisions can be analysed, where the benefits and costs are quantified and then the costs subtracted from the benefits
• Data mining


  The process used by organisations to turn large amounts of data (big data) into useful information
• Decentralisation


  The process of redistributing decision-making power away from a central location or authority