B key terms

• Aim


  The intention to reach a goal.
• Average Rate of Return

  The average profit for the year as a percentage of the original investment.

  Average rate or return = average return per annum / initial 100
• Break-Even Output


  The point at which the business' total sales equals the total costs. There is neither profit nor loss.
• Buffer Stock


  A stock of raw materials held in reserve to protect the production process from unforeseen shortages.
• Cash-Flow Forecast


  A financial planning tool that estimates the money coming into and going out the business on a month to month basis
• Centralisation


  Maintaining control by keeping authority at the senior levels of the organisation.
• Chain of Command


  The line through the hierarchy that shows who is responsible for whom from top to bottom of an organisation
• Channels of Distribution


  The route the ownership of the product transfers from the seller to the buyer
• Commission


  An amount paid to an employee based on a percentage of the employee's sales
• Competitive Pricing


  Setting the price of a product so that it is in line with competitors' prices.
• Cost-Plus Pricing


  Setting the price of a good or service at an amount higher than the cost of producing
• Decentralisation


  Where authority is spread widely through the organisation.
• Delayering


  The reorganisation of the organisations's employees so that there are fewer levels of management
• Delegation


  Allocating a task to someone who would not normally be responsible for it
• Diseconomies of Scale


  When a business grows too large, leading o a possible increase in unit cost
• Dividend


  A portion of the after-tax profit that is paid to shareholders according to the number of shares owned
• E-commerce


  Business transactions carried out electronically on the internet
• Economies of Scale


  The cost advantage or producing on a large scale
• Enterprise


  The ability to identify business ideas and opportunities to bring them to fruition and to take risks where appropriate
• Exchange Rates


  The price of one currency based on another
• Extension Strategies


  Methods used to prolong the life of a product
• External Growth


  The growth of a business by joining with another by merger or takeover.
• Fixed Costs


  The costs that stay largely the same
• Flat Organisational Structure


  An organisational structure that has a wide span of control, few management levels and a short chain of command.
• Flow Production


  Using a production line to make goods continuously and in
• Focus Groups


  a small number of people who are brought together to discuss a particular product, idea, or issue
• Franchising


  The sale of the rights to use/sell a product by a franchisor to a franchisee
• Fringe Benefits


  Additional 'perks' that are in addition to a wage/salary; they are liable to income tax.
• Full-time


  Working all the usual hours required of an employee: 35 hours
• Globalisation


  The trend for large businesses to operate on a world wide scale
• Growth


  A business' increase in size
• Hire Purchase


  Buying items by making a small initial payment and paying the remaining amount in instalments over an agreed period of time.
• Income Statement


  A summary of the revenue and expenses for a specific period of time, such as a month or a year.
• Induction


  Training given to a new employee when they start a new job, it provides info about the business, its operations and working practices
• Integration


  2 or more businesses join together
• Job Analysis


  the process of determining what the job entails, including responsibilities and tasks
• Job Production


  A method of creating a single product to meet an individual order
• Job Share


  A system where 2 employees choose to share a full time job
• Just in Case (JIC)


  Ensures that the production precess never runs out of stock, reducing the number of sales lost due to raw materials
• Just in Time (JIT)


  Organising the ordering of raw materials and components to be delivered just before they will be used, reducing the need for storage.