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BUSS 2 Key Terms and Calculations
Using Budgets
Budget: an agreed plan establishing, in numerical or financial terms, the policy to be pursued and the anticipated outcomes of that policy
Variance analysis: the process by which the outcomes of budgets are examined and then compared with the budget figures. The reasons for any differences are then found
Favourable Variance: when costs are lower than expected or revenue is higher than expected
Adverse Variance: when costs are higher than expected or revenue is lower than expected

Improving Cash Flow
Bank Overdraft: when a bank allows an individual or organisation to overspend its current account in the bank up to an agreed limit for a stated period of time.
Short-term Loan: a sum of money provided to a firm or an individual for a specific, agreed purpose. Repayment of the loan will happen in less than 2 years
Factoring: when a factoring company buys the right to collect the money the credit sales of an organisation
Sale of assets: when a business transfers ownership of an item that it owns to another business or individual, usually in return for cash
Sale and leaseback of assets: when assets that are owned by a firm are sold to raise cash and then rented back so that the company can still use them for an agreed period of time
Working Capital: the day-to-day finance used in a business, consisting of assets (cash, stock) minus liabilities (creditors, overdrafts)
Liquidity: the ability to convert an asset into cash without loss or delay

Improving Organisational structures
Organisational Structures: the relationship between different people and functions in an organisation
Organisational chart: a diagram showing the lines of authority and layers of hierarchy in an organisation
Organisational hierarchy: the vertical division of authority and accountability in an organisation
Levels of Hierarchy: the number of different supervisory and management levels between the shop floor and the chief executive of an organisation
Span of Control: the number of subordinates whom a manager is required to supervise directly.
Delegation: the process of passing authority down the hierarchy from a manager to a subordinate
Responsibility: being accountable for one’s actions.
Authority: the ability or power to carry out a task
Accountability: the extent to which a named individual is held responsible for the success or failure of a particular policy, project or piece of work
Communication: the process for exchanging information or ideas between two or more individual groups
Internal Communication: the exchange of information that takes place within an organisation
External Communication: the exchange of information that takes place with individuals, groups and organisations outside the business.
One-way Communication: Communication without any feedback
Two-way Communication: Communication with feedback
Communication channel: the route through which communication occurs
Open channels of communication: any staff member is welcome to see, read or hear the discussions and conclusions
Closed channels of communication: access to the information is restricted to a named few.
Formal channels of communication: communication channels established and approved by senior management, within which any form of communication is regarded as formal
Informal channels of communication: means of passing information outside the official channels, often developed by employees themselves
Vertical communication: when information is passed up and down the chain of command.
Lateral communication: when people at the same level within an organisation pass information to each other.

Measuring the effectiveness of the workforce
Labour productivity: a measure of the output per worker in a given time period. Labour productivity = output per period / number of employees per period
Labour turnover: the proportion of employees leaving a business over a period. Rate of labour turnover = number leaving business / average no. employed x 100
Absenteeism: The proportion of employees not at work on a given day. Rate of absenteeism = no. of staff absent on 1 day / total no. staff x 100 Annual rate of absenteeism = total no. of days lost per year / total no. of days that could be worked x no. of employees x 100 Rate of absenteeism due to health+ safety = no. of working day lost per year due to health+ safety / total no. of possible working days per year x 100

Developing an effective workforce: recruitment, selection and training
Internal recruitment: filling a job vacancy by selecting a person who is already employed in the organisation
External recruitment: filling a job vacancy by advertising outside the organisation
Training: the provision of work- related education, either on-the-job of off-the-job, involving employees being taught new skills or improving skills they already have
Induction training: education for new employees, which usually involves learning about the way the business works rather than about the particular job that the individual will do
On-the-job training: where an employee learns a job by seeing how it is carried out by an experienced employee
Off-the-job training: all forms of employee education apart from that in the immediate work place

Developing and retaining an effective workforce: motivating employees
Motivation: the causes of people’s action
Motivation theory: the study of factors that influence the behaviour of people in the workplace
Scientific management: Business decision making based on data that are researched and tested quantitatively in order to improve the efficiency of an organisation
Piecework: payment based on the number of items each worker produces
Performance- related pay: a bonus or increase in salary usually awarded for above-average employee performance
Profit sharing: a financial incentive in which a proportion of a firm’s profit is divided among its employees in the form of a bonus paid in addition to an employee’s salary
Share ownership: in this context, a financial incentive whereby companies give shares to their employees or sell them at favourable rates below the market price
Share options: a financial incentive in which chief executives and senior management are given the choice of buying a fixed number of shares at a fixed price, by a given date
Fringe benefits: benefits received by employees in addition to their wages or salary
Job enrichment: a means of giving employees greater responsibility and offering them challenges that allow them to utilise their skills fully
Job enlargement: increasing the scope of a job, either by job enrichment or job rotation
Empowerment: giving employees the means by which they can exercise power over their working lives
Team working: a system where production is organised into large units of work and a group of employees work together in order to meet shared objectives

Making operational decisions
Operations management: the process that uses the resources of an organisation to provide the right goods or services for the customer
Operations targets: the goals or aims of the operations function of the business
Unit cost: the cost of producing 1 unit of output unit cost = total cost/ units of output
Capacity: the maximum total level of output or production that a business can produce in a given time period
Capacity utilisation: the percentage of a firm’s total possible production level that is being reached
Under- utilisation of capacity: when a firm’s output is below the maximum possible
Capacity shortage: when a firm’s capacity is not large enough to deal with the level of demand for its products
Rationalisation: a process by which a firm improves its efficiency by cutting the scale of its operations
Subcontracting: when an organisation asks another business to make all or part of its product
Stock control: the management of levels of raw materials, work in progress and finished goods in order reduce storage costs while still meeting the demands of the customer
Non-standard orders: a business decision relating to a one-off contract

Developing effective operations: quality
Quality: those features of a product or service that allow it to satisfy customers
Quality system: the approach used by an organisation to achieve quality
Quality control: a system that uses inspection as a way of finding any faults in the good or service being provided
Quality assurance: a system that aims to achieve or improve quality by organising every process to get the product ‘right first time’ and prevent mistakes ever happening
Total quality management: a culture of quality that involves all employees of a firm
Kaizen: a policy of implementing small, incremental changes in order to achieve better quality and/ or greater efficiency
Quality standard: a set of criteria for quality established by an organisation

Developing effective operations: customer service
Customer service: identifying and satisfying customer needs and delivering a level of service that meets or exceeds customer expectations
Customer expectations: what people think should happen and how they think they should be treated when asking for or receiving customer service
Customer satisfaction: the feeling that the buyer gets when he or she is happy with the level of customer service that has been provided and the degree to which customer expectations have been met by the provider of the service.

Working with suppliers
Supplier: an organisation that provides a business with the materials it needs in order to carry out its business activities
Payment terms: the arrangements made about the timing of payment and any other conditions agreed between buyer and seller
Just-in-time: a system where items of stock arrive just in time for production or sale

Using technology in operations
Technology: the application of practical, mechanical, electrical and related sciences to industry and commerce
Automation: the use of machinery to replace human resources
Computer-aided manufacturing: the use of computers to undertake activities such as planning, operating and controlling production
Information and Communication Technology: the acquisition, processing, storage and dissemination of vocal, pictorial, textural, and numerical information by a microelectronics based combination of computing and telecommunication
Computer-Aided Design: the use of computers to improve the design of products
CADCAM: An approach that combines CAD and computer aided manufacture, using IT to aid both the design and manufacture of an item

Effective Marketing
Marketing: The anticipating and satisfying of customers’ wants in a way that delights the consumer and meets the needs of the organisation
Marketing objectives: the goals of the marketing function in an organisation
Business-to-consumer marketing: where a firm targets individual consumers with its products
Business-to-business marketing: where a firm sells its product to another business
Niche marketing: Targeting a product of service at a small segment of a larger market
Mass marketing: aiming a product at all of the market
Product differentiation: the degree to which consumers see a particular as being different form other brands

Designing an effective marketing mix
Marketing mix: those elements of a business’s approach to marketing to marketing that enable it to satisfy and delight its customers

Using the marketing mix: product
Product: the good or service provided by a business
Product design: deciding on the make-up of a product so that it works well, looks good and can be produced economically
Product development: when a firm creates a new or improved good or service, for release into the existing market
USP: A feature of a product or service that allows it to be differentiated from other products
Product portfolio: the range of products or brands provided by a business
Product portfolio analysis: the study of the range of products with a view to deciding whether new products should be added to the portfolio and whether any existing products should no longer be provided
Boston Matrix: a tool of product portfolio analysis that classifies products according to the market share of the product and the rate of growth of the market in which the product is sold
Product life cycle: the stages that a product passes through during its lifetime – development, introduction, growth, maturity and decline
Extension Strategies: methods used to lengthen the life cycle of a product by preventing or delaying it from reaching the decline stage of the product life cycle

Using the marketing mix: promotion
Promotion: the process of communicating with customers or potential customers
Promotional mix: the coordination of the various methods of promotion in order to achieve overall marketing targets
Public relations: gaining favourable publicity through the media
Branding: the process of differentiating a product or service from its competitors through the name, sign, symbol, design or slogan linked to that product or service
Merchandising: attempts to persuade customers to take action at the point of sale
Sales promotions: short-term incentives used to persuade consumers to buy a particular product
Direct selling: the process of communicating to the individual consumer through an appropriate form of communication
Advertising: the process of communicating with customers or potential customers through specific media
Cost per thousand: an indicator used commonly in the advertising industry to assess and compare the expense of different forms of promotion

Using the marketing mix: Pricing
Pricing strategies: approaches adopted in order to achieve marketing objectives
Price skimming: a strategy in which a high price is set to yield a high profit margin
Penetration pricing: a strategy in which low prices are set to break into a market or to achieve a sudden spurt in market share
Price leadership: a strategy in which a large company sets a market price that smaller firms will tend to follow
Price taking: a strategy in which a small firm follows the price set by a price leader
Predator pricing: a strategy in which a firm sets very low prices in order to drive other firms out the market
Pricing tactics: pricing approach or techniques used in the short term to achieve specific objectives
Loss leadership: a tactic in which a firm sets a low price for its products in order to encourage consumers to buy other products that provide profit for the firm
Psychological pricing: a tactic intended to give the impression of value
Price elasticity of demand: the responsiveness of a change in the quantity demanded of a good or service to a change in price

Using the marketing mix: Location
Distribution channels: channels or routes through which a product passes in moving from the manufacturer to the consumer

Marketing and competiveness
Market: a place where buyers and sellers come together
Monopoly: in theory, a single producer in a market, but in practice a firm with a market share of 25%or more
Oligopoly: a market dominated by a small number of large businesses, known as oligopolists
Cartel: a group of firms that come together to agree price and output levels in an industry
Cartel: a group of firms that come together to agree price and output levels in an industry
Monopolistic competition: where a large number of firms are competing in a market, each having enough product differentiation to achieve a degree of monopoly power and therefore some control over the price they charge
Perfect competition: where there is a large number of sellers and buyers, all of which are too small to influence the price of the product
Competitiveness: the ability of businesses to sell their products successfully in the market in which they are based
TSR Jessica
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Report 7 years ago
Sorry you've not had any responses about this. Are you sure you’ve posted in the right place? Posting in the specific Study Help forum should help get responses.

I'm going to quote in Puddles the Monkey now so she can move your thread to the right place if it's needed. :yy:

(Original post by Puddles the Monkey)

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