BUSS3 Key Words

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BUSS3 Key Terms
Corporate Objectives
A quantifiable statement of a business's goals which should include measurable targets
Functional Objectives
A quantifiable statement of a department's goals which should enable it to contribute to
the achievement of the business objective
Functional Strategy
The plan by which the department intends to achieve its functional objectives on a
day-to-day basis
SMART Targets
Specific ­ no confusion about what is required
Measurable ­ a quantifiable goal is clear
Agreed ­ the result of a consultation with those involved with their delivery
Realistic ­ an impossible goal is likely to demotivated employees at any level of the
hierarchy in the organisation
Time-based ­ so that progress towards achievement can be measured
Acid Test Ratio
A measure of the ability of the business to meet short term debts from liquid assets
Asset Turnover
A measure of how effectively a business is using its assets to generate sales
Average Rate of Return
Average annual profit expressed as a percentage of the initial investment
Balance Sheet
A financial document that summarises the net worth of a business
It balances total assets with total equity and liabilities
Capital Employed
Capital employed = total equity + non-current liabilities
It is the total capital invested in the business from long term sales

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Capital Expenditure
The purchase of assets that will remain in the business in the medium to long term,
accounted for in the business sheet
Cash-Flow Targets
A financial objective focused on maintaining a healthy cash balance
Cost Minimisation
The process by which businesses attempt to maximise profits by keeping costs low
Someone the business owes money to
i.e.…read more

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For example; marketing director or a finance director
Financial Strategy
The long term financial plan of action to achieve the financial objectives of the business
Gearing Ratio
The percentage of capital employed that comes from non-current liabilities
Gross Profit
Profit after cost of sales have been deducted
Gross Profit Margins
Gross profit expressed as a percentage of sales revenue
Income Statement
A financial document that summarises a business's trading activity and expenses to show
whether it has made a profit or loss
Intangible Asset…read more

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Non-Current Assets
Items of value owned by the business that are likely to be kept for more than one year
Non-Current Liabilities
Debts that the business has more than one year to repay
Non-Executive Directors
A member of the board of directors who does not work for the business on a day-to-day
basis but sits on the board in an advisory or consultative role
Operating Profit
Profit after all other expenses have been deducted also referred to as net profit
Operating Profit Margins
Operating…read more

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Aiming to achieve a satisfactory level of profit
Shareholder Ratios
Ratios that help measure the value of the return received by shareholders
Shareholders' Returns
The financial rewards to a shareholder in return for their investment; this can include
dividends paid and increase share value
Sources of Finance
The range of options available to firms to fund business operations including banks,
venture capitalists and share capital
Time Value of Money
Recognition of the fact that £1 today is worth more than £1 in the…read more

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Offering a new product in a new market
A prediction of a future based on an identified current trend
Market Analysis
A detailed examination of the features of a market size and sales used to predict future
Market Development
Finding new markets for existing products either by selling abroad of by identifying a new
segment of domestic market
Market Penetration
When a firm increases the sales of its current products to existing customers or attracts
new customers from its competitors in the…read more

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To replicate all elements of a product launch including promotion, distribution and price,
to a geographic region or demographic group to judge the viability of the product in the
market before a full scale launch
A general direction in which something tends to move
E.g.…read more

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Diseconomies of Scale
The disadvantages experienced by a firm as a result of operating beyond optimum output,
leading to a rise in average costs
Earliest Start Time
The earliest time an activity can start in a project based upon the completion of a
preceding activity
Economies of Scale
The benefits enjoyed by a firm as a result of operating on a large scale, leading to a fall in
average costs
Efficiency Targets
Operational objectives which a minimum acceptable standard provision in relation to
efficiency…read more

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Latest Finish Time
The latest time an activity must be completed by to avoid any delay to the project
Lean Production
The adoption of techniques that help to reduce waste
A business with operations or production bases in more than one country
Multisite Locations
A business that operates from more than one location
Non-Critical Activities
Those activities with float time
I.e.…read more

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The scientific research and technological development of a new product or process
Resource Mix
The combination of capital and human resources utilised within a business to achieve the
required output
The ability to employ specialists and for staff to focus on one particular area or function
Any person or group that has an interest in the activities of the business
E.g.…read more


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