Business Key term theme 1

Adding Value

Difference between selling price and costs of its material inputs.

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Autocratic

Top-down decisions without consultation. Delegation is rare.

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Bias

If the sample includes disproportionate number of people from a particular market segment.

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Boston Matrix

Analyses company's products in terms of market share and growth potential.

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Branding

Creating a positive and recognisable image of the product or service.

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Business Objectives.

Goals and Targets that the business needs to achieve in order to make progress towards the long-term aim.

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Business To Business

Process of selling products or services to other businesses.

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Business To Consumer

Involves selling directly to customers who are buying products or services for personal use.

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Cash Cow

Large share of a slow growing or static market. Sells very well and doesn't require much promotion.

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Centralised Structure

All decision-making is at the top of the hierarchy.

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Collective Bargaining

Discussions between employers and representatives of employees, often a trade union.

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Competition

Lower prices, better quality, more choice, innovation, greater efficiency.

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Competitive Advantage

Having an edge over rival products. May be based on low costs and keen prices or an innovative design feature.

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Competitive Pricing

Charging about the same as, or a little less than, the prices of competing products.

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Cost Plus Pricing

Adding certain percentage to the average total cost of the product.

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Decentralised Structure

Businesses have moved the decision making process away from a central head office and spread it throughout the organisation.

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Delayering

Reducing the amount of middle managers

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Delegation

Allowing decisions to be taken at a lower level.

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Democratic

Guide rather than dictate, consulting widely and encouraging everyone to participate in the decision- making process.

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Design Mix

Function, Aesthetics, Cost

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Dismissal

The worker is sacked.

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Distribution Channel

Route taken by the product as it moves from the producer to the customer. Producer -> Wholesaler -> Retailer -> Customer

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Dog

Low share of low growth market. Best strategy is usually to discontinue production.

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Dynamic Market

Constantly changing market. Can be due to rising incomes, fashions or arrival of a superior competing product.

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Elasticity

Responsiveness to change.

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Emotional Branding

Creation of brands that appeal to a customer's emotional nature rather than their logical side.

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Empowerment

Giving employees some discretion as to how they carry out their tasks.

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Entrepreneur Characteristics

Hard work, motivation, risk-taking, initiative, creativity, resilience, perseverance, market understanding.

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Equilibrium Point

The quantity demanded is the same as the quantity supplied. There will be no unsold products.

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Extension Strategies

Used when sales are slowing. This could be re- launching the product or re-branding.

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External Recruitment

Potential candidates are found from outside the organisation, either by advertising or using recruitment agencies.

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Flexible Hours

Requires the employee to work a certain number of hours in a given time period but the employees can choose their own hours.

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Flexible Workforce

Workforce that can adapt quickly, e.g. to a sudden change in customer demand.

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Herzberg's Two Factor Theory

Motivating factors and hygiene factors. Hygiene factors can only dissatisfy employees if they are not met.

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Hierarchy

Employees are ranked in layers, one above the other, in a typical pyramid shape.

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Income Elastic

Income change causes proportionately bigger change in quantity demanded. x>1

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Income Elasticity of Demand

How much a change in income leads to a change in demand.

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Income Inelastic

Income change causes proportionately smaller change in quantity demanded. 0 < x < 1

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Individual Approach

Direct discussions between an employer and an individual.

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Induction

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Inferior Good

Demand decreases as income increases. E.g. Aldi Baked Beans

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Innovation

Bringing a new idea into existence and using it.

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Internal Recruitment

Potential applicants are found within the organisation

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Labour Turnover

Rate at which staff leave the business

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Laissez Faire

Set the initial agenda and then give staff complete freedom to complete the task.

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Leadership

Art of motivating and organising a group of people to achieve a common goal.

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Limited Company

Owned by its shareholders.

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Luxury Good

Demand increases as income increases. E.g. Jaguar

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Marketing Objectives

Longer term marketing goals and targets.

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Market Map

Plots brands in the market according to how they meet customers' needs. It uses two sets of criteria such as quality and prices.

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Market Orientation

Business will focus on customer preferences and needs, involves expensive market research.

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Market Segmentation

Way markets can be divided up, each with different customer preferences. E.g. income level or gender.

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Market Share

Amount sold by a single business as a percentage of total market.

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Market Size

Measured by either value or volume.

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Maslow Hierarchy of Needs

Self-Actualisation Self-Esteem Social Needs Safety Needs Basic Physical Needs for Survival.

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Mass Market

Large market where most people tend to buy same or similar products. E.g. laundry detergents.

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Matrix Structure

Individuals are assigned to teams according to their specialism.

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Mayo Human Relations

Focuses on addressing human needs, social and psychological factors.

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Multi-skilling

Practice of training employees so that they can do a range of tasks.

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Niche Market

Small market with specific needs for specialised products or services. E.g. high quality chocolate.

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Opportunity Cost

Cost of giving up something in order to do or buy something else.

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Organisational Structure

Framework which shows how a business arranges its lines of authority and communications.

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Outsourcing

Where business tasks or processes are undertaken by an external provider. E.g. office cleaning.

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Partnership

Two or more people working together. Unlimited liability.

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Paternalistic

Behave like a parent might in making decisions. Consult early on and at every level and explain their reasons.

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Penetration Pricing

Used to enter a new market. Lower price is used to gain customers and penetrate the market.

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Personal Branding

Individuals who have become their own brand.

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Predatory Pricing

Prices set at a very low level, possibly even below costs of production, in order to destroy competition. Effective but illegal.

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Premium Pricing

Ability to charge higher price than competition without losing sales.

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Price Elastic

Price Change causes proportionately bigger change in quantity demanded. Beyond -1.

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Price Elasticity of Demand

How much a price change leads to a change in demand.

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Price Inelastic

Price change causes proportionately smaller change in quantity demanded. -1

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Price Skimming

Charging a very high initial price for the product.

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Pricing Strategies

range of ways in which a business might decide on the price of its product/service.

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Primary Research

Collecting new data directly from original sources. E.g. questionnaires and in- depth interviews.

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Problem Child

Small share of fast growing market. Need to be promoted or adapted to fit customer requirements more closely.

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Process Innovation

Using new technology to improve production methods, so that costs are reduced. Change is often invisible to consumers, but it may result in price cuts.

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Product Branding

Single product is recognised by that name. E.g. Jacuzzi

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Product Differentiation

When each business creates a distinctive product. This could be with unique features. Reduces PED.

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Product Innovation

New technologies make it possible to create new products or to improve quality of existing ones.

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Product Life Cycle

Shows different stages that a product passes through. Development, Introduction, Growth, Maturity, Decline.

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Product Orientation

Business will focus its efforts upon creating the product rather than responding to market needs. Make the product first then sell it. E.g. iPhone.

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Product Portfolio

Range of products that a business produces.

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Profit Maximisation

Making as much money as possible.

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Profit Satisficing

Making enough profit to continue in business. They may not be interested in taking on the additional risk and effort involved in maximising profits.

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Promotion

Inform customers and potential customers about the product or service.

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Psychological Pricing

Used to make the price seem more attractive than it really is. E.g. £9.99

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Qualitative Research

Customers' genuine opinions. Aims to understand customer behaviour.

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Quantitative Research

Analysis of numerical data.

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Redundancy

When the worker's skills are no longer of use to the business.

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Risk

Situations where the outcomes are known and can be quantified.

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Secondary Research

Gathering data from existing online and paper-based sources. E.g. government statistics.

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Social Trends

Way society as a whole behaves.

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Sole Trader

Self-employed and runs his/her own business. Unlimited Liability.

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Span of Control

Number of people directly answerable to each person in the chain of command.

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Star

Product with significant market share in a fast growing market.

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Supply

Amount of a good or service that producers are willing to provide at a given cost.

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Taylor Scientific Management

Close supervision and bonuses rewarded to more productive employees.

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Trade-Off

Occurs when two things cannot both be fully achieved.

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Uncertainty

Where events are unpredictable. Caused by factors outside the control of the business.

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Unique Selling Point

Distinctive feature that no competing product can match precisely.

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Unit Income Elasticity

Same proportional change in quantity demanded and income. x =1

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Unit Price Elasticity

Price change causes same change in quantity demanded. -1

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Viral Marketing

Strategy that encourages individuals to pass on a marketing message to someone else. Youtube has been very useful for this.

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Business Key term theme 1

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