Definitions for Unit 3 Business Studies

Revision of Definitions for Business Studies Unit 3

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Objectives
Medium-long term goals or targets that must be achieved in order to realize the stated aims of an organisation or department.
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Corporate Objectives
The goals or targets of the whole organisation, usually based on its mission or aims
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Functional Objectives
The goals or targets of each of the functional areas of a business, usually based on its corporate objectives
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Strategy
The medium to long term plans through which an organisation aims to attain its objectives
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Financial Aims
The broad, general goals of the finance and accounting department
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Financial Objectives
The specific, focused targets of the finance and accounting department
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Financial Strategies
Long term or medium term plans, devised at senior management level, and are designed to achieve the firm's financial objectives
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Financial Tactics
Short term financial measures adopted to meet the needs of a short term threat or opportunity
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Balance Sheet
A document describing the financial position of a company at a particular point in time
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Income Statement
An account showing the income and expenditure of a firm over a period of time
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Management Accounting
The creation of financial information for use by internal users in the business, in order to predict, plan, review, and control the financial performance of the business
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Financial Accounting
The provision of financial information to show external users the financial position of the business
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Assets
Items that are owned by an organisation
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Non-Current Assets
Resources that can be used repeatedly in the production process, although they do wear out or lose value
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Tangible Assets
Non-current (fixed)assets that exist physically
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Intangible Assets
Non-current assets that do not have a physical presence, but are nevertheless of value to a firm e.g. brand name
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Current Assets
Short term items that circulate in a business on a daily basis and can be expected to be turned into cash within 1 year
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Liabilities
Debts owned by an organisation to suppliers, shareholders, investors or customers who have paid in advance
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Total Equity
Funds provided by shareholders to set up the business, fund expansion and purchase fixed assets
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Revenue Expenditure
Spending on day to day items such as raw materials, stock (inventories), wages and power
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Capital Expenditure
Spending on non-current (fixed) assets- those assets used repeatedly in the production process
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Depreciation
The fall in value of an asset over time
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Obselescence
When an asset is still functioning but is no longer considered useful because it is out of date
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Working Capital (Net current assests)
The day to day finance used in a business, consisting of current assets minus current liabilities
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Liquidity
The ability to convert an asset into cash without loss or delay
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Liquid Assests
Items owned by an organisation that can be converted into cash quickly and without a loss of value
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Working Capital Cycle ( Cash Operating Cycle)
The inflow and outflow of liquid assets and liabilities within a business
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Gross Profit
Revenue minus cost of sales. Shows how efficiently a business is converting its raw materials or stock into finished products
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Operating Profit
The revenue earned from everyday trading activities minus the costs involved in carrying out those activities
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Earnings Per Share
How much a shareholder would earn if all of the profit were given to shareholders as dividends
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Profit Quality
A measure of whether profit is sustainable in the long run. High quality profit = profit that will continue. Low quality profit arises from exceptional circumstances that are unlikely to continue
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Profit Utilisation
The way in which a business uses its profit or surplus
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Trend
The underlying pattern of change shown within a set of numerical data
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Ratio Analysis
A method of assessing a firm's financial situation by comparing two sets of linked data
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Solvency
A measure of a firm's ability to pay its debts on time. Solvent = firms that meet its financial commitments. Insolvent = firms that cannot meet its financial commitments
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Trading Profit
The difference between the income received from an organisation's normal activities and the expenditure it incurs in operating
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Retained Profit
The part of the firm's profit that is reinvested in the business rather than distributed to shareholders
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Ordinary Share Capital
Money given to a company by shareholders in return for a share certificate that gives them part ownership of the company and entitles them to a share of the profits
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Loan Capital
Money received by an organisation in return for the organisation's agreement to pay interest during the period of the loan and to repay the loan within an agreed time
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Debenture
A long term loan made to a business at an agreed fixed percentage rate of interest and repayable on a stated date
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Bank Loan
A sum of money provided to a firm or an individual by a bank for a specific, agreed purpose
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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
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Profit Centre
An identifiable part of an organisation for which costs and revenue can be caluculated
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Investment Decision Making
The process of deciding whether or not to undertake capital or major business projects
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Investment Appraisal
A scientific approach to investment decision making, which investigates the expected financial consequences of an investment, in order to assist the company in its choice
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Payback Period
The length of time that it takes for an investment to pay for itself from the net returns provided by that particular invesment
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Average Rate of Return (ARR)
Total net returns divided by the expected lifetime of the investment, expressed as a percentage of the initial cost of the investment
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Net Present Value
The net return on an investment when all revenues and costs have been converted to their current worth
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Marketing Aims
The broad, general goals of the marketing function within an organisation
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Marketing Objectives
The specific, focused targets of the marketing function of the business
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Marketing Strategies
Medium - long term plans, devised at senior management level, and designed to achieve the firm's marketing objectives
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Marketing Tactics
Short term marketing measures adopted to meet the needs of short term threat or opportunity
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Market Analysis
The study of market conditions to assist a firm's plans
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Sales Forecast
A prediction of the level of sales revenue for individual products or for the organisation as a whole
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Quantitative Forecasting
Those methods of prediction that are based on statistical information
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Test Marketing
The introduction of a product to a certain geographical area, in order to assess its likey success
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Moving Average
Calculation of the average of a set of data covering a defined period of time
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Trend
The underlying pattern of change indicated within a set of numerical data
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Extrapolation
Using the previous patterns of numerical data in order to predict values in the future
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Moving Averages
Statistics used to analyse trends in the recent past so that firm can predict future sales
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Fluctuations (Variations)
Periods of time when sales are above or below the trend
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Correlation
A statistical technique used to establish the strength of the relationship between two sets of values
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Qualitative Forecasting
Methods of prediction that are based on personal opinions
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Product Differentiation
The degree to which consumers see a particular brand as being different from other brands
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Unique Selling Point (USP)
A feature of a product or service that allows it to be differentiated from other products
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Marketing Plan
A statement of the organisation's current marketing position and future strategies, and a detailed examination of the tactics that it will use to achieve its objectives
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Marketing Budget
The amount of money that a firm allocates to spend on marketing activities
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Operations Management Aims
The broad, general goals of the operations management function within an organisation
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Operations Management Objectives
The specific, focused targets of the operations management function within an organisation
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Operations Management Strategies
Medium - long term plans devised at senior management level, and designed to achieve the firm's operations management objectives
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Operations Management Tactics
Short term operations management measures adopted to meet the needs of a short term threat or opportunity
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Economies of Scale
The advantage that an organisation gains due to an increase in size
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Diseconomies of Scale
The disadvantages that an organisation experiences due to an increase in size
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Capital Intensive Production
Methods of production that use a high level of capital equipment in comparison to other inputs e.g. labour
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Labour-Intensive Production
Methods of production that use high levels of labour in comparison to capital equipment
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Innovation
The successful exploitation of new ideas
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Research and Development
The scientific investigation necessary to discover new products, and the procedures necessary to ensure that these new products are suited to the needs of the market
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Assisted Areas
Parts of the UK that have relatively low levels of economic activity and high and persistent unemployment
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Industrial Inertia
The tendency for firms to remain where they are, even though the original reasons for location no longer apply
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External Economies of Scale
The benefits gained by a firm as a result of the concentration of an industry in one location
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External Diseconomies of Scale
The disadvantages arising from the concentration of an industry in one location
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Multi-Site Locations
Where a business chooses to operate from a number of different sites, as opposed to a single site location
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Offshoring
Where companies outsource business activities overseas largely because labour and facility costs are much cheaper there
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Outsourcing
Where companies give responsibility for some of their activities, such as IT support, catering or manufacturing processes, to other businesses
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Trade Barriers
Methods of restricting trade
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Protectionism
A decision by a country or countries to place restrictions on trade between nations, in order to help domestic firms competing with foreign companies
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Time-Based Management
An approach that recognises the importance of time and seeks to reduce the level of 'unproductive' time within an organisation
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Networking Analysis
A method of planning business operations in order to identify the most efficient way of completing an integrated task or project
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Critical Path Analysis
The process of planning the sequence of activities in a project in order to discover the most efficient and quickest way of completing it
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Critical Path
The sequence of activities in a project that must be completed within a designated time in order to prevent any delay in overall completion of the project
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Critical Activity
Any activity on the critical path
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Float Time
The amount of time that non-critical activities within a project can be delayed without affecting the deadline for completion of the project as a whole
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Total Float for an Activity
The number of days that an activity can be delayed without delaying the project
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Lean Production
Production based on the range of waste saving measures inspired by Japanese manufacturing companies
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Just-In-Time Production
Japanese Philosophy: Organises operations so that items of stock arrive just at the time they are needed for production
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Kaizen
A policy of implementing small, incremental changes in order to achieve better quality or efficiency
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Human Resource Management
The management of people at work in order to assist the organisation in achieving its objectives
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Hard HR Strategy
This strategy treats employees as a resource, just like any other resource, to be monitored and used in an efficient manner in order to achieve the strategic objectives of the organisation
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Soft HR Strategy
This strategy views employees as valuable assets. a major source of competitive advantage and of vital importance in achieving strategic objectives
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Workforce Planning
The method by which a business forecasts how many and what type of employees it needs now and in the future
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Workforce Plans
Plans of action that result from the process of workforce planning
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Organisational Structure
The relationship between different people and functions in an organisation
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Organisation Chart
A diagram showing the lines of authority and layers of hierarchy in an organisation
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Accountability
The extent to which a named individual is held responsible for the success or failure of a particular poject
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Centralisation and Decentralisation
The degree to which authority is delegated with an organisation: Centralised structure has a greater degree or central control, decentralised involves greater degree of delegated authority
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Functional Organisational Structure
The traditional management structure consisting of a different department for each of the main functions of the business
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Matrix Organisational Structure
A flexible organisational structure in which tasks are managed in a way that cuts across traditional departmental boundaries
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Delayering
The removal of one or more layers of hierarchy from the management structure of an organisation
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Portfolio Career
A career in which income is derived from a variety of sources
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Downsizing
Reducing the size of a firm to make it more responsive to market conditions
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Teleworking
People working from home and other locations, and keeping in contact through ICT
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Noise
Anything that can interfere with the receipt of a message
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Intermediaries
Individuals or groups within official communication channels through whom messages must be passed in order to reach the intended recievers
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Jargon
A word or phrase that has a technical or specialised meaning
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Communication Overload
When an individual becomes swamped by the sheer volume of communication and information
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Employee Participation
A general term referring to the extent to which employees are involved in the decision making process
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Industrial Democracy
When employees have the opportunity to be involved in and to influence decision making
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Worker Directors
Employees of a company who sit on its board of directors, are involved in decision making at this level and represent the views and interests of the workforce
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Trade Union
A pressure group that represents the interests of people at work
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Negotiation
Where union representatives in a particular organisation discuss with management the issues that affect employees working in that organisation
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Collective Bargaining
The process whereby workers' representatives meet with employers to discuss and negotiate employment related issues
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Union Density
The proportion of all employees who are union members
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Industrial Dispute
A disagreement between management and the trade union representing the employees
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Industrial Action
Measures taken by employees to halt or slow production or disrupt services in order to put pressure on management during and industrial dispute
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Strike
A form of industrial action involving the complete withdrawal of labour by employees
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Work-To-Rule
A form of industrial action in which employees refuse to undertake any work that is outside the precise terms of their employment contract
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Go-Slow
A form of industrial action in which employees keep on working, but at the absolute minimum pace required to avoid being subject to legitimate disciplinary action
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Overtime Ban
A form of industrial action that attempts to disrupt the employer while keeping employees' basic wages unaffected
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Single Union Agreement
The recognition by a firm of only one trade union for collective bargaining purposes
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No-Strike Agreement
A contract, signed as part of a firm's negotiation and disputes procedure, which prevents the trade unions in a particular firm from calling a strike
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Industrial Relations
The atmosphere prevailing between an organisation's management and its workforce representatives
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Other cards in this set

Card 2

Front

The goals or targets of the whole organisation, usually based on its mission or aims

Back

Corporate Objectives

Card 3

Front

The goals or targets of each of the functional areas of a business, usually based on its corporate objectives

Back

Preview of the back of card 3

Card 4

Front

The medium to long term plans through which an organisation aims to attain its objectives

Back

Preview of the back of card 4

Card 5

Front

The broad, general goals of the finance and accounting department

Back

Preview of the back of card 5
View more cards

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