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8/2/2019 Business Dictionary2

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Mr. Canning Business Dictionary 2011 Edition

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cid Test Ratio

• Used to access liquidity position of a firm

• Current Assets – Closing Stock : Current Liabilities

• Ratio of 1:1 seen as ideal

• More severe test than working capital ratio as stock is excluded

Acquisition

• Form of business growth – inorganic

• One firm buys majority or all of another

• Useful to expand into foreign markets

Actuary

• Specialist in insurance

• Assess risk to be accepted by insurers

• Set premiums, greater the risk the higher the premium

Agenda

• Sent to all members entitled to attend a meeting (employees, shareholders, club members etc…)

• Mentions location, date, time, type of meeting & lists business to be discussed in order of discussion

Agri-business

• Business of agriculture & associated industries which use agricultural output as a raw material

• Products include milk, sugar, meat products etc…

• Controlled by CAP of EU

Annual Percentage Rate - APR

• True cost of borrowing to consumers• Takes into account:

(i) Interest rate (called Flat Rate)(ii) Additional costs, e.g. insurance, admin costs, which have to be taken out with the loan(iii) By law APR must be stated in all documentation/advertising, allows consumers make comparisons

& shop around

Arbitration

• Way of resolving conflict, both parties request a third party to make a decision on an issue

• Both sides agree in advance to accept this decision

• Used in the Labour Court, where a panel of three hear IR disputes

Articles of Association

• Sets out internal rules of a firm, includes:(i) Amount of authorised share capital(ii) Voting rights(iii) Procedure for electing directors(iv) Procedures for calling meetings of shareholders, quorum etc…

Average Clause

• Applies in case of partial loss when risk is underinsured

• In context of Principle of Indemnity very important

Amount Insured x Amount of Damage Caused

Value on Date of Loss




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alance of Payments

Difference btw country’s total exports & total imports over a year Total exports = visible exports (goods) + invisible exports (services) Total imports = visible imports (goods) + invisible imports (services)

Indicator of how well economy is performing, a surplus is a sign that the economy is booming, the income from

exports is greater than expenditure on imports (net inflow of money into the economy) – opposite is a deficit

Balance of Trade

• Difference btw country’s visible exports & visible imports over a year (only includes goods NOTSERVICES)

• In surplus if export of goods is greater than import of goods, opposite is a deficit

Balance Sheet

• Statement of financial position of a firm on a specified date

• Shows firm’s assets & liabilities Assets divided into Fixed Assets (e.g. buildings, machinery) & Current Assets (e.g. stock,

debtors) Liabilities divided into Long-term Liabilities (e.g. share capital, loans) & Current Liabilities (e.g.

overdrafts, creditors)

• Analysis of balance sheet allow us to see if a firm is overtrading & highly geared

Batch Production

• Identical goods are produced in batches of certain quantise in anticipation of being sold, e.g. bakeryproducing bread, cakes etc…

A firm like HB Ice Cream engage in batch production as many of their products are made usingthe same machines (e.g. Fat Frogs & Loop the Loops)

Benefit-in-Kind

• Way of rewarding employees on top of money income

• Can be monetary (e.g. pensions, share options) or non-monetary (e.g. company car, holidays etc…)

Branding

• Brand is a name, term, design, symbol or feature that distinguishes one company’s goods from another’s

• May be products only unique feature, without it consumer may have difficulty recognising it

• Simplify shopping for consumers, guaranteeing quality & allows us express our preference

Business Ethics

• Management policy which is used as a gauge in deciding whether behaviour of employee is right or wrong• Should conform to generally accepted standards

• All firms should have a Code of Ethics – for example is it ethical for a sales manager to own shares in acompeting company?

ash Flow Forecast

• Shows estimated future revenue & expenditure, to ascertain the future liquidity position of the firm

• By preparing one a firm can determine future shortfalls & so can arrange additional finance to meetcommitments

Caveat Emptor • ‘Let the Buyer Beware’ – implied term in contracts of sale

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• Buyers should check out goods & services before purchasing as a change of mind is insufficient groundsunder consumer law for redress

Chain of Command • Management structure with a firm

• Conduit for instructions to be passed from superiors to subordinates

• If clearly defined should eliminate obstructions & allow more efficient management

Common Agricultural Policy – CAP Objectives are:

(i) Increased productivity & efficiency (ii) Free agri-trade btw member states(iii) Guaranteed regular supplies of agri-products to EU consumers at affordable prices(iv) Payments to farmers which have been de-coupled from production

Common Fisheries Policy – CFP Objectives are:

(i) Prevent over-fishing in Irish water, thus ensuring adequate future stocks(ii) Ensure consumers have regular supplies at reasonable prices(iii) Guarantee future livelihood for those in fishing industry

Conciliation • Attempt by a third party to resolve a dispute

• Hears from both sides, may recommend a solution but both sides in the conflict must make the finalresolution

• LRC provides a conciliation service

Contract • Agreement enforceable by law

• The following must be present to be legally enforceable: Offer Acceptance Consideration Capacity Intention Consent

Contribution • In cases of over-insurance due to risk covered with 2 insurers, principal of indemnity applies

• Only allowed recover value of loss & not allowed to make a profit by claiming twice

• Each insurer pays in proportion to the risk they cover

elayering • Reducing number of layers of management (middle) in a large firm

• Gives more authority to those left, should allow the firm to become for efficient

Amount Insured with each insurer x Loss suffered

Total amount insured for

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Delegation • Giving other people the authority to do certain work, e.g. a sales manager who appoints a regional

manager, who then becomes responsible for running the sales department in that region

Desk Research • Form of market research, aims to help decision making

• Involves examining all relevant internal & external information Internal sources – firm’s own files & reports External sources – reports in magazines, official statistics & information on WWW

Deregulation • Reduction in regulations & government interference in business activities

• Allows more growth in free enterprise, with less protection for existing firms Taxi industry recently deregulated, prior to this very expensive to buy a taxi licence – now only

costs a couple of thousand €uro

Development of New Product/Service 1. I DEA GENERATION 2. P RODUCT SCREENING 3. C ONCEPT DEVELOPMENT 4. F EASIBILITY STUDY

5. P ROTOTYPE DEVELOPMENT 6. T EST MARKETING 7. C OMMERCIALISATION

Differential Marketing • Where firm has different target markets, so a different marketing approach is required for each target

• Can be expensive so normally only see it from large firms

Direct Marketing • Form of non-shop retailing

• Make direct contact with target customers through direct mail, telesales or direct response brochures

• Three major advantages:(i) Make direct contact with target market (ii) Cheaper way of promoting goods(iii) Possible to quantify results of campaign & hence effectiveness of campaign

Direct Taxation • Taken directly from you income, e.g. PAYE

• Employer responsible for deducting tax from employees’ wages & remitting it to tax office

Discretionary Income • Money left after paying tax & spending on essential items like food, clothes etc…

• Spent on holidays, home improvement etc…

Diversification • Being involved in different industries

• Allows firms to spread risk, increase sales & profit & benefit from economies of scale BIC, has huge success with biros but has widened its product range by moving into the

disposable razor market




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conomies of Scale • Relationship btw cost & production is known as an economy of scale

• When a firm increases its production run, unit cost will be reduced as costs are spread over a larger output Gives a big firm a competitive advantage over a smaller firm

Electronic Data Interchange – EDI

• Electronic transfer of data from one computer to another • Used for sending orders & paying invoices

Benefits are improved stock control, reduction in administration costs & better use of management time

Employment Appeals Tribunal – EAT ROLE:

• Independent body, responsible for implementing your rights under employment law

• Made up of Chairperson (w/ legal background), TU rep & Employers repFUNCTIONS

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Hears range of disputes but mainly unfair dismissals2. It decision (called a determination) is legally binding, but can be appealed to High Court but only on apoint of law

Empowerment • Allowing workers set own goals, make decisions & solve problems that arise within their area of responsibility

• Form of delegation, used to motivate staff & improve morale Business benefits from an improved service provided by a more committed workforce

Entrepreneur • Risk-taker who invests personal resources into a new business venture, hoping to make a profit

• Entrepreneurship is process of planning, organising, staffing, directing, operating & accepting risk of startinga new business venture

Equality Authority • Established under Employment Equality Act (1998)FUNCTIONS:

1. Work to eliminate discrimination under 9 grounds laid out in above act2. Promote equality of opportunity in employment under 9 grounds laid out in above act3. Provide information to public on workings of Employment Equality Act4. Monitor & review operations of Employment Equality Act

Equity Capital • Finance raised from shareholders

• Issued share capital

• Long-term source of finance

• Company must pay dividend in return

• Shareholders elect board of directors to represent them

actoring •

Short-term source of finance using debtors• Firm sells debts to financial institution for discount, factor collects payment in full from debtor

Allows firms to release cash that is tied up in debtors, can also reduce possibility of bad debts if debts are sold without recourse

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Feasibility Study • Used to determine whether a business idea is practical & profitable

• Involves checking all issues involved: R&D, production, finance, logistics, human resources, costs etc… Results from this will help management decide whether to proceed with or to drop a project

Field Research

• Form of market research• Involves using surveys, sampling, questionnaires & observation

• More costly than desk research but more targeted as it is tailored to each project

Financial Information - Importance to Business • Useful in the following areas:

1. LIQUIDITY & C ASH F LOW 2. C ONTROL OF DEBT 3. SIZE OF C REDITORS 4. P ROFITABILITY & P ROFIT P ORTFOLIO

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V ALUE OF N ET ASSETS OF FIRM 6. F ILING ACCOUNTS ( W / C OMPANIES OFFICE )7. F UTURE P LANNING

Fiscal Policy • Government policy relating to receipts & payments to & from the exchequer

Fixed Costs • Costs which a firm has to pay regardless of production levels, e.g. rent & insurance

• They remain the same whether the level of output is high or low

Franchising • Buy legal right to sell products (normally flat fee up front & percentage of sales)

• Franchisor provides equipment, management advice, marketing & branding to franchisee Benefit is setting up a new business with business experience & success of others, e.g.

McDonalds

earing – Leverage • Relationship between firm’s debt capital and equity capital

• If debt capital greater than equity capital – firm highly geared, this may cause share price of a PLC to fall Information about gearing available from a firm’s Balance Sheet

Global Business • Firm attempts to standardise its business operations worldwide

• Succeeds because it is able to identify worldwide markets for its products, e.g. Coca-cola & Ford

Gross Pay • Person’s gross earnings before any deductions (e.g. tax) are made

Gross pay is basic pay plus overtime &/or bonuses Gross pay less all deductions equals Net Pay

Gross Profit • Sales less cost of sales equals gross profit

Calculated in a firm’s Trading Account, which is part of the Final Accounts

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ire Purchase • Medium source of finance by business & households

Used to buy items like TVs or cars

• Buy in instalments, get possession on first payment but only become owner on payment of last instalment

dentifying New Business Opportunities INTERNAL SOURCES

1. From employees2. Brainstorming sessions3. R & D4. Feedback from customers5. Sales personnel 6. SWOT analysis

EXTERNAL SOURCES

1. Competitors2. Customer requirements

3. Research agencies/management consultants4. Government agencies5. Trade fairs6. Franchising 7. Public Procurement

Indigenous Firms • Irish-owned, established in Ireland by Irish people

Between 1999-2004, 150,000 jobs created in Ireland by indigenous firms

Inflation • Sustained increase in the level of selling prices over a specified period, measured by Consumer Price Index

(CPI) High rate bad for business as firms become less competitive if workers demand wages increases

due to rising prices

Interest Groups • Role is to influence decisions made by government, EU, business etc…

• Not elected but have strength in numbers, can affect business by:1. Boycotting firms

e.g. IFA once boycotted meat processors until problem over prices was resolved in their favour 2. Encouraging consumers not to support certain firms

e.g. Environmental groups encourage us to reduce, reuse & recycle while avoiding products which arenot recyclable

3. Lobbying to influence decision makers by campaigning in mediae.g. 2004 Irish Vintners Association lobbied government not to introduce ‘Smoking Ban’, used media tohighlight possible job losses as main PR tool. Failed.

Intrapreneur • Person engaged in entrepreneurial activities from within a firm

• Not a risk-taker, but has some of the traits of an entrepreneur, i.e. coming up with new ideas which may be

profitable for the business

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ob Production • Production of a single item to meet specific requirements of the purchaser

• Not produced for stock, made to order

• Product expensive & highly-skilled labour used in production, e.g. ship or bridge-building

Just-in-Time Production • Ordering materials often & in small quantities so that stock only arrives when needed, i.e. Just-in-time• Reduces firm’s investment in stock levels & storage space, emphasises elimination of waste

Need total confidence in suppliers as this puts great pressure on suppliers to have very efficient system of production & distribution

abour Relations Commission - LRC • Established under Industrial Relations Act (1990)ROLE:

1. Promote improved IR

2. Assist in solving disputes3. Reduce number of disputes before Labour Court

FUNCTIONS:

1. Provide conciliation service by appointing IRO to investigate dispute & steer parties towards a solution2. Provide IR advice3. Prepares Codes of Practice in consultation with IBEC & ICTU4. Appoints Rights Commissioners & Equality Officers5. Assist JLC & JIC6. Researches & monitors IR developments to improve IR in Ireland

Labour Court • Established under Industrial Relations Act (1990)FUNCTIONS:

1. Investigates disputes on request of Minister of Enterprise, Trade & Employment or if they deem itappropriate (i.e. Irish Ferries)

2. Investigate disputes where LRC has waived its involvement or if parties request intervention3. Offers binding arbitration, both parties sign to accept resolution. Then both sides give their side & court

makes decision4. Issue binding recommendation if recommendations of Rights Commissioners or Equality Officers rejected5. Establish JLC & JIC’s – they recommend wages levels & conditions in areas where workers have no

union representation6. Register employment agreements & check implementation

Leasing • Medium source of finance used to acquire assets like computers & vehicles

• Firm don’t purchase asset but rents it

• Leasing is good for a firm’s working capital & cash flow because only small regular payments have to bemade, however it is expensive in the long-run

Limited Liability • Protection for shareholders in private & public companies

• If company goes bankrupt, shareholders only lose the amount they have invested – none of their personalassets can be seized

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Liquidity Ratios • Show relationship between firm’s current assets & current liabilities, used to assess a firm’s ability to pay

debts as they fall due W ORKING C APITALR ATIO = Current Assets : Current Liabilities ACID T EST R ATIO = Current Assets – Closing Stock : Current Liabilities

anagement Skills LEADERSHIP

• Autocratic

• Democratic

• Paternalistic

• Laissez-faire

MOTIVATING

• Maslow’s Hierarchy of Needs

• McGregor’s Theory X & Theory YCOMMUNICATION

Management Activities PLANNING

Process of deciding the objectives of the business & how they are going to be effectively achieved

• T ACTICAL

Designed to a achieve stated short-term goals (1-2 years)

• S TRATEGIC

Stated long-term goal, uses tactical plans to reach final target (2-6 years)

• O PERATIONAL

Very short-term (weeks or months) Monthly budgets

ORGANISING

Ensuring a clear structure w/in a firm to allow the smooth running of the businessCONTROLLING

Measuring performance to make sure the required standards are reached

• F INANCIAL – Accounts, cash flow, credit

• P RODUCTION – Output, quality, wastage

• H UMAN R ESOURCES – Labour turnover, absenteeism

• S TOCKS – Too much or too little

Manpower Planning • Function of HR manager

• Assessing HR requirements of each department of a firm

• Must be up to date with skills needed to perform tasks & also the technological developments taking place inmanufacturing & computers

Marketing Concept • Find out what consumers want & provide it

• Used to identify what a firm wants out of its marketing

Marketing Strategy • Used to achieve marketing concept

• Involves analysing target market & developing a marketing mix that will meet requirements of the consumersin that target market

• A plan allowing a firm to make best use of its resources & the unique features of its products

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Marketing Mix • Relates to how price, product, place & promotion are used by a firm

Mass Production • Producing large quantities of standardised goods, allows economies of scale & reduction of unit costs

• Highly capital intensive, so needs large initial investment, but this is necessary to achieve low costs & be

competitive• Goods made for stock as high sales expected over time, e.g. golf balls, biros etc…

Memorandum of Association • Sets out a firm’s relationship with the public

• Defines what the limitations & powers of the company are, e.g.(i) Name of company – followed by Ltd or PLC (ii) Objectives of the company (iii) Statement that firm has limited liability

• A firm can’t legally carry out any activities not included in the Memorandum of Association, if it does, it is

acting ‘ultra vires’ , i.e. outside its authority

Merchandising • Manufacturer looks to ensure retailers sell their products as quickly & profitably as possible

• Provide advice & assistance to shops, e.g. providing display stands at impulse locations, posters etc… HB Ice Cream provide colourful freezer units, colourful product charts & outside signage

• Aim is to increase sales of their products not all the products in a shop

Mission Statement • Defines what a business can & should do

• States objectives in relation to sales, profits, customer service, market share etc. & how these are to beachieved

etworking • Business people making contacts to develop their business

• Getting to know people with influence so as to use them to their advantage Other business people, local & national government officials etc…

Niche Market • A segment of the marketplace that in not currently being exploited

• Small size of these means fewer suppliers & less severe competition than established markets

pen Economy • Economy which allows trade to take place without restriction

• Trade within EU states operates in this way, although EU states are not open economies to non-EU states

Organisation Structure • Levels of management & divisions of responsibilities within a firm

• Should show chain of command clearly Line organisation, Matrix Structure etc…

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Overtrading • When business has insufficient current assets to pay its current debts

• Can be identified by calculating Working Capital Ratio

Ombudsman ROLE:

1. Investigates complaints from public about certain public bodies, e.g. An Post, local authorities & healthboards

2. Impartial & independent of government3. First contact applies, then Ombudsman will investigate complaint & issue recommendation to solve the

problem (this is not binding but bad PR if not accepted)

Office of Director of Consumer Affairs (now offically the National Consumer Agency) • Set-up under Consumer Information Act (1978)ROLE:

1. Enforce above act2. Promote higher standards in advertising3. Instigate legal proceeding against those involved in misleading advertising4. Investigate complaints from consumer to other interest parties5. To request cessation of misleading advertising, if ignored can go to High Court for injunction6. Monitor legislation at home & in Europe & inform consumers of their rights

• Without this office consumers likely to be misled, losing out on quality, value & legal rights

Office of Director of Equality Investigation – Equality Tribunal • Set up under Employment Equality Act (1998)

• Separate from Equality AuthorityFUNCTIONS OF ODEI – EQUALITY TRIBUNAL:

1. Investigate complaints under above act2. Appoint Equality Officers & Equality Mediation Officers3. Submit annual report to Minister for Justice on activities of Office

Office of the Data Protection Commissioner • Set up under Data Protection Act (1988)FUNCTIONS

1. Maintain register of Data controllers & processors2. Prepare codes of practice in this area3. Issue Enforcement Notices on those in breach of act4. Authorise officers to seize data on file5. Instigate legal action against those in breach of act

erformance Appraisal • Using employees performance as basis for wage increases

• Function of Human Resource Department

• Assess employees in terms of: Quality of work Time-keeping Commitment Targets met

• Also discuss where & how improvement can be made

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Private Limited Company • Use Ltd after company name

• Shareholders have limited liability

• Shares not available to public & not on stock exchange

• Must have Certificate of Incorporation to trade

Public Limited Company • Use PLC after company name

• Shareholders have limited liability

• Shares quoted on stock exchange & available to public

• Must publish accounts

Product Life Cycle • Stages a product goes through from inception to possible removal

Research & development Induction

Growth Maturity Saturation Decline

Prototype Development • Small number of samples of a new product for test marketing

• Useful to highlight any production problems, costing, consumer reaction to selling price

• Product may or may not proceed to full production

Public Relations (PR) • Deliberate, planned & sustained effort to establish & maintain a good relationship with the public

• Involves getting good publicity for firm or countering bad publicity

uality Control • Ensures standards set by firm & expected by customers are met

• Can help avoid potentially damaging legal claims or negative publicity due to faults

• Q Mark in Ireland should be assurance of quality

ights Commissions • Deals with problems of individual workers as distinct from groups of workers

• Issues like disciplinary procedures or dismissals

• Makes recommendation which can be rejected & appealed to Labour Court who will make a binding decision

Risk Management • Organised approach to assessing & managing potential risks to a business

• Can use insurance to counter these risks

ales Promotion • Short-term activities to support adverting & sales

• Examples include:S

€

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Special offers Money off Discounts on future purchases

Single European Market • Came into force in 1993, created free trade throughout EU

• Free movement of goods, services & capital

• Aimed to provide more competition & lower prices for consumers

Small Claims Court • Established under Consumer Information Act (1978)

1. Hears claims by consumers for faulty goods & services not exceeding €1,2702. Fee of €93. Aims to be accessible, speedy, cheap & fair

• Main weakness is judgement in consumers favour not enforceable, if rejected applicant must go to full hearing in District Court

Span of Control • Number of subordinates reporting to any one manager

Stakeholders • People involved & interested in how a business is run

Owners Consumers Employees

Public Government Service providers

SWOT Analysis • Examines firm’s strengths, weaknesses, opportunities & threats

• Allows firm to formulate strategy

ax Credit • Discount on tax payable

• Depends on personal circumstances

• Deducted from gross tax

Team building Process 1. F ORMING

2. STORMING 3. N ORMING 4. P ERFORMING

Total Quality Management • TQM is management approach that insists on total quality in all aspects of firm’s activities

Trade Mark • Distinguishes goods or services of one firm from another’s

• Can consist of words, designs, colours

Coca-Cola, Tesco, Finches etc…




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nsolicited Goods (Inertia Selling) • Goods received by consumers that have not been asked for, request for payment comes with goods

• Under Sale of Goods & Supply of Services Act (1980) consumer can be keep these goods after giving sender

30 days notice that goods are not wanted

Utmost Good Faith • Full disclosure of all material facts when taking out insurance

• Material facts are those that may influence an insurer in whether to offer insurance & what premium to charge History of heart disease Penalty points Smoker or non-smoker

ariable Costs • Costs which vary with the number of goods produced

• The more goods produced the higher variable costs will be as more labour, raw materials etc…

Venture Capital • Also called ‘seed’ capital

• Long-term source of finance, where venture capitalist invests in return for equity holding (shares) in company& share of profits

“Remember that the dictionary is the only place where success comes before work”

DISCLAIMER

THIS IS NOT AN INEXHAUSTABLE LIST BUT THIS IS A GOOD PLACE TO START. YOU SHOULD SEEK OUT OTHER DEFINITIONS

FROM YOUR NOTES, BOOK & PAST PAPERS

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