Mr.

Canning

Business Dictionary

2011 Edition

Mr. Canning

Business Dictionary

2011 Edition

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 Value on Date of Loss x
2

Amount of Damage Caused

Mr. Canning

Business Dictionary

2011 Edition

alance of Payments Difference btw countrys 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 countrys visible exports & visible imports over a year (only includes goods NOT SERVICES) 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 firms 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. bakery producing bread, cakes etc A firm like HB Ice Cream engage in batch production as many of their products are made using the 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 companys goods from anothers 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 a competing 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 meet commitments

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 grounds under 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 final resolution 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 Amount Insured with each insurer x Loss suffered Total amount insured for

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

Mr. Canning

Business Dictionary

2011 Edition

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 firms 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. 2. 3. 4. IDEA GENERATION PRODUCT SCREENING CONCEPT DEVELOPMENT FEASIBILITY STUDY 5. PROTOTYPE DEVELOPMENT 6. TEST MARKETING 7. COMMERCIALISATION

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

Mr. Canning

Business Dictionary

2011 Edition

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 rep FUNCTIONS 1. Hears range of disputes but mainly unfair dismissals 2. It decision (called a determination) is legally binding, but can be appealed to High Court but only on a point 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 starting a new business venture

Equality Authority
Established under Employment Equality Act (1998) FUNCTIONS: 1. Work to eliminate discrimination under 9 grounds laid out in above act 2. Promote equality of opportunity in employment under 9 grounds laid out in above act 3. Provide information to public on workings of Employment Equality Act 4. 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 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

Field Research

Financial Information - Importance to Business

Useful in the following areas: 1. LIQUIDITY & CASH FLOW 2. CONTROL OF DEBT 3. SIZE OF CREDITORS 4. PROFITABILITY & PROFIT PORTFOLIO 5. VALUE OF NET ASSETS OF FIRM 6. FILING ACCOUNTS (W/ COMPANIES OFFICE) 7. FUTURE PLANNING

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 firms 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 firms 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
Persons 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 firms 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 employees 2. Brainstorming sessions 3. R & D 4. Feedback from customers 5. Sales personnel 6. SWOT analysis EXTERNAL SOURCES 1. Competitors 2. Customer requirements 3. Research agencies/management consultants 4. Government agencies 5. Trade fairs 6. 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 are not recyclable 3. Lobbying to influence decision makers by campaigning in media e.g. 2004 Irish Vintners Association lobbied government not to introduce Smoking Ban, used media to highlight 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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Business Dictionary

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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 firms 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 disputes 3. Reduce number of disputes before Labour Court FUNCTIONS: 1. Provide conciliation service by appointing IRO to investigate dispute & steer parties towards a solution 2. Provide IR advice 3. Prepares Codes of Practice in consultation with IBEC & ICTU 4. Appoints Rights Commissioners & Equality Officers 5. Assist JLC & JIC 6. 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 it appropriate (i.e. Irish Ferries) 2. Investigate disputes where LRC has waived its involvement or if parties request intervention 3. Offers binding arbitration, both parties sign to accept resolution. Then both sides give their side & court makes decision 4. Issue binding recommendation if recommendations of Rights Commissioners or Equality Officers rejected 5. Establish JLC & JICs they recommend wages levels & conditions in areas where workers have no union representation 6. Register employment agreements & check implementation

Leasing
Medium source of finance used to acquire assets like computers & vehicles Firm dont purchase asset but rents it Leasing is good for a firms working capital & cash flow because only small regular payments have to be made, 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 personal assets can be seized

Mr. Canning

Business Dictionary

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Liquidity Ratios
Show relationship between firms current assets & current liabilities, used to assess a firms ability to pay debts as they fall due WORKING CAPITAL RATIO = Current Assets : Current Liabilities ACID TEST RATIO = Current Assets Closing Stock : Current Liabilities

anagement Skills
LEADERSHIP Autocratic Democratic MOTIVATING Maslows Hierarchy of Needs McGregors Theory X & Theory Y COMMUNICATION Paternalistic Laissez-faire

Management Activities
PLANNING Process of deciding the objectives of the business & how they are going to be effectively achieved TACTICAL Designed to a achieve stated short-term goals (1-2 years) STRATEGIC Stated long-term goal, uses tactical plans to reach final target (2-6 years) OPERATIONAL Very short-term (weeks or months) Monthly budgets ORGANISING Ensuring a clear structure w/in a firm to allow the smooth running of the business CONTROLLING Measuring performance to make sure the required standards are reached FINANCIAL Accounts, cash flow, credit PRODUCTION Output, quality, wastage HUMAN RESOURCES Labour turnover, absenteeism STOCKS 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 in manufacturing & 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 consumers in 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 firms 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 cant 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 be achieved

N O

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 & health boards 2. Impartial & independent of government 3. 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 act 2. Promote higher standards in advertising 3. Instigate legal proceeding against those involved in misleading advertising 4. Investigate complaints from consumer to other interest parties 5. To request cessation of misleading advertising, if ignored can go to High Court for injunction 6. 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 Authority FUNCTIONS OF ODEI EQUALITY TRIBUNAL: 1. Investigate complaints under above act 2. Appoint Equality Officers & Equality Mediation Officers 3. 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 & processors 2. Prepare codes of practice in this area 3. Issue Enforcement Notices on those in breach of act 4. Authorise officers to seize data on file 5. 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

Time

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

Q R S

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:
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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 1,270 2. Fee of 9 3. 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 firms 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. 2. 3. 4. FORMING STORMING NORMING PERFORMING

Total Quality Management

TQM is management approach that insists on total quality in all aspects of firms activities

Trade Mark
Distinguishes goods or services of one firm from anothers Can consist of words, designs, colours Coca-Cola, Tesco, Finches etc

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U V

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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