Unit 2 Business

1. Capacity utilization: Percentage of current output to the maximum capacity.

2. Capital intensive: Production is largely based on machinery rather than labour

3. Buffer Stock: Minimum stocks held to be used in case of emergencies such as delays in
delivery.

4. Re-order level: Level of stocks that will trigger a new order to be sent to the supplier.

5. Re-order quantity: Quantity of stocks being ordered at each time.

6. Lead time: Time between order and delivery

7. Economic order quantity: Optimum order size at which the ordering cost and the stock
holding cost will lead to a minimum total cost.

8. Just- in- time: Stocks will arrive at the production floor at the time and the quantity at which
it is required so that no buffer stock is needed.

9. Quality assurance: Setting the quality standards throughout the organisation and ensuring
that they are complied with.

10. Quality control: Organizations set up teams of employees who are assigned the task of
finding out ways to improve the quality.

11. Total quality management: Philosophy that quality is everyone’s responsibility.

12. Culture: This term refers to the shared values, beliefs and norms which exist amongst the
workforce in a business.

13. Product design- function, aesthetics (relating to beauty) and cost

14. Inelastic demand: Percentage increase in price is more than percentage increase in demand

15. Elastic demand: Percentage increase in demand is more than percentage increase in price.

16. Increasing market share: Requires sales to rise faster than for the market as a whole

17. Product life cycle: is the course that a product’s sales and profit take over its lifetime./ Four
distinct but not wholly-predictable stages every product goes through from its introduction to
withdrawal from the market

18. Boston Matrix: The way of analysing the current and possible future position of a range of
products owned by a business
19. Product extension:

20. Branding: This means creating a name and identity for a product which differentiates it
from those of competitors.

21. Trade mark: Distinctive design, graphics, logo, symbols, words, or any combination thereof
that uniquely identifies a firm and/or its goods or services, guarantees the item's genuineness,
and gives it owner the legal rights to prevent the trademark's unauthorized use.

22. Patent: An entrepreneur can use patents and copyrights to protect a new product, process,
invention or information against copying and reproduction by other people without the
entrepreneur's permission.

23. Packaging: is a material which tries to protect a product.

24. Labeling: Display of information about a product on its container, packaging, or the product
itself.

25. Penetration pricing: The price of the product is set at a low level in order to build up a large
market share and a high degree of brand loyalty. The price may be raised over time, as the
product builds up a strong brand-loyalty.

26. Skimming pricing: This is a pricing strategy for a new product, designed to create an up-
market, expensive image by setting the price at a very high level. It is a strategy often used
for new, innovative or high-tech. products, or those which have high production costs which
need recouping quickly.

27. Cost- plus pricing: This is where the cost of producing each unit is calculated, and then a
percentage profit is added to this unit cost to arrive at the selling price.

28. Niche marketing: When a marketer targets one or a very few segments that it finds
profitable, it is known as niche marketing.

29. Mass marketing: involves using the same marketing mix for all the segments in the market,
here the marketer ignores the importance of segmentation i.g. Coke traditionally used to
target the whole market with the same product (Tk. 10 glass bottle).

30. Budget: is a planning that is based on prediction of the future.

31. Forecasting: is prediction of the future.

32. Cash-flow: is the inflow and outflow of cash from a business over period of time.

33. Working Capital: Funds left over to meet day-to-day expenses after current debts have been
paid
34. Tall organization: are those having higher stages of hierarchy with a narrow span of control

35. Flat organization: are those having few stages of hierarchy with wide span of control.

36. Span of control: This refers to the number of subordinates who are accountable to a specific
manager. The span of control is described as 'wide' if there are many subordinates reporting
directly to a manager.

37. Decentralization: This means passing responsibility and authority away from the
headquarters of the business to regional offices and departments.

38. Centralization: it means keeping all of the important decision making powers with head
office or the centre of the organization.

39. Internal recruitment: It occurs when employees are recruited from the organization by
giving promotions as well as transferring from one department to another.

40. External recruitment: It occurs when employees are recruited from outside the
organization.

41. Labour Turnover: Number of people who leave a business over a period of time as a
percentage of the number of people employed.

42. Voluntary labour turnover: Employees leave the organisation by themselves.

43. Job enrichment: This is a method of motivating employees by giving them more
responsibilities and the opportunity to use their initiative.

44. Job rotation: This involves the employees performing a number of different tasks in turn, in
order to increase the variety of their job and, therefore, lead to higher levels of motivation.

45. Job enlargement: This involves increasing the number of tasks which are involved in
performing a particular job, in order to motivate and multi-skill the employees.
46. Empowerment: This involves a manager giving his subordinates a degree of power over
their work (i.e. it enables the subordinates to be fairly autonomous and to decide for
themselves the best way to approach a problem).

47. Team working: This is the opposite production technique to an assembly-line which uses an
extreme division of labour. Team working involves a number of employees combining to
produce a product, with each employee specializing in a few tasks. Cell production is an
example of team working.

48. Delegation: This occurs when managers pass a degree of authority down the hierarchy to
their subordinates.

49. Flexible working: A system of flexible working hours gives the employees some choice
over the actual times that they work their contracted hours. Such a system is a good way of
recruiting and retaining staffs as it provides an opportunity for the employees to work
according to their own commitment.

50. Staff Dismissal: employees may be dismissed for a variety of reasons. It may be for joining
a trade union, secondly for misconduct or being incapable of doing a job. However, a notice
period is required for the employee to be dismissed. The length of the notice may depend on
the length of service of the employee.