IB Business and Management SL and HL
definitions 2023
above-the-line promotion - Answer-a form of promotion that is undertaken by a business
by
... [Show More] paying for communication with consumers, e.g. advertising
acid test ratio - Answer-liquid assets - current liabilities
accountability - Answer-the obligation of an individual to account for his or her activities
and to disclose results in a transparent way
adverse variance - Answer-exists when the difference between the budgeted and actual
figure leads to a lower than expected profit
advertising elasticity - Answer-measures the responsiveness of demand for a product
following a change in the advertising spending on it
agent - Answer-business with the authority to act on behalf of another firm, e.g. to
market its products
annual forecasted net cash flow - Answer-forecasted cash inflow/forecasted cash
outflows
Ansoff's matrix - Answer-a model used to show the degree of risk associated with the
four growth strategies of market penetration, market development, product development
and diversification
arbitration - Answer-resolving an industrial dispute by using an independent third party
to judge and recommend an appropriate solution
asset-led marketing - Answer-an approach to marketing that bases strategy on the
firm's existing strengths and assets instead of purely on what the customer wants
assets - Answer-items of monetary value that are owned by a business
autocratic leadership - Answer-a style of leadership that keeps all decision-making at
the centre of the organisation
average rate of return (ARR) - Answer-measures the annual profitability of an
investment as a percentage of the initial investment
backward vertical integration - Answer-integration with a business in the same industry
but a supplier of the existing business
bad debt - Answer-unpaid customers' bills that are now very unlikely to ever be paid
balance sheet - Answer-an accounting statement that records the values of a business's
assets, liabilities and shareholders' equity at one point in time
batch production - Answer-producing a limited number of identical products - each item
in the batch passes through one stage of production before passing on to the next stage
below-the-line promotion - Answer-promotion that is not a directly paid-for means of
communication but based on short-term incentives to purchase, e.g. sales promotion
techniques
benchmarking - Answer-comparing the performance - including quality - of a business
with performance standards throughout the industry
Boston Matrix - Answer-a method of analysing the product portfolio of a business in
terms of market share and market growth
brand - Answer-an identifying symbol, name, image or trade mark that distinguishes a
product from its competitors
brand awareness - Answer-extent to which a brand is recognised by potential
customers and is correctly associated with a particular product - can be expressed as a
percentage of the target market
brand development - Answer-measures the infiltration of a product's sales, usually per
thousand population. If 100 people in1000 buy a product, it has a brand development of
10
brand loyalty - Answer-the faithfulness of consumers to a particular brand as shown by
their repeat purchases irrespective of the marketing pressure from competing brands
break-even point of production - Answer-the level of output at which total costs equal
total revenue
break-even revenue - Answer-the amount of revenue needed to cover both fixed and
variable costs so that the business breaks even
budget - Answer-a detailed financial plan for the future
budget holder - Answer-individual responsible for the initial setting and achievement of a
budget
buffer stocks - Answer-the minimum stocks that should be held to ensure that
production could still take place should a delay in delivery occur or production rates
increase
bureaucracy - Answer-an organisational system with standardised procedures and rules
business plan - Answer-a written document that describes a business, its objectives and
its strategies, the market it is in and its financial forecasts
business process outsourcing (BPO) - Answer-a form of outsourcing which uses a third
party to take responsibility for certain business functions, such as human resources and
finance
business process re-engineering - Answer-Fundamentally rethinking and redesigning
the processes of a business to achieve a dramatic improvement in performance
business strategy - Answer-a long-term plan of action for the whole organisation,
designed to meet the needs of markets and to fulfil stakeholder expectations
capacity shortage - Answer-when the demand for a business's products exceeds
production capacity
capacity utilisation - Answer-the proportion of maximum output capacity currently being
achieved
capital employed - Answer-(non-current assets + current assets) current liabilities OR
non-current liabilities + shareholders equity
capital goods - Answer-physical goods that are used by industry to aid in the production
of other goods and services, such as machines and commercial vehicles
cash flow - Answer-the sum of cash payments to a business (inflows)less the sum of
cash payments made by it (outflows)
cash inflows - Answer-payments in cash received by a business, such as those from
customers (debtors) or from the bank, e.g. receiving a loan
cash-flow forecast - Answer-estimate of a firm's future cash inflows and outflows
cell production - Answer-splitting flow production into self-contained groups that are
responsible for whole work units
centralisation - Answer-keeping all of the important decision making powers within head
office or the centre of the organisation
chain of command - Answer-this is the route through which authority is passed down an
organisation - from the chief executive and the board of directors
change management - Answer-planning, implementing, controlling and reviewing the
movement of an organisation from its current state to a new one
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