Definitions in Business SL:

Unit 1:
1.1 What is a Business:
Business:
An entity that tries to combine human, physical and financial resources into
processing goods and services to respond to or satisfy customer needs.

Needs:
They are necessities/things that you must have in order to live and survive.

Wants:
They are things that you wish to have for the sake of adding comfort to your life.

Enterprise:
The Idea of the business.

Capital Intensive:
Large proportion of machinery in relation to labor during the production process.

Labor Intensive:
Large proportion of labor in relation to machinery during the production process.

Output:
Either good or service.

Good:
Tangible products that can be physically touched or taken home.
Service:
Intangible products that cannot be touched or taken home.
HRM (Human Resource Management):
This business function is in charge of employees.

Finance:
This business function is in charge of all the money of the business.

Marketing:
This business function is in charge of promoting and driving up the sales of the
business.

Operations:
This business function is in charge of strategic and day to day production of goods
and services.

Primary Business Sector:

The process of extracting raw materials/natural resources to provide raw materials.

Secondary Business Sector:

The process of manufacturing the raw materials extracted from the primary sector
into finished goods.

Tertiary Business Sector:

The process of providing services to consumers and businesses.

Quaternary Business Sector:

The process of providing information and ICT services to consumers and businesses.
Which is a subgroup of the tertiary business sector.

Chain of Production:
These are the steps that the different sectors must take to turn raw materials into
finished goods.
Sectoral Change:
Process of changing from one sector to another.

Innovation:
The process of improving an already existing product process of translating an
idea into a good or service that consumers will pay for.

Entrepreneur:
A self-employed individual that’s the center of the start up of a business and bares
all the risk of failure.

Intrapreneur:
An induvial employed by large organizations that comes up with ideas to improve
business.

Market Driven:
Determined by needs or wants of customers.

Service Driven:
Entrepreneurs should convince people that the product is worth buying.

1.2 Types of Business Entities:

Private Sector:
Part of the economy is under the control of private individuals and businesses,
rather than the government. (sole traders, partnerships, corporations)

Public Sector:
Part of the economy is under the control of the government.

Limited Liability:
Restriction on the amount of money that can be lost from the owners of a business
if it goes

Unlimited Liability:
This is when the business owner is responsible for all the business debts, obligations
and will have to cover the commitment.

Sole Trader:
Self-employed person that runs the business on their own and has full responsibility
for business’s success or failure.

Partnership:
Form of private sector business owned by 2-20 people who share the responsibilities
and burdens of running and owning the business.

Private Limited Company: (LTD)

Business organization owned by shareholders with limited liability but whose shares
cannot be bought or sold to the public.

Public Limited Company: (PLC)

Limited liability business organization that allows the general public to buy and sell
shares in the company via stock exchange.

Share:
This represents a part of the company.  level of control increases as number of
shares increases.

Dividends:
This is a sum money paid regularly by company to the shareholders.

Annual General Meeting: (AGM)

This is a meeting held every year that is open for all shareholders. Here members
get the chance to talk about business performance and activities as well as any
other business matter.

Franchise:
This is an agreement between the franchisor and franchisee where the franchisor
sells its name, logo and trademark to the franchise and franchisor receives an
annual fee.

Franchisor:
This is the original business that develops the business product, branding and idea
and sells to other businesses.

Franchisee:
The franchisee sells the products developed by the franchisor and has to pay a
royalty fee to the franchisor.

Royalty Fee:
Annual fee paid every year from franchisee to franchisor.

Social Enterprise:
This is a business that is created to achieve a social purpose in a financially
sustainable way.

For-Profit Social Enterprise:

These are the type of social enterprise which aim to achieve a social purpose in a
financially sustainable way.

Non-For-Profit Social Enterprise:

These are the type of social enterprise which aim to achieve a social purpose
without the goal of generation profits yet relying on grants and donations for
financial stability.
Co-operatives:
For-profit social enterprises that are owned and run by and for their members.
Surplus:
This is an amount of money, conceptually, similar to profit, but rather all of it is
reinvested into the business and spent on dividends.

Microfinance Providers:
This is a for-profit social organization that offers financial services like loans and
savings to those without a job or with a very low income.

Public Private Partnership: (PPP)

This is an agreement between the private and public sectors for the purpose of
designing projects done by the public sector.

Non-governmental organization: (NGO)

Any private sector organization that does not primarily aim to make profit. Instead,
they operate for the benefit of others in society (for a social purpose basically).

Charities:
These are non-for-profit social enterprise with a key function to collect donations
from individuals to support their main aim which is serving the community and
filling the gap between the private and public sector.

1.3 Business Objectives:

Vision Statement:
It outlines a business’ aspirations (where it wants to be) in the distant future.

Mission Statement:
It is a simple statement that broadly states the purpose of an organization’s
existence.

Aims:
They are general long-term goals of an organization.

Objectives:
They are specific medium to short-term goals of an organization, based on its aims,
clarifying how the business will achieve its aims and reach its vision.

Operational Objectives:
These are day-to-day objectives set by the first line managers, usually workers
themselves, so they can achieve tactical objectives.

Tactical Objectives:
These are the short to medium term objectives that middle managers set to reach
and achieve the strategic objectives.

Strategic Objectives:
These are medium-to-long-term objectives that managers set to guide the business
into the right direction for it to reach its aim.

Hierarchy of objectives:
A pyramid representing the relationship between aims and objectives in an
ascending order of operational, tactical, strategic objectives then aims.

SMART objectives:
Specific, measurable, achievable, realistic, time specific objectives.

Internal Environment:
This refers to changes in conditions within the business.

External Environment:
This refers to changes in conditions outside the business.
Ethics:
Moral principle that governs a persons’ behavior.
Code of Conduct/Behavior:
It is a set of rules outlining the norms, rules and responsibilities of an individual. It is
the generally accepted rules governing how people behave.

Corporate Social Responsibility: (CSR)

Businesses responsibility to act morally towards their stakeholders.

SWOT Analysis:
This is an analytic tool used to assess the internal strengths and weaknesses and
the external opportunities and threats of an organization or a decision.

1.4 Stakeholders:
Stakeholder:
This refers to anyone who affects or is affected by the business.

Internal Stakeholder:
Stakeholders within the business that affects the business and is affected by it.
(employees, shareholders, managers, and directors of the organizations)

External Stakeholders:
Stakeholders from outside the business who affect and get affected by the business.
(suppliers, customers, pressure groups, competitors and the government)

Pressure Groups:
These are groups of people with shared interest, where they try to pressurize the
business into changing its behavior.

Stakeholder Analysis:
This is an analytic tool used by large businesses that have complicated stakeholder
interests, to perform a stakeholder analysis.
Customers:
Businesses that buy raw materials.
1.5 Growth and Evolution:
Steeple Analysis:
A framework used to analyze the opportunities and threats of social, technological,
economic, environmental, political, legal and ethical on business activity.

Gross Domestic Product: (GDP)

This is a measure of the market value of all the final goods and services produced in
a specific time period.

Boom:
Rapid and significant sales growth.

Recession:
Decline in economic activity, where there is significant increase in unemployment.

Slump:
Poor performance and activity in an economy.

Recovery:
The economy starts picking itself up.

Inflation:
This is the rate of increase in prices over a given period of time.

Economic Growth Rate:

The percentage change in value of all goods or services produced in a nation during
specific period of time.
Economies of Scale:
This refers to the decrease in average unit cost as the level of output increases,
usually described as resulting from bulk purchasing, technical, marketing,
managerial, etc.

Diseconomies of Scale:
This refers to the increase in average unit cost as the level of output also increases,
usually described by the difficulty of managing very large operations.

Salaries:
These are fixed amount that are paid regularly per period of time.

Wages:
These are amounts of money paid by the hour with no fixed or set amount.

Capacity Utilization:
This refers to the percentage of total capacity that is being achieved in a given
period of time.

Internal Economies of Scale:

This refers to the efficiencies that the business itself has made and controlled. 
Technical, financial, managerial, specialization, marketing, risk bearing , purchasing.

External Economies of Scale:

This refers to the efficiencies that the business achieves of a favorable location or
growth in industry.  Consumers, employees.

Internal Diseconomies of Scale:

This refers to inefficiencies the business makes itself.  technical, managerial,
financial, marketing, purchasing, risk bearing.
External Diseconomies of Scale:
This refers to inefficiencies the business faces/increase in average costs of
production as business grows, due to factors beyond its control (external factors
outside the business).

Risk Bearing:
This is a type of economies of scale where larger businesses are able to bear the
risk of failure of products. ChatGPT definition  Risk bearing is the act of accepting
responsibility for potential losses in a business or investment, knowing that
outcomes are uncertain.

Internal (Organic) Growth:

This is when the business grows internally, using its own resources to increase the
scale of its operations and the sales revenue.  happens slowly

External (Inorganic) Growth:

This is a quicker and riskier method of growth where the business deals with outside
businesses.
 Merger and Acquisition or Takeover
 Joint Venture
 Franchise
 Strategic Alliance

Merger:
Type of External growth the business undergoes by integrating itself with another
business, forming a new, bigger organization.

Acquisition:
Similar to merger, is a type of external growth the business undergoes by taking
over another business, sustaining its original business yet only growing it by size.

Takeover/Hostile takeover:
Exactly like acquisition, is a type of external growth where the business undergoes
by taking over another business forming a new, bigger organization. But this
happens unapproved by the business being taken over.
Integration:
This refers to the process where two businesses combine to form a larger, unified
organization, typically through mergers or acquisitions, in order to expand their
market reach or capabilities.
 Horizontal Integration
 Backward Vertical Integration
 Forward Vertical Integration
 Conglomeration/Diversification

Horizontal Integration:
This is when two businesses from the same industry but operating at the same level
of production or service, merge together. They typically offer similar or
complementary products or services. For instance, when Facebook (now Meta)
acquired Instagram in 2012, it was a horizontal integration because both companies
were in the social media sector, offering similar products and services. The merger
helped Facebook expand its user base and consolidate its position in the market.

Backward Vertical Integration:

This is when a business integrates with another business further back in the supply
chain of production. The business mainly integrates/merges with its supplier to
protect its supply chain. Example  Starbucks merges with coffee farms to
protecting its supply chain.  Same Industry but different sector.

Forward Vertical Integration:

This is when the business integrates with a further forward business later in the
supply chain of production. This business mainly integrates/ merges with outlets for
its products.  Same industry but different sector.

Conglomeration/Diversification:
This is when 2 business in unrelated lines of business integrate. This is primarily to
reduce the overall corporate risk, and increase risk bearing.

Joint Ventures:
This is a type of external growth, where 2 businesses agree on sharing their
resources for specific goal for a limited period of time.
Strategic Alliance:
Similar to joint venture, this is a type of external growth involving businesses
collaborating for a specific goal for a limited period of time, but no legal entity is
created.

Multinational Companies: (MNC’s)

Business organization that operates in two or more countries.

MDC:
More economically developed country.

LDC:
Less economically developed country.

Home Country:
This is the main country where the multinational company operates.
(headquartered)

Host Country:
This is where the sub-side operations of the business take place (where its branches
are located).

Unit 2 Human Resource Management:

2.1 The role of Human Resource Management:
Human Resource Management:
It is the overall management of an organization’s workforce.

Recruitment:
Hiring the right number of qualified and suitable workers at the right time to fill job
vacancies.

Induction:
Training for new employees to get adapted to the norms and operations of the
organization.

Retention:
Keeping workers at the organization by meeting the needs of employees.

Appraisals:
The formal procedure of assessing the performance and effectiveness of employees
in relation to their job description.

Absenteeism:
Dealing with issues that arise when employees are unable to attend work.

Dismissal:
Letting go of workers no longer needed, often due to underperformance in
workplace.

Training and development:

Improving the productivity and skills of workers.
Performance appraisal:
Holding workers accountable for their performance and work.

Human Resource Planning / workforce Planning:

It describes the overall management of an organization’s workforce.

Demography:
The study of population and population trends.
Labor Mobility:
Measure of the extent that workers have the ability and willingness to move
between geographical or occupational locations for their employment.

Occupational Mobility:
It is the ability and willingness of an employee to do another job or pursue a
different career.

Geographical Mobility:
It is the ability and willingness of employees to relocate to another location or
country for work reasons.

Migrant workers:
People who move to other locations or countries in search of job opportunities.

Flexi-time:
It is a form of flexible work practice that enables employees to work a set number of
core hours per week.

Gig-economy/on-demand economy:
It refers to labor markets in which workers are given short-term or one off contracts,
like freelancing, rather than a long-term contract/job.
Gig workers:
Independent contractors who enter into formal agreements with on-demand
businesses to provide certain services to the business’s customers.

Change Management:
is the process and techniques used to plan, implement and evaluate changes in
business operations.

Resistance to change:
It refers to the opposition of employees in an organization to accept and adapt to
new ideas or developments in the workplace.

2.2 Organizational Structure:

Organizational Structure:
It is a representation of a business showing the interrelationships and hierarchal
arrangements within a firm.

Organizational Chart:
It is a diagrammatic representation of an organization’s formal organizational
structure.

Responsibility:
It refers to the duties and obligations assigned to a person in the organization.

Delegation:
This is when a line manager entrusts and empowers a subordinate with authority to
successfully complete a particular task. (passing on control and authority)

Span of Control:
It refers to how many workers are directly under the authority of a particular line
manager.

Narrow Span of Control:

It means that the manager in an organization prefers to have closer control of
decision-making.

Wide Span of Control:

It means that a line manager has responsibility over many subordinates.

Levels of hierarchy:
It refers to the number of layers of formal authority of a manager, represented in an
organizational chart.

Tall / Vertical Structure:

It has a large number of levels are hierarchy, so span of control is likely to be
narrow.

Flat/Horizontal Structure:
It has a small number of levels of hierarchy, so span on control is likely to be wide.

Organization by function:
It means structuring the workforce according to business’s functions.

Organization by product:
It means structuring a workforce according to the goods and services sold.

Organization by region:
It means structuring a workforce according to different geographical areas based on
where the firm’s operations are.

Chain of Command:
It refers to the formal lines of authority in an organization, revealing how
communication flows throughout the organization.

Bureaucracy:
It refers to the administrative system within an organization.

Centralization:
It refers to the situation in organizations where decision-making is predominantly
made by a small group of senior managers at the top of the organizational
hierarchy.
Decentralization:
It refers to the situation in organizations where decision-making authority is
delegated throughout, rather from a central authoritative group.

Delayering/redundancies:
This occurs when an organization removes one or more layers in its hierarchical
structure, making the organization flatter.
Matrox Structure:
It is a flexible organizational structure based on the specific needs of a particular
business to meet the changing needs of the organization.

2.3 Leadership and Management:

Management:
It is the process of achieving organizational objectives by using the limited
resources that an organization has.

Senior Management:
The highest-ranking managers who set and oversee the long-term plans and
strategies of the organization.

Middle Management:
Managers who establish departmental goals and strategies and are responsible for
the staff with their divisions.

Supervisory/Junior Management:
Low-ranking managers who monitor the regular and routine day-to-day tasks of the
organization.

Leadership:
It is about influencing other people to achieve a vision or a goal.

Official/Formal Leader:
Leader established by an organization and therefore has authority to give order but
also has the “power” to influence others.

Informal Leader:
Leader that is not in an official role but has natural spirit and charisma to influence
other people. Also has “power” to influence others.

Autocratic Leadership and Management:

This is a strict and rigid management style that involves only managers making all
decisions in an organization.

Paternalistic Leadership and Management:

Paternalistic managers act rather like parents – they take actions that they believe
are in best interest of the subordinate.

Democratic Leadership and Management:

Democratic managers are those who prefer to discuss and involve employees in
decision making.

Laissez-faire Leadership and Management:

Laissez-faire is a Latin phrase meaning ‘to leave alone’. Laissez-fair managers are
those who delegate significant amount of authority to subordinates and provides
them with freedom to carry out tasks in their own way, with minimal direction or
supervision.

Situational Leadership and Management:

Leader who is willing and is able to change leadership style according to the
circumstances being faced by the organization.

2.4 Motivation and Demotivation:

Motivation:
It refers to the desire and willingness to complete a task or to achieve a goal.
Lower order needs/deficiency needs:
Physiological, safety, and social(love and belonging) needs. Which must be met to
prevent dissatisfaction and unhappiness.

Higher order needs/growth needs:

Esteem and self-actualization needs. Meeting these makes one feel content and
overjoyed.

Physiological needs/basic needs:

These are requirements for human survival.

Safety needs/Security needs:

These are the requirements that make people feel safe, like job security.

Social Needs/love and belonging needs:

These refer to the requirements about being accepted by others.

Esteem Needs:
These refer to the desire of people to feel respected, having value and having self-
respect.

Self-actualization:
This occurs when people become the very best that they can – fulfilling their full
potential.

Hygiene Factors/maintenance factors/job dissatisfiers:

These are lower level needs of people in order to meet their physiological needs.

Working conditions/working environment:

These refer to the tangible and intangible conditions of the workplace.
Motivators/Growth Factors:
These are the factors that define the job context. In other words, higher levels of
needs of people to meet their psychological needs. Like achievement and
challenging work.

Financial Rewards:
These are the set of pay structures and monetary payments within an organization.

Salary:
It is a type of financial payment rewarding staff a fixed annual amount of money,
but paid monthly.

Wages:
They are a type of financial reward payment system based on time or output.

Piece rate:
Paying system reward workers with wages based on their output.

Commission:
It is a type of financial payment that rewards workers a certain percentage of the
sales of each good or service that they are responsible for competing.

Performance-related pay:
It is a type of financial payment system used to pay employees a bonus for reaching
a set target.

Remuneration:
The overall financial package of a person. Like salaries , commission, performance-
related pay.

Profit-related pay:
It is a type of financial reward system which remunerates workers a certain
percentage of the annual profits that the business earns.

Employee share ownership scheme:

A type of financial payment system that involves giving workers shares in the
company they work for.

Fringe Payments/Fringe benefits/Perks:

Are financial benefits of a job in excess of the basic way.

Non-Financial Motivation:
It is based on motivation that comes from within and is driven by personal
satisfaction, passion, and sense of accomplishment.

Financial Motivation:
Motivation that is driven by external, financial and tangible rewards.

Job Enrichment:
It refers to enhancing the experiences of workers, giving workers a wide range of
challenging task and more responsibilities at work.

Job Rotation:
It is an operational management technique and form of non-financial motivation
that involves workers switching between jobs for a period of time.

Job Enlargement/Horizontal Loading:

The type of non-financial motivation that takes place when more tasks or activities
are added to a workers’ job description.

Empowerment:
Delegation of decision-making power to workers, therefore helping to boost their
productivity.
Teamwork:
It refers to the combined efforts of a group of workers to achieve an organizational
goal.

Training:
It is the process of instructing and teaching employees how to perform a certain
task in their job.

Induction:
A type of training intended for new employees in order to help them adapt with the
people, polies and processes of the organization.

On the job training:

A type of training that takes place within the organization so employee is
performing work tasks.

Off the job training:

A type of training led by external specialists and takes place away from the place of
work.

Unit 3 Finance:
3.2 Sources of Finance:
Sources of Finance:
This refers to the various ways that a business gets its money in order to run a
business, such as personal funds and retained profits.

Capital Expenditure:
This refers to spending on a firm’s fixed assets.

Fixed Assets:
These are items a firm plan to keep for longer than one year.

Revenue Expenditure:
This refers to the businesses spendings on its everyday and regular operations. Like
paying wages and salaries to workers and paying suppliers.

Insolvency:
If a business fails to pay its revenue expenditure it will go out of business rapidly.
Employees will refuse to work and suppliers will no longer send materials.

Finance:
Variable Cost:
Variable costs are costs that change as the level of output/ production of the
business, changes in the business. Like commission, wages, material, packaging
and delivery.

Fixed Cost:
Fixed costs are costs that are on the business to pay which do not change as the
level of output/production of business does not change. Like rent and salaries.

Semi-variable Costs:
These are costs that could be seen as both variable and fixed costs. Like electricity.

Direct Costs:
This refers to the costs that affect the sales directly. In other words, these are costs
that only can caused by a single part that is directly linked to the sales of goods or
the making of a service. Like running costs of a single store, or store maintenance.

Indirect Costs:
These are the costs that affect the sales indirectly.

Unit 4 Marketing:
4.1 Introduction to Marketing:
Marketing:
The management process of getting the right product to the right customers at the
right price, the right place, and the right time.

Market-Oriented:
A business approach focused on identifying and meeting the needs of customers
through market research and customer feedback.

Product-Oriented:
A business approach that prioritizes developing and perfecting the product itself,
focusing on its quality and features, often with less emphasis on customer needs or
market trends.

Market Share:
Measures the value of a firm’s sales revenues as a percentage of the industry total.

Marketing Mix:
Main elements of a firm’s marketing strategy. It consists of the 7P’s product, price,
place, promotion, people, physical evidence, processes.
Marketing Plan:
The document outlines a firm’s marketing objectives and strategies for a specified
period.

Position Map:
Visual aid that shows the customers’ perception of a product or brand in relation to
others in the market.

Segmentation:
Categorizing customers into distinct groups of people with similar characteristics an
similar wants or needs for research and targeting purposes.

Target Market:
It is the consumer segment which the business aims its marketing message to.

Control tools:
These are tools that allow managers to assess whether their marketing strategies
have been successful or not.

Niche Market:
It Focuses on a small group of consumers who have interests that align with a
product or a service of a specific business.

Mass Market:
It Focuses on a large and broad market segment.

USP (Unique Selling Point):

Any aspect of a product that makes a business standout from those offered by rival
businesses.

Primary Research:
Involves data being collected by the researcher since the information does not
currently exist.
Quota Sample:
It is a sampling method that involves segmenting the population and then selecting
a certain number of people in each market segment.
Random Sample:
It is a sampling method that gives every person in the population an equal chance
of being selected.

Sales Forecasting:
Quantitative technique that attempts to estimate the levels of sales a business
expects to achieve.

Sampling:
Practice selecting a representative group of a population for primary research
purposes.

Secondary Research:
It involves using data and information that has already been collected by another
party.

Academic Journals:
They are scientific journals that contain the very latest research and academic
theory which has been published by academics from the world’s leading
universities.

Governmental Publications:
These are data regularly published from governments, covering topics like
population statistics and economic forecast.

Branding:
Using an exclusive name, symbol, or design to identify a specific product or
business.

Guerrilla Marketing and Packaging:

These are creative ways to promote a product. Through philosophy, companies have
developed unique, functional packaging that helps raise awareness and brand
image.
Extension Strategy:
Attempt by marketers to lengthen the product life cycle of a particular product.

Product Life Cycle:

Typical process that products go through from their initial design and launch to their
decline and often their death.

Skimming:
This is when a business releases a product at a very high price and after a short
amount of time this price is reduced.

Penetration:
Its aim is to promote and encourage customers to try a new product. This happens
through lowering the price at first, reducing the customers’ risk of trying something
and not liking it. Once customers like it and brand loyalty is developed, price is
raised so that normal profit is achieved.

Premium Pricing:
A high selling price of the products image reassures customers that they are buying
the most advanced product available. Otherwise, the product would not be able to
command a high price.

Cost-plus Pricing:
It is a strategy where a business sets the selling price by adding a fixed percentage
or markup to the cost of producing a product.

Price Leadership:
It occurs when a market leader sets the price for a product or service, and
competition in the industry follows its pricing decisions.

Price Followership:
It is when a smaller (lower market share) business adopts the pricing strategies set
by a market leader instead of setting their own prices indefinitely.

Psychological Pricing:
It is a strategy that uses pricing tactics, such as setting a price at $9.99 instead of
$10, to create a perception of better value in customers’ minds.

Predatory Pricing:
It is an aggressive pricing strategy where a company sets prices extremely low to
drive competitors out of the market, leading to monopoly.

Price Discrimination:
It is the practice of charging different prices to different customers for the same
product or service based on factors like location, age, or purchase volume.

Loss Leader:
It is a pricing strategy where a product is sold at a price lower than its cost to
attract customers and encourage them to buy other profitable complementary
items.

Cannibalistic Marketing:
It occurs when a company’s product takes sales away from its existing products,
reducing their market share instead.  existing product competes with the same
business’s existing products.

Stars:
The business products that have the best market share and generate the most cash.

Cash Cows:
It refers to any product that generates significant sales revenue due to its large
market share in a mature market.

Question Mark:
Products of a business that have high growth prospects but low market share. Have
the potential to become stars.

Dogs:
Products that have both a low growth rate and low market share.

Market Penetration:
Strategy adopted by business when it has an existing product with a known market.
Hence, it needs a growth strategy within that market.

Product Development:
Business which has a good market share in existing market and there might be
need to introduce new products for expansion.  existing products have revealed
saturation.

Market development:
Strategy when business targets a new market with an existing product.

Diversification Strategy:
When the product tis completely new and is being introduced into a new market.

Research and Development:

Technological and scientific research helps to generate a flow of new ideas and
processes.

Above the line promotion:

It is any form of paid-for advertising through the mass media in order to reach a
wide audience.

Advertising:
It is a method of informative promotion that is to be paid for.
Below the line promotion:
It refers to promotional methods that do not directly use the mass media as a form
of promotion. (direct targeting)

Through the line promotion:

It is a marketing strategy that combines both above-the-line (mass media) and
below-the-line (direct targeting) promotional methods to maximize reach.

Promotion:
Component of the marketing mix. Refers to the methods used to inform, persuade,
or remind people about products, brand and business.

Agents:
Negotiators who help to sell the products.

Channels of distribution:
The ways that a product gets from the manufacturer to the consumer.

Distribution:
Component, place, of the marketing mix. Refers to the process of getting product to
customers at the right time and place in the most cost- effective way.

Retailers:
The sellers of products to the general public operate in outlets.

Wholesalers:
Businesses that purchase large quantities of products from a manufacturer and then
separate or break the bulk purchase into smaller units for sale to retailers.

B2B:
Business to business and refers to online trade conducted directly for the business
customer rather than the end user.
B2C:
Business to customer and refers to online business conducted directly for the end-
user.

E-commerce:
Trading of good and service via the internet.

Unit 5 Operations Management:

5.1 The role of Operations Management:

Operations Management:
The business function that combines inputs to produce outputs.

Production process/transformation process:

Operations method of turning inputs into outputs by adding value.

Adding Value:
Ensuring through production that the price that customers pay for a product is
greater than production cost.

Productivity:
A measure of a firm’s efficiency level in terms of how well things are done within the
organization. In other words, the rate at which input transforms into output, adding
value in the production process.

Labor Intensive:
When an organization relies more on laborers to produce its output, rather than
machinery or capital equipment.

Capital Intensive:
When an organization relies more on machinery and equipment to produce its
output, rather than labor.

Factors of Production:
These are human, physical, financial resources needed to produce any good or
service. They are land, labor, capital and enterprise.

Sustainability:
The ability of an organization or an economy to continue its business activities
indefinitely.

Triple Bottom Line:

It refers to the three pillars(aspect) of sustainability that a business needs to
consider:
- Social sustainability (people)
- Ecological sustainability (planet)
- Economic sustainability(profit)

Ecological sustainability:
It refers to the sustainable use of the planet’s natural resources so that the current
level of consumption does not threaten the resources available for future
generations.

Social sustainability:
It focuses on the extent to which an organization or economy can meet the needs of
the current generation without threatening the needs of future generations.

Economic sustainability:
It focuses on using resources, both natural and manufactured, efficiently and
responsibly. It is able to encourage businesses to focus on their long-term
profitability targets rather than their short-term ones.

5.2 Operations Methods:

Production:
Operations method of turning inputs into outputs by adding value.

Job Production:
The production method of a customized good or service that meets the specific
needs of a specific customer.

Labor Intensive:
The manufacturing of goods or provision of a service that relies mainly on the use of
labor inputs.

Batch Production:
The production method that involves producing a set of identical products, with
work on each batch being fully completed before production switches to another
batch, which may have slightly different specific standards.

Capital Intensive:
The manufacturing of goods or services relies mainly on the use of machinery and
equipment inputs.

Mass production/Flow production:

The production method where different operations are continuously and
progressively carried out in sequence, with very large output of standardized
products.

Line Production:
Form of low production whereby a product is assembled in various stages along a
conveyor belt until a finished product is made.

Standardization:
It means that products are mass manufactured to an identical standard, with all
output being homogeneous.
Mass Customization:
Combines the benefits of mass production with the personalization of job production
in order to meet the induvial needs and preferences of customers.

Fixed Costs:
The costs that do not vary with level of output.

Variable costs:
Those that change in proportion to the level of output like raw materials and piece
rate earning and production workers.

5.3 Location:

Location:
It refers to the geographical position of business.

Infrastructure:
It refers to the physical structures and facilities required to efficiently run a country.
Includes transportation systems, telecommunications networks, social frameworks
and public utilities.

Bulk-increasing industries:
Business that needs to be located near to their customers because the final product
is bulkier and heavier than the raw materials used to make it.

Bulk-reducing industries:
Business that needs to be located near raw materials that are used to produce a
certain good as the weight of final output is less than that of the raw materials.

Clustering:
It refers to firms choosing to locate near other businesses operating in related/
complementary industries, enabling them to benefit from passing customers and
the demand for goods and services in related markets.
Footloose organizations:
Businesses that do not have to locate in any particular area. They can locate almost
anywhere, as there are no cost advantages of locating in particular geographical
location.

Industrial inertia:
Exists when a business chooses to remain in the same location even though there
are no cost advantages in doing so. 2

Outsourcing:
It is the use f a third-party subcontractors for carrying out non-core activities of a
business in order to improve operational efficiency and reduce production costs.

Offshoring:
It is an extension of outsourcing but involves relocating part or all of an
organizations functions and processes overseas.

Insourcing/in-housing:
It refers to the use of an organization’s own resources in order to fulfil a specific job
function or project instead of it being outsourced to a third party provider.

Reshoring/onshoring:
It is the practice of bringing back business functions to domestic county from
overseas.

Tariffs:
Import taxes.

Subcontractors:
They are outsourced firms that perform the non-core activities for their clients.