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Business unit 4 key words

Mission Statement
A qualitative statement of an organisations aims. It uses language intended to motivate employees and convince customers and those outside the firm of its sincerity and commitment.

Corporate Aims

The long-term intentions of a business

Corporate Objectives

Targets that must be achieved in order to meet the stated aims of the business

Stakeholder

An individual or group with a direct interest in the activities and performance of an organisation

Macroeconomics

The study of the whole economy. PESTEL (Poitical, Economic, Social, Technology,Environment and Legal factors)

Microeconomics

The study oof individual parts of the economy

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Gross Domestic Product (GDP) Gross National Product (GNP)

The total value of a country's output over the course of a year Gross National Product The total value of a country's output over the course of a year plus net income from abroad. The growth in real GNP per head of population is the main measure of economic growth

Consumer Durables

Items that are purchased by firms because they help them to produce goods

Business Cycle (or Trade Cycle)

The regular patterns of ups and downs within an economy or of gross domestic product growth over time. It can be characterised by 4 terms: Boom, Recession, Slump and Recovery.

Boom

Period characterised by high levels of consumer demand, business confidence, profits and investment at the same time as rising costs, increasing prices and full capacity.

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Recession

Period characterised by falling levels of consumer demand, output, profit and business confidence, little investment, spare capacity and rising levels of unemployment

Slump

Period characterised by very low levels of consumer demand, investment and business confidence, an increasing number of businesses failing and falling levels of unemployment

Recovery

Period characterised by slowly rising levels of consumer demand, rising investment, patchy but increasing business confidence and falling levels of unemployment

Economic Growth

An increase in the level of economic activity or real gross domestic product (GDP)

Interest Rates

The cost of borrowing money and the return for lending money.

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Exchange Rate

The price of one country's currency in terms of another Flexible/Freely Floating/Fluctuating Exchange Rates The demand for and the supply of the currency determine the exchange rate

Fixed Exchange Rate

The government decides to fix the value of its currency permanently in relation to other currencies

Inflation

An increase in the general level of prices within an economy. Inflation also means that there is a fall in the purchasing power of money.

Deflation

A decrease in the general level of prices within an economy or a rise in the purchasing power of money

Cost-Push Inflation

Occurs when there is an increase in the costs of production (including wages, raw materials, fuel, tax etc) that forces firms to increase their prices in order to protect their profit margins

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Demand-Pull Inflation

The process by which prices rise because there is excess demand in the economy

Inflationary Expectations

Views about what will happen to the rate of inflation in the future

Hyperinflation

A situation where the value of money decreases so fast that people lose confidence in it

Unemployment

The number of jobless people who want to work, are availiable to work and are actively seeking employment

Structural Unemployment

Long-term unemployment resulting from a change in demand, supply or technology in the economy which produces a fundamental decline in an industry

Cyclical Unemployment

Unemployment resulting from and economic downturn or recession in the business cycle

Globalisation

The process of enabling financial and investment markets to operate internationally, largely as a result of deregulation and improved communications

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Monetary Policy

Controlling the money supply and the rate of interest in order to influence the level of spending and demand in the economy

Fiscal Policy

The use of taxation and government expenditure to influence the economy

Environmental Audit

An independant checkon a firm's polluting activities, such as emissions, wastage and levels of recycling

Pressure Group

An organisation formed by people with a common interest or shared goal, who join together to further their interests or achieve their goals by putting pressure on the general public, governments or businesses

Business Ethics

The moral principles that should underpin decision making. Ethical behaviour involves actions and decisions that are seen to be morally correct.