27 Key Definitions/Equations You Need To Know When Managing A Business
December 6, 2010 Leave a comment
27 Key Definitions & Equations
By: Josh Druck
Business Management Definitions :
Marketing ~ Generates the demand for your products or services. Gets your stuff in front of potential buyers.
Operations Management ~ Set of activities that creates value in the form of goods and services through the transformation of inputs into outputs.
Mission Statement ~ The purpose or rationale for a businesses existence. What will the business contribute to society? Mission Statements provide boundaries and focus for the organization as well as a concept which the business can rally around.
Strategy ~ An organization’s action plan to achieve it’s mission.
Competitive Advantage ~ The creation of a system within a business that gives it a unique advantage over it’s competitors.
Differentiation ~ Distinguishing the offerings of a business in a way that the customer perceives as adding value.
Experience Differentiation ~ Engaging the customer with a product through imaginative use of the five senses, so the customer “experiences” the product.
Benchmarking ~ Improving existing processes by looking to an ideal standard. The standard may be established from an external source, such as a competitor, a partner, or an unrelated industry or company.
Brand ~ A name, term, sign, symbol, or design, or a combination of them, intended to identify the goods or services of one seller or group of sellers, and to differentiate them from those of the competitors.
Customer Relationship Management (CRM) ~ CRM is a widely-implemented strategy for managing a company’s interactions with customers, clients and sales prospects. It involves using technology to organize, automate, and synchronize business processes keeping customers satisfied.
Core Competencies ~ Set of unique skills, talents, and capabilities that a business does particularly well. Can be used to gain a competitive advantage in a Target Market.
Business Accounting Terms :
Just-In-Time (JIT) – A production and inventory control system in which materials are purchased and units are produced only as needed to meet actual customer demand. (Example: Dell Computers)
Fixed Cost – Cost that remains constant, in total, regardless of changes in the level of activity within the relevant range.
Overhead – All costs associated with the operations of a business. Expenses that are necessary to the continued functioning of the business, but cannot be immediately associated with the products/services being offered. http://en.wikipedia.org/wiki/Overhead_(business)
Job Cost Sheet – A form prepared for each job that records the materials, overhead, and labor costs charged to the job.
Opportunity Cost – The potential benefit that is given up when one alternative is selected over another.
Decentralization – The delegation of decision making authority by providing managers with the ability to make decisions relating to their area of responsibility. Basically, allowing others to make choices and run their groups in the manner they see fit.
Break-Even Point – The level of sales at which profit is zero. Also defined as the point where total sales = total expenses or the point where total contribution margin = total fixed expenses.
Depreciation – Defined often as a non cash expense that reduces the value of an asset as a result of wear and tear, and age. Basically, a decrease in an assets value over time and it’s useful life.
Business Equations :
