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Benchmarking is the process of comparing one's business processes and performance metrics to
industry bests or best practices from other industries. Dimensions typically measured are quality,
time and cost. In the process of best practice benchmarking, management identifies the best firms
in their industry, or in another industry where similar processes exist, and compares the results
and processes of those studied (the "targets") to one's own results and processes. In this way,
they learn how well the targets perform and, more importantly, the business processes that
explain why these firms are successful.

collective action
Behavior or actions of a group working toward a common goal. When individuals engage in
collective action, the strength of the group's resources, knowledge and efforts is combined to
reach a goal shared by all parties.

democratic leadership
Involves a team guided by a leader where all individuals are involved in the decision-making
process to determine what needs to be done and how it should be done. The group's leader has
the authority to make the final decision of the group.

Voluntary non attendance at work, without valid reason. Absenteeism means either habitual
evasion of work, or willful absence as in a strike action. It does not include involuntary or
occasional absence due to valid causes, or reasons beyond one's control, such as accidents or
sickness. See also attendance management.

1. Impartial analysis and evaluation conducted according to established criteria to determine the
acceptability, merit, or worth of an item.

fixed cost
A periodic cost that remains more or less unchanged irrespective of the output level or sales
revenue, such as depreciation, insurance, interest, rent, salaries, and wages.

external environment
Conditions, entities, events, and factors surrounding an organization that influence its activities
and choices, and determine its opportunities and risks. Also called operating environment.

non profit organization (NPO)
Associations, charities, cooperatives, and other voluntary organizations formed to further
cultural, educational, religious, professional, or public service objectives. Their startup funding is
provided by their members, trustees, or others who do not expect repayment, and who do not
share in the organization's profits or losseswhich are retained or absorbed. Approved,
incorporated, or registered NPOs are usually granted tax exemptions, and contributions to them
are often tax deductible. Most non governmental organizations (NGOs) are NPOs. Also called
not for profit organization.

product life cycle
Four distinct but not wholly-predictable stages every product goes through from its introduction
to withdrawal from the market: (1) introduction, (2) growth in sales revenue, (3) maturity, during
which sales revenue stabilizes, and (4) decline, when sales revenue starts to fall and eventually
vanishes or becomes too little to beviable. As a product moves through these stages, its pricing,
promotion, packaging, and distribution are re-evaluated and changed if required to prolong its
life. In summary, it is the journey from "new and exciting" to "old and dated."

Neutral third party to whom disputes between parties to a contract are submitted for a decision
('award') based only on his or her discretion. An ad hoc arbitrator is one who decides a specific
case, whereas a permanent arbitrator is selected to hear all disputes arising out of a certain
contract or during a certain period.

1. The concentration of management and decision-making power at the top of an organization's
2. The location of all or most main departments and managers at one facility.

The condition of retaining (keeping) something. "You may be able to memorize facts in the
short-term, but how well is your retention of those facts over the long-term?" "Successful
companies need to foster a good working environment so that employee retention remains at a
high level." See also retention clause, retention period, and retention ratio.

sole proprietor
Sole owner of a business; a self-employed person such as a grocer, plumber, or taxi driver. He or
she directs the affairs of the enterprise, bears its risks and losses, and takes the profits and
benefits. Also called sole trader.

pressure group
Non-profit and usually voluntary organization whose members have a common cause for which
they seek to influence political or corporate decision makers to achieve a declared objective.
Whereas interest groups try to defend a cause (maintain the status quo), the pressure groups try
to promote it (change the status quo).

To experience neither gain nor loss, neither benefit nor detriment. "During the year my portfolio
was substantially down, but due to some gains near the end of the year it was able to reach
breakeven." See also breakeven point and breakeven analysis.

strategic alliance
Agreement for cooperation among two or more independent firms to work together toward
common objectives. Unlike in a joint venture, firms in a strategic alliance do not form a new
entity to further their aims but collaborate while remaining apart and distinct.

stock valuation
The process of calculating the fair market value of a stock by using a predetermined formulas
that factors in various economic indicators. Stock valuation can be calculated using a number of
different methods. The most common methods used are the discounted cash flow method, the
P/E method, and the Gordon model. Whichever method is chosen must be done accurately so
that the price of stock can be valued properly.

A system of administration distinguished by its (1) clear hierarchy of authority, (2) rigid division
of labor, (3) written and inflexible rules, regulations, and procedures, and (4) impersonal
relationships. Once instituted, bureaucracies are difficult to dislodge or change. See also
Parkinson's Law and Peter Principle.

1. A measure of the extent to which a person or organization has cash to meet immediate and
short-term obligations, or assets that can be quickly converted to do this.
2. Accounting: The ability of current assets to meet current liabilities.
3. Investing: The ability to quickly convert an investment portfolio to cash with little or no loss
in value.

social audit
The process of evaluating a firm's various operating procedures, code of conduct, and other
factors to determine its effect on a society. The goal is to identify what, if any, actions of the firm
have impacted the society in some way. A social audit may be initiated by a firm that is seeking
to improve its cohesiveness or improve itsimage within the society. If the results are positive,
they may be released to the public. For example, if a factory is believed to have a negative
impact, the company may have a social audit conducted to identify actions that actually benefit
the society.

collective bargaining
Good-faith process between an organization's management and a trade union representing its
employees, for negotiating wages, working hours, working conditions, and other matters of
mutual interest. To the management, this process presents (usually) one set of people to negotiate
with; to the employees, it gives greatly enhanced bargaining-power. Collective bargaining is the
fundamental principle on which the trade union system is based.

Sharing or transfer of authority and the associated responsibility, from an employer or superior
(who has the right to delegate) to an employee or subordinate.

performance related pay
A financial reward system for employees where some or all of their monetary compensation is
related to how their performance is assessed relative to stated criteria. Performance related pay
can be used in a business context for how an individual, a team or the entire company performs
during a given time frame

cost center
1. A defined area, machine, or person to whom direct and indirect costs are allocated.
2. A distinctly identifiable department, division, or unit of an organization whose managers are
responsible for all its associated costs and for ensuring adherence to its budgets. Also called cost
pool or expense center. See also profit center and revenue center.

1. Residence or tenancy in a dwelling or on a piece of land.
2. Taking over and acquiring title through adverse possession to a property that has known no
owner, or the owner does not object.
3. Period of tenancy or lease by an occupant

Corporate strategy: Practice under which a firm enters an industry or market different from its
core business. Reasons for diversification include (1) reducing risk of relying on only one or few
income sources, (2) avoiding cyclical or seasonal fluctuations by producing goods or services
with different demand cycles, (3) achieving a higher growth rate, and (4) countering a competitor
by invading the competitor's core industry or market. In contrast to vertical integration,
diversification does not increase a firm's market or monopolistic power. Also called market

variable cost
A periodic cost that varies in step with the output or the sales revenue of a company.

working capital
The cash available for day-to-day operations of an organization. Strictly speaking, one borrows
cash (and not working capital) to be able to buy assets or to pay for obligations. Also called
current capital.

Transfer of decision making power and assignment of accountability and responsibility for
results. It is accompanied by delegation of commensurate authority to individuals or units at all
levels of an organization even those far removed from headquarters or other centers of power.

A share of the after-tax profit of a company, distributed to its shareholders according to the
number and class of shares held by them.

Authoritarian Autocratic leadership
A leadership style in which the leader dictates policies and procedures, decides what goals are to
be achieved, and directs and controls all activities without any meaningful participation by the

Scientific decision-making
Systematic approach to collecting facts and applying logical decision making techniques, instead
of generalizing from experience, intuition (guessing), or trial and error.

the policy of leaving things to take their own course, without interfering.
"a laissez-faire attitude to life"

launch (something, especially a product) again or in a different form.
"he relaunched the paper as a tabloid"

margin of safety
the margin required in order to insure safety; "in engineering the margin of safety is the strength
of the material minus the anticipated stress"