DEFINITIONS OF KEY TERMS

Accountability Responsibility for results.

Accounting The system of keeping records of financial transactions and of summarizing these data in appropriate reports for management, financial institutions, or government agencies.

Administer To manage, especially in a setting that emphasizes the application of fixed procedures and minimal environmental turbulence.

Administrators Persons who administer. Also a title used for some managerial positions such as the administration of a hospital.

Advertising and promotion specialist A person well-versed in the cost and appropriateness of different modes of advertising and promoting a product or service and thereby able to advise on the best means to use in generating interest in that product or service.

Affiliate A company that works closely with another company in serving a particular market. A subsidiary of a multinational corporation that serves a country other than the larger company’s home country is an affiliate.

Allocate To divide resources among competing interests. Allocating financial resources through a budgetary process is a prime example of such division. Other resources such as people and time are allocated by some mechanism if there are varying ways to employ them.

Allocation A quantity of a resource allocated for a particular item. In speaking about money, a travel allocation would be an amount of money set aside for travel.

Analytical methods Methods of analysis that use mathematics and logic to resolve managerial problems. Financial ratio analysis and operations research analysis are prime examples of analytical methods.

Antitrust legislation Laws that prohibit the formation and operation of business monopolies. The Sherman Antitrust Law is the base of American antitrust law.

Appraise To assess the value of a property, a person’s job performance, or other item of value.

Assessment center A method of evaluating candidates for a managerial position that involves bringing the candidates to a central location for a series of tests, interviews, and exercises. Assessors evaluate the candidates’ performance and make recommendations to the person or persons who will make the final choice.

Assets The items of value owned by a company or person. Also the items fitting this description that appear on the left-hand side of a balance sheet opposite the liabilities.

Authority The right to use assigned resources within one’s discretion to accomplish an assigned task, including the right to direct people and other resources. Authority is always limited by the organization’s policies and procedures and the rules of the larger society.

Automation The system of production that uses self-controlled machines to accomplish the task at hand. When further self-controlled devices are incorporated, one says that there is greater automation in the process.

Autonomy The ability to operate independently of other units. A manager may have great autonomy in his job, or one can speak of a subsidiary of a conglomerate having limited autonomy.

Balance of payments The payments due a country for exports less the payments it owes for imports during a particular time period. The notion can be applied to a single pair of countries or to one country versus all others. The term “balance of trade” is also used.

Bankrupt A legal or economic term that means insolvency or inability to pay one’s debts.

Basic strategy objective A company or organization’s central aim in trying to achieve its overall financial or other objectives. For example, Sears and Roebuck’s basic strategy objective during its early decades was to merchandise true values to farmers and their families through mail-order merchandising.

Behavioral psychology The school of psychology that relies exclusively on the analysis of empirically observed behavior in accounting for why people act as they do.

Behavioral science approach to management The school of thought that gives primary importance to the disciplines of psychology, sociology, and anthropology in explaining management and in trying to improve the practice of management.

Billing The business function of giving customers or clients formal notice that payment is due on a certain date for goods or services provided.

Boss The person in charge or holding final authority.

Brand name product A product sold with a company’s name or other specific name attached to it rather than being sold with only a generic name.

Break-even point The level of sales or production that is necessary to break even—that is, to lose no money and to make no money. Analysis whose objective is to determine this level is called break-even analysis.

Budget An approved scheme that specifies how much is to be spent on each category of expenditure during a given time period. The scheme is usually compiled in a document referred to as the budget.

Budget allocation The amount to be spent in a particular category as specified in a budget.

Budgeting The process of developing a budget.

Budget-based institution An organization that receives relatively assured income rather than being subject to an immediately responsive market. Government agencies and nonprofit organizations are examples of such institutions.

“Buying-in” The process of getting approval to provide a product or service by underestimating the total cost.

By-product A substance, product, or condition produced by a production process in addition to the primary item produced.

Capacity The maximum amount of product or service that could be provided by a given mechanism.

Capital Wealth that an organization possesses to employ in achieving its aims.

Capital equipment A company or organization’s equipment or buildings whose purchase required the expenditure of substantial capital.

Capital formation The process by which capital is created in an economy.

Capital-intensive industry An industry that in comparison to other industries requires large investments of capital per dollar of sales or production. Frequently contrasted with labor-intensive industry.

Capital investment An investment or an employing of a company’s capital in a specific project.

Capital investment decisions Decisions regarding the employment of a firm’s capital. Since capital is usually invested in plant or equipment for long periods, it is of utmost importance that decisions be made with as much knowledge as possible about the expected rate of return on the capital. Thus there is a vast body of literature on this kind of analysis and decision making.

Carrying costs The costs incurred by holding inventory.

Centralization A method of organizing that concentrates decision making at the top of an organization’s hierarchy.

Client A customer for a service-producing enterprise.

Commander A person empowered to give orders and expect results, most frequently in a military context.

Committee A group of people assigned to perform a given task as a group.

Common Market The group of Western European countries banded together to provide a larger market open to all members, or any market formed in this manner.

Communication The transfer of meaning from one (the sender) to another (the receiver). The sender and receiver may be persons, corporate entities, or other groups of people.

Compensation That which is given in exchange for work performed. Compensation is usually money but may include other items such as privileges.

Competition The companies that are alternative sources of supply for a given company’s customers or clients.

Computer Electronic device that can perform multiple complex calculations or logic operations.

Computer program An integrated set of instructions for a computer to use in performing a particular task.

Computer programmer A person who creates computer programs.

Conflict Disagreements or clashes in feelings within an organization.

Conglomerate A company made up of many other companies in a wide variety of industries. Many such companies were formed in the late 1960s.

“Conscience” activities The activities directed to giving vision and to setting standards and auditing performance against them.

Constituencies The various interest groups who vie for the attention of an organization. Faculty, students, parents, foundations, and government agencies each constitute a constituency for a university.

Consumer The person who is the user of the product or service produced.

Consumerism The social movement that insists that products and services be of unassailable quality and without any possible hazardous side effects.

Control The management function that aims to keep activities directed in such a way that desired results are achieved. Monitoring of performance is the starting point of all control. In case performance deviates from what is expected, corrective action must be taken to get the process back on the track.

Cooperation Joint effort to achieve a desired result.

Coordinate To integrate one’s own efforts with those of others to achieve a desired result. Frequently one speaks of coordination of efforts in various parts of the organization so that a manager is coordinating his efforts with those of people in other departments.

Corporation A legal entity formed by persons to enter a business while limiting their liability to the monies they have contributed to the enterprise.

Cost accountant An accountant whose primary responsibility is to determine the cost of goods or services. The cost figures are to be used in determining profit levels and in meeting other demands for judgments on what the costs are.

Cost center In a business, costs are either assigned exclusively to the business as a whole, or the business is broken into parts each of which is responsible for certain costs. In the latter event, the parts are the cost centers. In a multidivision company, the divisions may be the cost centers.

Cost effectiveness analysis The method of analysis that compares the cost of alternative solutions for a problem with the relative benefits provided by each.

Cost of capital The rate of return that should be used as the minimum acceptable for considering a given capital expenditure; the “rental” cost of money. Thus, projects must pay more than it would cost to “rent” the money required, or no financial benefit has been produced.

Credit Ability to borrow funds, or the funds so borrowed.

Critical path analysis A method of analyzing the scheduling of a project with multiple subactivities. The method uses network diagrams that represent the component activities. Time required to complete each activity is analyzed, and the earliest and latest beginning date for each activity is specified. Finally the longest path through the sequence of activities (the critical path) is identified, and that path receives special attention so that the project will be completed on time.

Customers The persons or organizations that consume the product or services provided by another company.

Data processing The function of handling the masses of data involved in the multiple transactions related to a firm’s business. Since most large firms use computers in this function, the department in charge of the computing is frequently called the data processing department. Similarly, the function is often referred to as electronic data processing (EDP).

Decentralization A method of organizing that disburses decision making to multiple locations and levels rather than concentrating it at the top of the organization’s hierarchy.

Decision A determination to take a particular action.

Decision making The process of arriving at decisions.

Decision theory A body of analytical tools including logic, mathematical models (especially models that use probability theory), and diagrams to be used in decision making.

Decision tree  From decision theory, a diagram that looks very much like a tree and that allows alternative decisions to be pictured in an orderly fashion.

Deficit The amount by which expenses exceed the funds available (or allocated) to cover them.

Delegation The process a manager uses to assign a task or part of a task to one of his subordinates.

Demand pattern The relative distribution of demand among the various markets served or that could be served.

Demographics The study of populations as regards their numbers, births, deaths, etc., and the statistics so produced.

Department A basic subunit of an organization, frequently used in the formal title of some subunits.

Departmentalization The process of grouping organizational activities into basic subunits, usually done using a common characteristic such as function, product, or geography.

Depreciate The process by which the worth or equipment or buildings are assigned decreased values due to deterioration, obsolescence, or other considerations.

Depression A period of extremely low business activity, marked by high unemployment and extreme declines in demand.

Developed countries Those countries with the highest standards of living, generally the industrialized nations.

Developing countries Nations that have begun to industrialize but whose economies are still dominated by small farms and low personal-income levels.

Direct labor cost The cost that is attributable to the production process itself and that is so ascribed in accounting for the results of the business. Direct labor costs are frequently contrasted with indirect labor costs, which are costs counted in determining results but are not part of the production payroll.

Direct To indicate that a certain action should be taken; to command.

Discounted cash flow analysis A method of allowing a stream of fund flows that are to occur over a period of years to be summarized into a single number so that alternative streams can be compared.

Distribution The function of dispensing the goods manufactured or warehoused to the locations where they will be consumed or received by customers. Choices of modes of transportation to be used and their timeliness and cost are important elements of the distribution function.

Distributive system The mechanism set up to accomplish the distribution task.

Distributor A company or business agent who is the middleman between the manufacturer and the end user.

Dividend The amount of profit for a given period returned to the owner of one share of a company’s stock.

Division of labor The method of dividing a task into specialized subtasks with different people doing different subtasks so that they may become very efficient at performing their subtask and thereby contribute to accomplishing the overall job at least cost.

Economic development The process by which a nation’s economy grows and moves toward providing its people a higher standard of living.

Econometric methods Methods used by a branch of economics that makes extensive use of mathematical modeling and simulation.

EDP (electronic data processing) Data processing using computers.

Effective demand The demand that will be realized if the product or service is made available.

Effectiveness The extent to which the desired result is realized. Frequently compared with efficiency.

Efficiency Output divided by input, or the extent to which the result produced was produced at least cost.

Employee satisfaction The degree to which employee needs are met, a relative measure.

Entrepreneur A person who starts and develops a business.

Environment The external setting in which a business operates. Of special importance are the factors that may have a large impact on the business’s success—such factors as competition, labor market conditions, the general economic climate, government regulation, etc.

Equipment Machinery and devices that can be employed in producing the results the firm desires.

Executive A manager. Most frequently used to refer to middle and upper levels of the organizational hierarchy.

Exports Goods and services provided from one country to another. Generally contrasted with imports, goods consumed in a home country but produced abroad.

Extrapolation A method of forecasting that assumes that the future will continue to reflect already established trends.

Facilities Buildings and structures that can be used in a firm’s operations.

Factors of production The elements necessary in order to produce goods and services in an economy, for example capital and labor.

Federal decentralization A mode of organizing a large multidivision company by decentralizing authority and centralizing control.

Feedback mechanism A mechanism to allow recognition of unexpected deviations in a process and prompt corrective action so that the process will stay at the level needed to obtain the desired results.

First-line supervisor A manager who supervises other employees at the lowest managerial level in the organizational hierarchy. These people are also referred to as first-line management.

Fixed capital Money invested permanently in buildings, machinery, and equipment.

Fixed Costs Costs that are incurred regardless of the level of production. Frequently contrasted with variable costs, which depend on the amount produced.

Forecasting Estimating the value of a certain variable in the future, such as sales for the coming year.

Foreman A manager who is in charge of one of the basic units of a production facility.

Formal organization The structure that indicates to whom each person in the hierarchy reports, frequently diagramed in an “organization chart.”

Free enterprise system The economic system that has private ownership of property and business units operated with a minimum of governmental interference.

Functional authority Authority based on a business function whose exercise may require compliance by persons who are not subordinates of the person exercising the authority. For example, a purchasing department may require persons in another department to follow its procedures for ordering equipment.

Function organization A mode of organizing a business that makes the manufacturing, selling, engineering, accounting, and other departments defined by business functions the basic subunits of the organization.

Gantt Chart A chart to be used in planning and coordinating an activity that involves several parallel subactivities. A time line is depicted horizontally at the top of the chart. Below the time line are horizontal bars for each activity, with the length of each bar representing its duration and the left-end border representing the beginning time of the activity.

Goals The basic aims of an enterprise.

Gross national product (GNP) The sum of the values of all the products and services produced by a national economy during a single year.

Hierarchy of needs A construct in Maslow’s theory of motivation. The theory postulates that human needs consist of the hierarchy: physiological, security, affiliation, esteem, and self-actualization needs. The theory suggests that the lower-level needs must be satisfied before higher-order needs come into play and that once lower-level needs are satisfied, they lose their motivational importance.

Human asset accounting A set of methods for trying to value a firm’s human resources.

Human relations approach to management An approach to management thought and practice that insists on the primacy of the relations among a firm’s employees as the determinant of success.

Hygiene and housekeeping activities Activities that do not contribute to the basic results of the business but that if done poorly could damage the business, for example keeping the premises clean, the employees fed, reporting to the government, etc.

Hygiene factors A construct in Hertzberg’s theory of motivation, factors that do not motivate positively but that could demotivate if handled poorly.

Impact The consequences an action has in addition to those that constitute its raison d’etre, for example an action taken in one department may have consequences far beyond that department, or a production process may have polluting wastes as an impact. Incentives The items provided as “carrots” using a carrot-stick theory of motivation.

Industrial anthropology The science of man in the work place. Concepts of sociology, psychology, and physiology are applied to understanding life in an industrial setting.

Industrial engineer An engineer who applies scientific methods to solving work-related problems, especially in a factory or production setting.

Industrial engineering The discipline that includes the scientific principles and research the industrial engineer applies in the work place.

Industrial physiology The subdivision of physiology that is concerned with the impact of specific industrial practices on the human body and its functioning.

Industrial psychology The branch of psychology that studies human behavior in organizational settings, with special attention being given to behavior in business firms.

Industrial relations An approach to management promoted by some behavioral scientists. The central theme is the relief or prevention of dissatisfaction among employees.

Industrial sociology The study of human institutions and groups and their operating characteristics in an industrial setting.

Information Facts or data that can be communicated.

Inflation The process by which money loses some of its value.

Inflationary pressures Economic conditions that if left unchecked will bring on inflation, for example continued wage increases unmatched by productivity improvements.

Individual professional contributors Managerial personnel who may supervise no one (except possibly a secretary and an assistant) but who make major contributions to the results of the firm by applying their professional competence, for example an advertising specialist.

Informal organization The set of relationships that reflect actual interactions within an organization as contrasted with the formal organization structure.

Innovation Activity or developments in a firm that result in the adoption of a new product, business, or way of doing things.

Installment credit Credit extended in exchange for the promise to repay the money with interest in equal payments at specified intervals until the money is repaid.

Institutional investors Investors who represent large organizations and as a consequence buy and sell very large blocks of stocks and bonds, for example, mutual funds, pension funds, university endowment funds. Since the late 1960s such investors have come to dominate the market, whereas individual investors were once a large part of the market.

Insurance A method of protecting individuals against the effects of a specific kind of loss by having each individual in the insured group pay a fee in exchange for a promise to be compensated in the event the loss occurs.

Integrate A process by which a manager meshes his work with that of others (in his unit, in other units, above him, below him, and laterally) in order to insure performance.

Interest group A group banded together in order to pursue a particular objective.

Intermediate product A product made to be used in making another product rather than to be used by an end user, for example a basic chemical product such as carbon dioxide.

Interpersonal relations Relations among people, based on continued face-to-face interactions.

Invention A technological advance, either a product or a means of doing something.

Inventor A person who creates or produces an invention.

Inventory The supply of goods or resources on hand at one time.

Inventory models Models that may be used to determine when inventories should be re-supplied.

Investment An application of a firm’s resources (especially money) in a means that is expected to pay off in future results.

Investment banking The function performed by financial institutions that underwrite and sell new issues of stocks and bonds of a company and advise the company on such matters.

Investment decision A decision about how to employ substantial portions of a firm’s resources, especially capital.

Investment instruments Vehicles that may be used to invest funds, for example stocks, bonds, mutual funds, certificates of deposit.

Irreversible decision A decision whose impact cannot be removed or reversed, for example introducing a completely new technology (the secret of the technology cannot be reinstated).

Job description An exposition of the duties and responsibilities that are inherent in a particular job.

Job enlargement Including more tasks or more kinds of tasks in a given job in order to make the job more satisfying.

Job enrichment Changing some aspects of a job in order to have it satisfy more of a person’s higher-order needs.

Joint venture A business venture that is funded by more than one company. For example, the European SST was a joint venture of British and French companies.

Key activities Activities in the most important business areas: marketing, innovation, human organization, financial resources, physical resources, productivity, social responsibility, and profit requirements.

Knowledge worker An employee whose major contribution depends on his employing his knowledge rather than his muscle power and coordination, frequently contrasted with production workers who employ muscle power and coordination to operate machines.

Labor economics The branch or discipline of economics that concentrates its studies on the supply and demand of labor in an economy.

Labor-intensive industry An industry that, in comparison to other industries, requires large expenditures for labor per dollar of sales or production. Frequently contrasted with capital-intensive industry.

Labor unions Organizations of workers banded together to promote worker interests, especially higher wages and better fringe benefits and working conditions.

Large-scale organizations Organizations that require huge investments or employ thousands of workers, as contrasted with small businesses, proprietorships, or businesses with limited managerial employees.

Lateral mobility Ability to move from one area of a business to another, as from production to sales. Frequently compared to vertical mobility.

Leadership The managerial function of providing guidance in setting business goals or quality standards.

Lead time The time that must pass between a decision and its coming to fruition, for example the number of years between the decision to build a new steel mill and the time when it can be placed in operation.

Limited liability insurance Insurance that covers only certain kinds of losses or only losses of a particular size.

Linear programming An operations research technique that can be used to determine the proper mix of products or ingredients to maximize profits or some other dimension of interest to management.

Line management job A managerial job that includes supervision and one of the central business functions such as selling or production. Frequently contrasted with staff jobs.

Liquidate To terminate an operation by disposing of all assets and inventory, returning the proceeds to the owners of the operation.

Long-range planning Planning with a multi-year time horizon. Contrasted with yearly plans and other short-range plans.

Logistics The function of moving, storing, and distributing resources and goods.

Manage In an organizational setting, to mobilize resources for the achievement of a human purpose.

Manageability The characteristic inherent in an organization that can be managed, believed to be related to complexity and size. For example, some commentators have questioned the manageability of large cities.

Management The group of persons who manage an organization. Also the discipline concerned with understanding and improving the knowledge of how to manage.

Management by objective (MBO) The approach to management that emphasizes the central role of objectives for each unit of an organization and for each individual contributor. The approach emphasizes self-control as a consequence of having clear objectives for each individual.

Management development The means by which an organization contributes to the development of the managerial abilities of its management group.

Management science The approach to management that emphasizes the application of scientific methods for the improved understanding and practice of management.

Managers The people in an organization whose jobs include managing responsibilities.

Managerial accounting The accounting done in a firm to produce reports that will contribute to management decisions. Contrasted with tax accounting or financial accounting.

Managerial economics The subdivision of economics that emphasizes notions of direct relevance to managers; decisions such as investment and pricing decisions receive special attention.

Manual worker A worker whose primary contribution is a result of his or her muscle power and coordination.

Manufacturing business A business whose central role is to produce an item, the chemical industry for example. Manufacturing is frequently contrasted to retailing or to other service industries.

Marginal cost The cost of producing and selling an additional unit.

Marginal efficiencies Efficiencies that if adopted would make very small changes in over-all results.

Marginal revenue The revenue that would be produced by producing and selling an additional unit.

Market An area in which buyers and sellers may come together or an area of demand (however defined).

Market analysts Specialists who attempt to define, map, quantify, and develop information about markets.

Market standing The relative ranks of various firms in a single market, for example first, second, etc.

Market research The research produced by market analysts.

Mass-distribution system A system for distributing goods or services to large numbers of customers who are dispersed within an area.

Mass-production system A system of production that is geared to produce large numbers of units.

Matrix organization A mode of organizing, especially of large technological projects, that includes persons having both task and function assignments and as a consequence being attached to two units of the organization at one time (with the possibility of having two bosses). The “matrix” is suggested by a diagram that has functional units across the top and task units down the side with entries indicating persons from various functions assigned to a given task.

Media Vehicles for communication, for example television, radio, newspapers, etc.

Middle managers Managers who occupy positions in the formal organization above first-line supervisors and below top management.

Minimum profitability The least level of profitability a particular industry should accept in order to take the risk inherent in that industry.

MIS (management information system) A term created to describe a management’s mechanisms for obtaining, processing, storing, retrieving, and using information, frequently suggesting the use of computers.

Mission An organization’s paramount objective for its intermediate future.

Model A simplified replication of a problem situation that can be manipulated to explore the range and quality of solutions to the problem.

Motivation Personal mechanisms that move an individual to action.

Multinational corporation A corporation that has significant production, markets, and operations in many countries.

Multiplier impact An impact that prompts multiple other impacts, as the multiplier impact of the building of infrastructure in a developing nation.

Multiproduct, multimarket, or multitechnology company A company that produces multiple products, operates in many markets, or employs a wide variety of technologies in its operations.

Mutual fund An investment vehicle that allows the investor to have an interest in many companies without being the direct owner of their stocks.

Network analysis Analysis used in planning and scheduling, for example critical path analysis.

Nonmanufacturing business A business whose primary function is selling or some business function.

Not-for-profit organization An organization such as a university whose mission is other than to create a profit from its operations.

Objectives The levels of results to be sought within a specific time period.

Obsolete No longer in use; outmoded.

Operations The activities associated with the production of current results. Frequently contrasted with the preparations for future business opportunities.

Operations manager A manager whose prime responsibility is in operations.

Operations research The discipline that studies the application of mathematical tools and logic to the solution of industrial problems.

Optimal solution A solution to a problem that is the best one possible.

Optimization The process of finding the optimal solution to a management problem, usually using an operations research model.

Organization chart The pictorial representation of the formal organization.

Organization design The design principles incorporated in the formal organization of a company or the discipline that studies alternative ways to design organizations.

Organizational psychology The branch of psychology that studies human behavior in organizations; includes industrial psychology.

Organizing The process of creating a formal organization structure or of breaking a task to be performed into subtasks.

Output That which results from a production process.

Participative management An approach to improving management practice that emphasizes participation of all impacted parties in decisions.

Partnership A mode of legally structuring a business that includes specifications of each partner’s role and responsibility.

Payback period The period required for the proceeds from an investment to equal the amount invested.

Payroll The business function that calculates the amount due each employee and conveys those funds to the employee by check or alternative means.

Pension A regular amount received by a retired employee based on certain payments made by employer and/or employee during the employee’s working years.

Pension fund The invested proceeds of the funds contributed by an employer and/or employees for the purpose of paying pensions.

Performance Actual results obtained. Sometimes used to denote the achievement of positive results.

Personal income Wages and salaries paid to individuals. Frequently contrasted with investment income.

Personnel administration The management role concerned with the hiring and training of employees and with keeping employee records.

Personnel appraisal The evaluation of employees’ performance and interaction between a boss and subordinate to discuss the subordinate’s performance and future objectives, a process frequently discussed in conjunction with MBO.

Personnel department The unit of an organization that performs the personnel administration role.

Personnel management The management of the firm’s human resources. Sometimes called human resources management.

PERT Chart (Program Evaluation Review Technique) A planning technique that uses charts, created by the Navy to aid in planning a project and in evaluating progress after it is under way.

Pilot-plant A plant built to test a new process, usually on a scale much less than that proposed for subsequent implementation. Frequently a pilot-plant test of a process, if successful, will suggest ways to improve the larger facility to be built later.

Planned obsolescence An approach to design that utilizes the expectation that the product design will become out of vogue before the product itself is physically unusable; the approach includes subsequent designs that are intended to make previous designs unfashionable. Also, the design of products to become obsolete earlier than necessary in order to be able to introduce new designs.

Planning The management function that includes decisions and actions to insure future results.

Planning assumptions or hypotheses Assumptions or hypotheses used in plans.

Plans The view of the future as specified in the decisions resulting from planning.

Plant The facilities that a firm can use for production.

Policy A specified mode of approaching a particular area in the future, for example a marketing policy.

Power Ability to influence, to make others act in a way desired by the holder of the power.

PPBS (Planning Programming Budgeting System) A comprehensive planning methodology utilized by some public agencies.

Priorities The relative order in which an organization intends to address a list of issues or areas.

Probability mathematics A subdivision of mathematics that is concerned with modeling situations with outcomes that have relative likelihoods of occurrence.

Procedures Specified ways to approach narrowly defined situations, for example procedures for recording a sale.

Process industry An industry that neither manufactures nor provides an intangible service; rather it subjects certain resources to a process, for example the oil refining industry.

Producing capital Capital invested in the land, buildings, and equipment used to produce the product or service.

Support activities Support activities include “conscience” activities (staff), and such functions as legal counsel, labor-relations activities. They are compared to result-producing activities, hygiene and housekeeping activities, and top-management activities.

Supporting capital Working capital, that is, capital used to bring goods and services to market or to finance the time between their production and the time the buyer pays. Frequently contrasted with “producing” capital.

Surplus Profits and other savings that successful performance can produce.

System A set of interrelated parts. For example, one can speak about a distribution system, which might consist of a network of warehouses to be served in a particular manner by a number of plants and which, in turn, would ship to customers according to prescribed procedures.

System thinking Analysis that uses systems and their dynamics to examine problems and possible solutions.

Tactics Basic approaches to be used in carrying out a predetermined strategy.

Task force A group assigned to accomplish a task. Committees may limit their attentions to making recommendations, while task forces are expected to perform a job.

Tax accounting The subdivision of accounting that attends to keeping and summarizing records for tax purposes.

Team A group of people who are expected to work together on a project.

Team organization A mode of organization that creates and disbands teams for a succession of projects that constitute the majority of a firm’s business.

Technology A way or means to accomplish a task. The technology may or may not include the use of machines.

Technology assessment The function of trying to determine the impacts of utilizing a particular technology in advance of its introduction. Proponents argue that technology assessment is possible, and Congress has established an office to do technology assessment. Opponents argue that it is impossible to assess technology in advance of its introduction.

Technology monitoring Following the impacts of a technology as it is introduced in order to identify and combat the harmful impacts, if any. This process is recommended by some who think that technology assessment is difficult if not impossible.

Theory X and Theory Y Theories about human behavior formulated by Douglas McGregor. Theory X assumes that people are lazy, dislike and shun work, have to be driven, and need both carrot and stick. It assumes that most people are incapable of taking responsibility for themselves and have to be looked after. Theory Y assumes that people have a psychological need to work and that they desire achievement and responsibility and will find them under the right conditions.

Time and motion studies Methods first promoted by the scientific management school. They include the study of physical work using stopwatches in order to break a task into segments that are redesigned in order to be performed more readily so that the productivity of the job is improved.

Time-sharing A method of arranging the operating characteristics of a computer so that several users can be working on it at the same time. The terms also refers to computing that a person does while the computer is set up in this way.

Top management The managers who occupy the upper positions in the organizational hierarchy.

Top-management activity Activity that is to accomplish the top management tasks, which include thinking through the mission of the business, standard setting, building and maintenance of the human organization, major relations that only the people at the top of a business can establish and maintain, “ceremonial” functions, and the provision of an organ to respond to major crises.

Trade associations Organizations that bring the companies of an industry together for the purpose of exchanging information and jointly promoting the interests of the industry.

Union relations The business function of conducting interactions with the unions to which a company’s employees belong.

Union An organization that brings workers in a trade or industry together for the purpose of bargaining collectively for improved wages, benefits, and working conditions.

Unity of command A management notion emphasized by early thinkers. The concept states that each employee should have one and only one boss.

Utility The usefulness or inherent value of something as perceived by an individual or an organization. A branch of economics tries to empirically measure and compare utilities.

Variable costs Costs of a production process that vary with the level of production.

Wage and salary administration The business function that determines wage and salary rates and adjusts them in response to market conditions and changed assignments.

Wealth The sum total of economic valuables owned by an individual, a country, or a society.

Wholly-owned subsidiaries Subsidiaries all of whose stock is owned by the parent company, as contrasted with a subsidiary that is controlled because of the parent’s being the largest, but not the only, holder of stock in the subsidiary company.

Working capital Supporting capital.

Yardsticks Means of measuring results in key areas of a business.

Zero-based budgeting Budgeting that assumes that each project or activity must justify again any expenditures (above zero) for each new year even if the project or activity was justified previously.

Zero-sum games Games in which the total of all winnings equals what is lost, that is, in which anything won resulted from a loss of one of the participants.