B

B2B Business to business, denoting direct trading without intermediaries.

B shares Category of ORDINARY SHARES with limited voting power.

B2C Business to consumer.

Babbage, Charles (1792–1871) Patron saint of operations research and management science. His inventions include a mechanical calculator, a computer, and a punch-card machine. His most successful book, On the Economy of Machinery and Manufacturers (1835), described the tools and machinery used in English factories. By analyzing the operations, he was able to suggest improvements. Babbage was also an advocate of the division of labor and of PROFIT SHARING.

Baby bond U.S. bond with a low face value.

Baby boomer Person born during the immediate World War II period, especially in the later 1940s and 1950s; considered as a discrete demographic group.

Baby Wagner acts State and territorial laws based on the federal Wagner-Connery Act of 1935, dealing with labor representation procedures and unfair labor and management practices.

Backdoor financing Procedure by which U.S. government agencies borrow directly from the U.S. Treasury.

Backflush accounting Method of costing a product based on minimum inventory and sales. Costs are allocated after actual costs are determined, and there is no separate accounting for WORK-IN-PROGRESS.

Backscratching Reciprocity in granting favors.

Backselling Sales promotion in marketing whereby a product or service is promoted at a point outside the selling chain.

Backward integration Process of adding more items to a company’s portfolio by moving further back along the SUPPLY CHAIN and eliminating intermediaries.

Backwardation Situation in which the spot price of a commodity is higher than the FORWARD PRICE.

Bailout Financial aid given to a corporation by a government or institution to help it avoid collapse.

Bait and switch Deceptive retail practice of advertising low-priced products to lure customers to a store, only to let them know that the advertised products are out of stock and persuading them to buy higher-priced substitutes.

Balance of payments National accounts representing all transactions with the outside world, divided into current account and capital account. The former includes the trade account, which records the balance of imports and exports. Overall, the accounts must always be in balance. A deficit or surplus requires purchase or sale of foreign currencies, monitored by the INTERNATIONAL MONETARY FUND.

Balance of trade National accounts that represent a country’s trading position, including VISIBLES (commodity exports and imports) and INVISIBLES (services).

Balance sheet Statement of the total assets and liabilities of a corporation in a fiscal period. The first part shows the FIXED ASSETS and LIABILITIES, and the second part shows how they have been financed. The two parts must be in balance. The balance sheet represents the accounting equation of a company that satisfies the formula that Assets = liabilities + equity.

Balanced score card (BSC) Management evaluation on the basis of both financial and nonfinancial criteria. Developed by business professors and writers Robert KAPLAN and DAVID NORTON in 1992, it evaluates performance on four levels: (1) financial, including costs and operating profits; (2) customer satisfaction, including market shares; (3) internal business, including development of new products and markets; (4) learning and growth curve, including employee satisfaction, productivity, and value. Of these, the first is a LAGGING INDICATOR and the others are LEADING INDICATORS.

The score card provides a mechanism for management to examine the business from four perspectives: (1) customer—How do customers perceive the firm? (2) internal—What are the firm’s strengths? (3) learning and innovation—How can value be created or upgraded? and (4) financial—How will stock prices react? BSC forces management to look at the operation comprehensively and to optimize output; it integrates available information and simplifies and highlights performance data such as quality, teamwork, capability, and innovation. It places corporate vision and strategy in foremost position, and managers are typically involved in the design of BSCs, rather than accountants and financial executives. Each score card pits perspectives against measures and goals, and pairs strategy with implementation, as follows:

Baldridge, Malcolm (1922–1987) Secretary of Commerce under President Reagan. The Malcolm Baldridge Award is named after him.

Baldridge award The Malcolm Baldridge National Quality Award is given annually by the U.S. Department of Commerce to corporations and other organizations that have excelled in quality in six categories: manufacturing, service, small business, health care, education, and nonprofit. The criteria include leadership, strategic planning, customer and market focus, measurement analysis, knowledge management, workforce focus, process management, and results. Named after a former U.S. Secretary of Commerce.

Balloon payment Irregular or large installment of a loan repayment.

Band Trading range of a commodity or currency, marked by ceilings and floors or upper and lower limits.

Bandcurve chart Breakdown graphic that separately magnifies the details of some of the elements in the chart.

Bandwidth Total spread of a workday under a flexible hours system.

Bank Financial institution that takes deposits and extends loans on a commercial basis. It also provides money transfers and a number of other services. Banks are supervised by a CENTRAL BANK, which sets the terms and interest rates and oversees fiscal solvency.

Bank of England Central bank of the U.K., a branch of the Treasury established under the U.K. Banking Act of 1979.

Bank of International Settlements (BIS) Bank that acts as a mechanism supporting the financial operations of Central Banks in international monetary transactions. It is headquartered in Switzerland. Founded on 1930, it is one of the world’s oldest financial organizations.

Bankruptcy Legal state of a delinquent creditor who is unable to repay loans and has declared insolvency.

Bankruptcy Reform Act Act of Congress in 1978 giving bankruptcy court judges greater powers and making it easier to file petitions. It also reformed tests of the ability to repay. Under Chapter 11, a company can apply to a court for protection from its creditors while undergoing reorganization.

Banque d’Affaires In French-speaking countries, the type of bank that handles both the business of a merchant bank or an investment bank and a clearing bank.

Bar code Universal product code, or UPC, consisting of an array of parallel rectangular bars and spaces, printed on a product or package for sale in a retail outlet. An optical scanner or reader reads the code at the checkout and displays the pricing information on a screen.

Barnard, Chester (1886–1961) American management expert who made contributions to the CLASSICAL SCHOOL OF MANAGEMENT. He was particularly interested in the functions of the executive, which he defined in his book Functions of the Executive (1938). He developed the ACCEPTANCE THEORY OF AUTHORITY, which states that authority is legitimate only if accepted by subordinates.

Barnard’s unit Idea developed by management expert CHESTER BARNARD that an organization should be made up of small departments of 10 or fewer members.

Bargaining Negotiations of two or more parties with different targets and expectations, with the goal of arriving at a mutually satisfactory settlement through rational discussion.

Bargaining zone Area of overlap in the interests of two negotiating parties within which BARGAINING can occur.

Barnevik, Percy Swedish-born business executive, former chairman of Asea Brown Boveri, who introduced the term MATRIX MANAGEMENT.

Barometer stock Widely held security, such as a BLUE CHIP, regarded as an indicator of the state of the market.

Barriers to entry Factors that prevent or inhibit competitors from entering a market and competing with established producers. These may include artificial road blocks, red tape, subsidies, patents, control of distribution networks, ECONOMIES OF SCALE, and brand loyalties. One of PORTER’S FIVE FORCES, barriers to entry put potential entrants at a disadvantage. These are additional costs that must be incurred by new entrants, which give existing firms an unfair advantage.

There are three types of deterrents: structural obstacles, risks of entry, and reduction of incentives. There are natural barriers, such as existing MONOPOLIES, and there are barriers based on size. Size-independent barriers include subsidies, tariffs, trade restrictions, anti-dumping rules, quotas, regulatory policies, licensing, special tax breaks, restrictions on pricing, favorable location, proprietary information, and restricted access to banking, raw materials, and other inputs, as well as regulations governing technologies and know-how and reduced access to distribution channels and markets. Other barriers include regulations governing safety, language, product standards and testing, accreditation, and plant safety. Access to raw materials can be limited by competitors’ tying up suppliers through long-term contracts, and labor costs can be driven up through artificially high union demands. New firms may find it difficult to compete with established firms because of policies that militate against economies of scale. There are certain industry characteristics that affect the survivability of new entrants. For example, high industry concentration makes incumbents more powerful and the price of failure higher for new entrants. For new entrants to leapfrog over older firms, they need to have a technological edge and knowledge of what makes the markets tick.

Barriers to exit Factors that make it difficult for a corporation to exit a country because of legal requirements that discourage CAPITAL FLIGHT.

BARS BE H AVIORALLY ANCHORED RATING SCALES

Barter Trade in which goods and services are exchanged without the intermediation of money.

Barth, Carl Georg Lange (1860–1939) Norwegian-American mechanical engineer who popularized the industrial use of compound slide rules.

Barth system Term used in WORK STUDY developed by Norwegian-American engineer CARL BARTH, in which payment due is calculated on the basis of standard times per unit of work.

Bartlett, Christopher Professor of Business Administration, Harvard Business School. Author of The New Global Business Manager (2002), New Game, New Rules: Developing Manager for a Competitive World (2000), Companies, Cultures and Transformation to the Transnational (1999); and Managing Across Borders: The Transnational Solution (reissued 1988), named as one of the 50 most important books of the century.

Base currency Money used as the basis for an exchange rate, as, for example, the U.S. dollar.

Base year First of a series of years in an index.

Basket of currencies Group of selected currencies used to determine the value of another currency.

Basle Convergence Accord 1968 agreement reached by the GROUP OF 20 and enacted through the BANK OF INTERNATIONAL SETTLEMENTS governing capital adequacy. The group recommended that banks have specific liabilities covering a minimum of 8% of their capital at risk. The accord was updated by Basle II (2004), which set new conditions for assessing risk and disclosing risk-related information.

Bata system Participative system of management developed by Bata Shoe Company in the 1920s.

Batch production Manufacturing process in which products are made in batches rather than continuously, and production is carefully scheduled to maximize utilization of capacity and minimize capital locked up in WORK-IN-PROGRESS.

Bathtub curve A graph showing the failure rate of machinery, which takes the shape of a bathtub, with three phases: (1) a burn-in or startup phase; (2) a normal phase in which the machinery is at peak performance; and (3) a wear-out phase at the end of its design life.

BATNA BEST ALTERNATIVE TO A NEGOTIATED AGREEMENT

Bayesian methodology Statistical analytical technique, named after British mathematician Thomas Bayes, used in forecasting, which treats the best estimate or probability as a firm certainty.

BCM BUSINESS CONTINUITY MANAGEMENT

Beachhead demand In collective bargaining, a demand made not in hope of gaining immediate acceptance but for use in future bargaining.

Bear Reference to a market in which the prices are falling. A person who sells or does not buy when prices are falling is considered bearish. A bear dealer sells Short by buying at lower prices certain commodities, currency, or securities that have already been sold at higher prices. Contrast BULL.

Bear hug Approaches by a company to the board of another company that an offer is about to be made for its shares. A friendly bear hug is known as the teddy bear hug.

Bear raid Practice among unscrupulous stock traders to spread false rumors relating to a sell-off of stock in order to bring down its price.

Becker, Gary Stanley (1930–) American economist, professor of economics and sociology at the University of Chicago. He won the Nobel Memorial Prize for Economics in 1992 and was awarded the Presidential Medal of Freedom in 2007. He was one of the first economists to branch out into sociology. He argued that many types of human behavior are rational in that they maximize utility. He is also among the foremost exponents of human capital and is credited with the theory of Rotten Kids.

Bedeian, Arthur Management professor at Louisiana State University and a historian of management. His best–known publication is Management Laureates: A Collection of Autobiographical Essays (1992).

Beer, Anthony Stafford (1926–2002) British theorist and professor at Manchester Business School, best known for his work in the fields of operational research and management cybernetics. He was a visiting professor at 30 universities He was the first to apply cybernetics to management, defining cybernetics as the science of effective management.

Behavior Characteristic conduct of a person, group, or corporation in response to a set of circumstances, including motivation, expectation, attitudes, and actions.

Behavioral attitude Amalgam of beliefs, tendencies, and feelings that influence behavior.

Behavioral economics Economic research based on the behavioral sciences, such as sociology and psychology, to explain and predict economic behavior.

Behavioral finance Study of the psychological factors in financial decision making, and on the overall market outcomes and ways in which these decisions deviate from the rational pursuit of self-interest. It covers a range of cognitive and emotional biases affecting decision making, including errors in judgment in estimating probable outcomes, underreaction and overreaction, and an inability to assess market anomalies and uncertainties.

Behavioral observation scale Measure used in assessing the performance of employees, in which workers are evaluated on the basis of how well they perform under stress.

Behavioral school Management theory that relies heavily on psychology, particularly drive and motivation and especially in times of change and stress. It developed out of the HAWTHORNE STUDY experiments of the early 1930s, which linked workers’ attitudes with productivity. It describes the workplace as a social system dependent on collaboration among its participants. Important in such a system are improved means of communication, leadership, motivation, and group behavior. The thinkers who helped to develop this school of management thought were MARY PARKER FOLLETT, CHESTER BARNARD, ABRAHAM MASLOW, KURT LEWIN, RENSIS LIKERT, and Keith Davis. The growth of the behavioral sciences during the 1940s also helped the theory to gain a larger following.

Behavioral theory of the firm Principle, developed by economist RICHARD CYERT and business professor JAMES MARCH, that a business organization is a coalition of different interest groups representing a variety of ideas, whose members are constantly bargaining for power. The colliding interests make decision making an uncertain exercise.

Behaviorally anchored rating scales (BARS) Measure to evaluate the job performance of employees. It involves breaking up a large task into constituent smaller parts, each with a range of possible behaviors that are then ranked on a scale calibrated from ineffective to excellent.

Behaviorism Branch of social psychology dealing with human behavior in response to defined stimuli.

Beige book Report on the current economic climate, prepared by the FEDERAL RESERVE BOARD.

Belbin, Meredith (1926–) British theorist and researcher known for his work on management teams. He was visiting professor at Henley Management College in England. He is best known for his book, Management Teams (1981). He was the first to describe an effective team with eight members among whom were the investigator, shaper, evaluator, and finisher.

Belbin group Team of workers in a corporation that addresses a specific task, working in competition with other similar groups. Named after Meredith Belbin, who studied work groups.

Bell, Daniel (1919–2011) American sociologist, futurist, and professor emeritus of Harvard University, known for his studies on post-industrial society. He was one of the leading intellectuals of the latter half of the 20th century. His best-known works are The End of Ideology (1960), The Coming of the Post-Industrial Society (1973), and The Cultural Contradictions of Capitalism (1976).

Below-the-line 1. In accounting, the entries in a PROFIT-AND-LOSS statement that separate items relating to profit and loss from those that show distribution of profits and sources of financing. 2. In national accounts, transactions relating to capital as opposed to revenue. 3. In advertising, expenditures in which no commission is payable to an agency.

Benchmark job Job used as a reference point in setting remuneration, retirement, benefits, and compensation packages.

Benchmarking Comparative process of identifying the best practices in relation to products both within an industry and outside of it, and using them as desirable reference points and goals. It is part of TOTAL QUALITY MANAGEMENT. Such benchmarking is usually applied to customer satisfaction, cost reduction, and productivity and effectiveness. There are 10 generic categories for designing benchmarks: (1) customer service performance; (2) product/service performance; (3) core business process performance; (4) support processes and service performance; (5) employee performance; (6) supplier performance; (7) technology performance; (8) new product and innovation performance; (9) cost performance; and (10) financial performance.

Benchmarking should create uniform standards that are consistent with corporate culture and achieve the corporation’s strategic objectives. It is supported by actions to collect actionable data. The information should be collected on a RADAR CHART, sometimes called a spider chart. In addition to careful design, benchmarking should be accompanied by management support, training for the project team, management information systems, appropriate information technology, and adequate resources. In the 1970s, Xerox pioneered a 12-step benchmarking process in five phases, as follows:

1. Phase 1 Launch Planning Identify what to benchmark, identify comparative companies, and determine data collection methods.
2. Phase 2 Organize Analysis Determine current performance gap, project future performance levels.
3. Phase 3 Reach-out Goals Establish functional goals and communicate them to the staff and gain their acceptance.
4. Phase 4 Assimilate Action Develop action plans and implement them, monitor progress, recalibrate benchmarks.
5. Phase 5 Act Maturity Integrate practices into processes.

Benchmarking may be integrated with REENGINEERING in seven steps:

1. Identify value-added strategic processes from the customer’s perspective.
2. Map and measure existing process to identify areas of improvement.
3. Implement the easy ones.
4. Benchmark for best practices to develop solutions, approaches, designs, and innovative alternatives to the existing system.
5. Develop alternative approaches where existing processes are unsatisfactory.
6. Redesign processes.
7. Make provision for continuous re-improvement.

Beneficial interest Right to enjoy the USUFRUCTS of a property in addition to a legal ownership.

Benefit segmentation Dividing a market on the basis of the benefits expected by consumers from a product.

Benefits realization Translation of projects into perceived benefits for its users.

Bennis, Warren Management guru and exponent of leadership theory and group dynamics, especially SENSITIVITY TRAINING and T-GROUPS.

Bertrand, Joseph Louis Francois (1822–1900) French mathematician who is also noted as an economist. In the field of economics he revised the oligopoly theory, specifically the Cournot Competition Model, using prices rather than quantities as strategic variables showing that the equilibrium price was simply the competitive price.

Bertrand competition Situation that occurs in an OLIGOPOLY whereby companies producing undifferentiated or homogeneous products compete against each other in terms of price. Named after Joseph Bertrand.

Best alternative to a negotiated agreement (BATNA) In a collective bargaining situation, when industrial action would be more beneficial to either management or the union than would be settling the dispute.

Beta coefficient Measure of the volatility of a stock, indicative of its associated risk.

Beta testing Trial run of a product in the field, under conditions that approximate the actual market conditions.

Beta version Trial version of a product that allows customers to test it and provide feedback to the manufacturer.

Beveridge curve Ratio between total unemployment and total job vacancies. Named after Albert Beveridge, historian and U.S. senator from Indiana.

BHAG BIG, HAIRY, AUDACIOUS GOAL

Bid defense Defensive tactic against a hostile takeover attempt. As the number of hostile bids to take over companies have increased in the post–World War II era, so have defensive tactics against such attempts, as follows:

Lockup strategies. There are three types. In the first variant, a WHITE KNIGHT is given the right to purchase authorized but unissued shares of the target company, thus increasing the cost of acquisition to a hostile bidder. In the second variant, the asset lockup, the white knight has the right to purchase a particularly attractive asset. In the third variant, the stock lockup, a major shareholder is asked to buy shares in the open market to prevent a hostile bidder from gaining a controlling share.

The self-tender defense. A firm undertakes a tender offer for its own shares, which are then retired as treasury stock. This is especially effective against the two-tier or front-end loaded hostile takeover, in which a raider acquires majority control and then forces the remaining shareholders to sell out for an undisclosed amount. The self-tender is usually for fewer shares than the hostile bid because of legal constraints. Self-tenders are used in conjunction with other defenses, such as GOLDEN PARACHUTES. Staggered board elections also discourage raiders and give the firm an advantage of time. Self-tenders raise the cost to an aggressor.

The Kamikaze defense. There are a number of Kamikaze defenses, all of which involve the loss or sale of attractive assets. In a SCORCHED-EARTH POLICY, all or most of a company’s good assets are sold; this is done when the offer is below the market price. In the sale of crown jewels approach, key assets that are of interest to the raider are sold. In the fat man strategy, the target company itself purchases the assets sought by the hostile bidder. The POISON PILL is a lethal dose for the aggressor; the company issues stock dividends to the target’s stockholders with special redemption and conversion features that reduce the raider’s ability to control the board. To be effective, the authorization of a large block of blank-check preferred stock must be authorized by the stockholders. The common stock dividend can be converted into shares of the acquirer.

The employee benefit plan. This defense consists of four methods. A company may use the stock held in benefit plans to assist a LEVERAGED BUYOUT. Or, the employee plan can refuse to render its shares or tender them only to a friendly bidder. The plan may also buy the target company’s stock and the plan’s surplus assets may be used to shore up the defense.

Many companies have certain amendments to their articles and by-laws that deter undesirable bids, called SHARK REPELLENTS. Among the most widely used are: (1) STAGGERED DIRECTORSHIPS under which the board of directors is divided into three groups, each of which comes up for reelection once in three years. As a result, it will take up to five years to gain control of the board. (2) Limited dismissal or size, in that board members may be removed only for a specific cause and not by majority vote; or the size of the board may be limited to prevent a raider from packing that board with its nominees at a single annual meeting. (3) Fair-price amendments are used to protect shareholders who have not tendered their stock in the first step of a merger, so that they can obtain a fair price in the second round. (4) GOLDEN PARACHUTE agreements designed to protect senior executives can add costs to the bidder. Some companies issue bonds that are convertible with shares of common stock; another tactic is relocation to a more friendly state, like Delaware.

Bifurcation Divestment of part of a business to enable the principals to concentrate on the remaining part.

Big bath Worst year for a company in terms of financial losses.

Big-bath accounting Corporate strategy of taking a large write-off or writing off unprofitable lines in one quarter to report higher earnings in the next quarter.

Big Board New York Stock Exchange.

Big business Colloquial term for large corporations that represent the corporate sector and act as the dominant part of an economy. Contrast SMALL BUSINESS.

Big, hairy, audacious goal (BHAG) Very ambitious, long-term objective consistent with a company’s core values and purposes that serves to galvanize all resources in its pursuit. Term coined by JIM COLLINS and Terry Porras, of Stanford University.

Bigelow plan Wage-incentive approach that provides for a step bonus between the minimum wage and the standard wage, with 1% additional salary for each 1% additional output.

Bilateral dependency In collective bargaining, the phenomenon in which labor and management are dependent on each other to survive, even when their immediate interests collide.

Bilateral monopoly Contract between one monopoly seller and one monopoly buyer.

Bill of exchange Unconditional written order authorizing the payment of a specified sum of money to a third party

Bill of lading Receipt listing goods shipped signed by an agent of the shipper or issued by a common carrier.

BIMBO BUY-IN MANAGEMENT BUYOUT

Biological asset Living plants or animals considered an asset on a balance sheet.

Biotechnology Use of biological organisms, cells, and systems in technological or machine-driven processes.

Bird in hand In finance, the preference on the part of investors for dividends rather than capital gains.

Black box Element in a system not observable to a researcher or an observer, which controls other elements or inputs. For example, the psychological motives of a consumer are not quantifiable or observable to market researchers.

Black capitalism Entrepreneurship among black people as a solution to depressed economic conditions.

Black economy Economic activity outside of the national accounts and that yields no taxable revenues. Also termed underground economy. See also BLACK MARKET.

Black Friday Friday following Thanksgiving, which marks the beginning of the Christmas holiday shopping season; reference is to stores being “in the black” because of the high volume of sales.

Blackhole engineering Design or assembly of complex machinery in which the original designer leaves blanks where he or she expects outside specialists or suppliers to supply the missing design.

Black knight Person or corporation making a HOSTILE BID.

Black leg Nonunion employee who refuses to join a strike. Also scab.

Black market Unregulated and untaxed market outside normal market oversight, populated by ROGUE TRADERS.

Black Monday Either of two Mondays, October 28, 1929, or October 19, 1987, marked by extremely large one-day drops in prices on the New York Stock Exchange.

Black swan Event that is improbable under normal circumstances but not impossible.

Blake, Robert R. (1918–2004) Management guru, author of The Managerial Grid (1964). He developed the BLAKE-MOUTON MANAGERIAL GRID model, which conceptualizes management in terms of leadership styles.

Blake-Mouton managerial grid Scale of managerial behavior, leadership, and performance developed by management experts ROBERT R. BLAKE and JANE S. MOUTON. Management is measured on a 9-point scale along two dimensions: productivity and interaction with people. There are a total of 81 possible styles, ranging from LAISSEZ-FAIRE to AUTHORITARIAN and COUNTRY CLUB.

Blamestorming Concerted efforts to allocate responsibility in the case of a blunder or disaster.

Blanchard, Ken (1939–) American management expert. His book, One-Minute Manager (co-authored with Spencer Johnson), sold millions of copies. He wrote 30 other books, including Raving Fans: A Revolutionary Approach to Customer Service (1993), Leadership and the One-Minute Manager: Increasing Effectiveness Through Situational Leadership (1985), and Whale Done: The Power of Positive Relationships (2002).

Blanket Relating to situations or activities with broad scope, covering an entire industry, such as blanket coverage, blanket agreement, or blanket policy.

Blau, Peter Michael (1918–2002) Austrian-born American sociologist and theorist, professor at Columbia University. He is associated with theories describing upward mobility, occupational opportunities, heterogeneity, and population structures. Blau Space is named after him. His books include Bureaucracy in Modern Society (1956), American Occupational Structures (1967), On the Nature of Organizations (1974), and Inequality and Heterogeneity: A Primitive Theory of Social Structure (1977).

Blau typology Technique used by sociologist PETER BLAU to classify formal organizations on the basis of the answer to “Who benefits?” It distinguishes four types of benefits: (1) mutual, as in clubs and political parties; (2) business, as in banks and shops; (3) service, as in hospitals and schools; and (4) commonweal, as in fire and police services.

Block release Form of a training program in which employers permit employees to take time off with full pay to undergo training.

Blow-off top Rapid increase in stock price, followed by an equally sharp drop in price.

Blue chip stock ORDINARY SHARE of the most highly rated companies in a stock market. Name derives from the color of the highest value chip in poker. These stocks are regarded as virtually unsinkable.

Blue collar Relating to workers on the ground, often engaged in menial labor, as distinguished from executive office personnel, or WHITE COLLAR.

Blue-sky law Law providing for state regulation and supervision of investment securities and involving licensing and registration.

Blue-sky research Theoretical high-risk research aimed at discovering or establishing fundamental principles rather than innovations. It involves a high degree of uncertainty, but may yield some profitable breakthroughs.

Board of directors Group of elected or nominated persons charged with the governance, supervision, or management of an institution or company.

Body corporate Corporation consisting of a group of persons considered a distinct entity, such as shareholders of a company.

Body language Nonverbal communication through facial expressions, gestures, eye contact, and body movements, also known as kinesics. Some gestures convey different meanings depending on cultural context.

Body shopping Practice whereby a consultancy supplies people to work on a temporary contract basis in lieu of permanent employees.

Boehm’s spiral model Development model adopted as part of strategy for new product development. Named after Barry Boehm, American software engineer.

Bogey Informal standard set at a low level, often used by labor unions to restrict output.

BOGO The sales offer of “Buy one, get one free.”

Boiler room Part of an organization where day-to-day business is transacted.

Boilerplate Part of the text of a document that can be used repeatedly in drawing up similar documents, with suitable modifications.

Boldfaced Used to describe conspicuous and unapologetic action or language.

Boll weevil Nonunion worker.

Bolton, Alfred (1926–2007) Born in Canada, Bolton was a management historian and worked with researcher Ron Greenwood in a seminal study of the Hawthorne experiment; see HAWTHORNE STUDY.

Bond Type of financial security with a nominal value, on which interest is paid until it is redeemed, at which point the nominal value is returned to the holder with a premium. See also BABY BOND, GILT-EDGED BOND, PERFORMANCE BOND.

Bonus 1. Extra payment to employees or others in recognition of work well done, or as an extraordinary compensation at the end of a special term. 2. Extra money distributed to shareholders outside of the proceeds or dividends.

Bonus culture Corporate culture that thrives on excessive bonuses, even when the company suffers losses.

Book value Worth of a company calculated as its total ASSETS less INTANGIBLES and LIABILITIES.

Bootstrap 1. Leveraged buyout by a PRIVATE EQUITY FIRM. 2. Takeover strategy in which a two-tiered offer is made to the shareholders of a target company. 3. Company started with little capital that meets its operating costs out of its revenues.

Borderless world Globalized world in which national regulations and barriers do not inhibit multinational business activities, and where businesses are free to follow profitable opportunities wherever they find them.

Boston matrix Performance analysis and assessment tool for business units in large, diversified corporations, developed by Boston Consultancy Group. It parlays market shares and growth rates to develop an overall business strategy, and identifies the most profitable units in a company. The matrix divides units into four categories: (1) CASH COWS, which are mature businesses or products with low growth rates. Typically they generate substantial cash flow, which is used to support investment in other areas. (2) Stars, which are businesses or products that exhibit high rates of growth and are beginning to generate substantial revenues. (3) Question marks, which are products or businesses that have a low market share and doubtful prospects of growth and that face extraordinary competitive pressures. (4) Dogs, which are questionable businesses that operate against considerable headwinds and face an uncertain future.

Bottom-fishing Investment strategy of buying up low-priced shares in order to flip them at a profit when the circumstances are more favorable.

Bottom-up Relating to an approach that relies heavily on input from the bottom tier of management and makes strategic decisions and identifies opportunities based on lessons learned at the ground level.

Bottom-up design See TOP-DOWN OR BOTTOM-UP DESIGN.

Boulton, Matthew (1728–1809) Associate of inventor James Watt, who helped develop the first steam engine, and a partner in the engineering firm Boulton, Watt and Sons.

Boulwarism In industrial relations negotiations, a fixed and unyielding position taken by management on what are reasonable concessions to be made to the unions; name derives from that of a General Electric executive.

Boundaryless organization Organizational structure in which there is a deliberate effort to deemphasize hierarchic boundaries and barriers, and to empower employees, create cross-functional teams, and delayer responsibilities.

Bounded rationality Ability to make complex decisions on the basis of incomplete and fluid knowledge. It deviates from the model of self-interest, in that it accepts what is possible and feasible as an alternative to what is ideal and perfect.

Box-Jenkins model Forecasting technique that feeds back data from earlier forecasts to refine later ones. Named after analysts George Box and Gwilym Jenkins and described in their Time Series Analysis: Forecasting and Control (1970).

Box store Retail store that sells a limited assortment of groceries in their original boxes or cartons at lower prices. Large electronics stores selling televisions and computers are known as big-box stores.

Boyatzis, Richard Eleftherios (1946–) Dean, Case Western Reserve University. He has published numerous books on emotional intelligence, behavior change, and competencies. Author of The Competent Manager: A Model for Effective Performance (1982).

Boycott Concerted effort by an aggrieved group against a business or political entity by discouraging economic activity, such as buying and selling, thereby applying economic pressure to achieve a stated goal.

Bracket creep Transition from one income group to the next higher group as a result of income growth; refers to federal income tax brackets.

Brain drain Emigration of skilled professionals from developing countries to developed countries, thus draining the available talent from the former.

Brainstorming Free-ranging group discussion in which the purpose is to explore the terrain rather than to erect structures. It creates a buccaneering atmosphere in which participants are emboldened to think outside the box and exercise uninhibited actions. The goal is to generate as many ideas as possible without evaluating them. Technique originally developed by advertising executive ALEX OSBORN. Compare DELPHI TECHNIQUE.

Brand Trade name of a product that is promoted as a handle by which consumer loyalties are created. Brands are part salesmanship, part psychology, and part media seal of approval. They are ultimately about quality, reliability, and trust, and they reinforce the bonds between consumer and manufacturer.

Brand loyalty Attachment to a particular product marketed under one name. Brand loyalty often reduces competitiveness by discouraging consumer desire to experiment with new products.

Brand management Marketing of one or more BRANDS and their images as distinct from the products.

Brand mark Unique glyph or graphic symbol that often identifies a BRAND.

Brand personality Creation of a man, woman, or animal to represent a corporate image, as in the case of the Colonel for fast-food enterprise KFC.

Brand recognition Extent to which consumers can identify a BRAND with the associated products and recall it readily when they need it.

Brand value Worth of a BRAND to its owner, based on its market penetration and the BRAND LOYALTY it enjoys. This often appears in company balance sheets as an INTANGIBLE.

Branding equity Corporate equity derived from the brand name as an ASSET, apart from its physical assets.

Breach of contract Failure by one party to a contract to perform the obligations as detailed in the contract. A statement that a contract or any of its clauses will be breached in the future is called a repudiation breach or anticipatory breach.

Breadth of market Theory that the health of a market is measured by the relative value of items that are going up or down in price.

Breakeven In management accounting, the separation of FIXED COSTS and variable costs to determine the optimum production, sales, or level of activity at which the business begins to be profitable.

Breech, Edward (1909–2006) British management historian who popularized the theories of HENRI FAYOL and F. W. TAYLOR. Author of Principles and Practice of Management (1953).

BRIC The four largest emerging economies: Brazil, Russia, India, and China.

Brick and mortar Relating to businesses with physical facilities and structures, as distinguished from an Internet business.

Brick by brick Form of forecasting based on an unsophisticated sampling of the opinions and views of salespersons and customers.

Bridge loan Short-term loan that spans the time gap between the purchase of one asset and the sale of another.

Briggs, Katherine Cook (1875–1968) Management specialist who, along with daughter Isabel Briggs-Myers (1897–1980), developed the Myers-Briggs type personality test, commonly used to evaluate applicants for employment.

Bright lights and trumpets Celebrity status accorded highly paid corporate executives.

Brinkmanship Act of taking risks routinely to outsmart opponents and gain difficult objectives.

Broadbanding Pay structure consisting of a small number of pay bands or scales, each applicable to a given level of performance, skill, or achievement.

Broker Agent who acts as a middleman between two principals in a transaction.

Broking Buying and selling on behalf of others.

Brown goods In retailing, goods such as televisions, radios, and stereos.

Brownlow committee U.S. committee appointed by President Franklin D. Roosevelt in 1937 that advocated for the first time the application of management principles to public administration.

BSC BALANCED SCORE CARD

Bubble Unstable financial situation, in which prices are artificially inflated through IRRATIONAL EXUBERANCE.

Bubble economy Period of economic activity marked by IRRATIONAL EXUBERANCE and wild and uncontrolled SPECULATION.

Bucket shop 1. Negative term for an organization that operates at the fringes or outside the mainstream to offer commodities, CREDIT-DEFAULT swaps, securities, or contracts at a discount. 2. In the U.K., a positive term for a shop selling discounted airline tickets.

Buddy system Management practice of assigning an experienced employee to train a novice.

Budget A quantitative statement or structured plan for money management, reflecting accurately the financial state of an entity in a given fiscal period. From medieval English meaning “wallet” or “leather purse.” Budgets are subject to AUDIT. They are prepared by accountants, and budgetary control is exercised by a group of financial professionals. Budgets may be of several kinds, such as capital budget and cash-flow budget. Budgets allow corporations to better utilize and anticipate the financial resources available to them. They enable accountants and managers to compare estimates with ACTUALS, and thus plan for the imponderables in operating a corporation.

Budgetary control Methodical control of operations through establishment of standards and targets regarding income and expenditure and continuous monitoring of performance against them.

Buffering Practice of isolating external or internal operations from exogenous uncertainties, a technique used in CONFLICT MANAGEMENT.

Buggins’s turn U.K. idiomatic expression describing promotions and rewards based on seniority alone.

Built-in obsolescence Design of a product so that it has a limited lifetime and needs to be replaced within a short time.

Built-in stabilizer Fiscal mechanism that is triggered automatically by every downturn as a way to mitigate the market’s downward plunge.

Bull Reference to a market in which prices are steadily rising, driven by profits and favorable economic reports. People who buy when prices in the market are rising are termed bullish. A bull dealer trades up in expectation of growth. Compare BEAR.

Bulling the market When a speculator trades to push prices upward artificially.

Bumping Demotion of a senior employee, which in turn leads to the dismissal of a junior employee.

Bundling Marketing strategy of incorporating similar products into a single package, targeted to a specific customer base. As a competitive strategy, marketers may bundle a newer or less successful product with a stronger one, resulting in cost savings.

Bureaucracy Organizational mode that relies on a cadre of managers and directors selected on the basis of their expertise to run administrative affairs and provide leadership. Bureaucracy is characterized by permanence and stability, experience, precedent, and impersonal decision making.

Bureaucratic management Management that is steeped in AUTHORITARIAN philosophy and run on the basis of hierarchy, order, discipline, and precedent.

Bureaupathology Underbelly of bureaucracy characterized by red tape, inability to make quick decisions, and hesitancy to take advantage of emerging opportunities; also by passing the buck, resistance to change, reliance on rules and regulations rather than innovation, and confused response to uncertainties.

Bureausis Resistance to BUREAUPATHOLOGY on the part of customers.

Burnout Work-related psychological condition characterized by emotional exhaustion, decreasing efficiency, and loss of interest in meeting professional goals and making rational decisions. The situation is brought on by unrelenting pressure of work, in which the subject finds no personal fulfillment.

Burns, James MacGregor (1918–) Historian, political scientist, expert in leadership studies. His trailblazing book, Leadership, introduced two types of leadership: transactional leadership and transformational leadership.

Burns, Tom (1913–2001) British sociologist noted for his study, The Management of Innovation (1961).

Business agility Ability of a business to adapt rapidly and cost efficiently to changes in the business environment. It incorporates ideas of flexibility, balance, adaptability, and coordination.

Business buy behavior Factors governing the decision to buy equipment, services, products, and raw materials; these include cost, loyalty to regular suppliers, the emergence of better brands or suppliers, and the need to meet new needs.

Business continuity management (BCM) RISK MANAGEMENT plan to avoid possible disruptions resulting from unforeseen breaks in administrative personnel, including death of key managers, national calamities, terrorism, and sabotage. Emergency plans must specify the sequence of steps to be taken to restore normalcy. Business continuity and disaster recovery planning can demand a great deal of resources. The average annual cost of computer network downtime was $42,000 in 2011. OUTSOURCING has become a standard practice to add flexibility to the SUPPLY CHAIN and avoid disruptions.

Business cycle Repeating mode or pattern in business history, whereby upturns are followed by RECESSIONS and gains are followed by losses. Cycles introduce uncertainty in business plans because they have different durations.

Business game Management training program consisting of exercises designed to build business skills, encourage participants to develop problem-solving and decision-making abilities, hone ideas and abilities, and bond with other members of the team.

Business interruption policy Insurance policy that pays claims for financial losses resulting from exogenous factors such as fire, flood, or riots.

Business-level strategies Three generic strategies popularized by MICHAEL PORTER in the 1980s: The low-cost strategy emphasizes lower costs, although not necessarily lower prices. The differentiation strategy focuses on development of a unique product for which it can charge a premium price, It focuses quality, innovation, and sensitivity to customer needs. The third strategy focuses on serving the needs of a limited group.

Business plan Detailed scheme setting out the stated mission of a business. It is the first step before incorporation and before raising capital and securing loans. It also forecasts activity volumes, cash flows, and anticipated profits. The U.S. Small Business Administration recommends that a business plan include four main elements: (1) overview, (2) marketing analysis, (3) financial plan, and (4) management plan.

A business plan should provide the following details.

1. Personal details on the founder, owner, partners, and directors and their qualifications and experience.
2. Structure of business—that is, whether it is a corporation, partnership, or proprietorship.
3. Business activities and details of the product or service.
4. Commencement date.
5. Objectives, especially in terms of sales and profits.
6. Information on prior history and antecedents.
7. Number of employees and anticipated staff requirements and their salary ranges and possible sources of manpower.
8. Products and services offered, pricing policy, and competing products and services. Information on the market for the product or services in the context of the competition. Testing of products for quality.
9. Existing market for the product or services, whether it is growing (sunrise) or declining (sunset) or static and seasonal.
10. Names of competitors, their pricing policy, and strengths and weaknesses. Quality of the competition and ideas on how to overcome their advantages.
11. Ideas on marketing the product or service and costs of doing so including budgets for advertising, promotion, and public relations.
12. Marketing opportunities and their costs, including names of potential suppliers and their terms.
13. Real estate costs involved in setting up offices and facilities, whether lease, purchase, or rent.
14. Nature of the real estate, whether it is storage, office, or retail space, and the proposed location with information on local and municipal zoning laws.
15. Manufacturing equipment for production, including purchase price and depreciation. Cost of servicing and the nature of the acquisition, whether lease, rent, or purchase.
16. Trading equipment, including vans and cars, their value and purchase, rent, or lease terms.
17. Sales forecasts on monthly, quarterly, and annual basis, including sales prices and agency discounts. Comparative sales data on industry-wide basis from government and private business experts.
18. Sources of funds, such as sales of stocks, loans, and debts with long-term and short-term projections.
19. Cash-flow projections for at least three years.
20. Convincing projections showing when and at what stage the business will be self-sustaining.

Business process reengineering Approach to organizational CORPORATE RESTRUCTURING based on a radical reassessment of the reasons the business exists. It asks the questions, “What are its core competencies?” and “What are its strengths in terms of the market and its products and services?” It seeks to reinvent the business, taking advantage of the information technologies that allow simultaneous processing of tasks that were conventionally done sequentially. It links inputs and outputs more rationally so as to enhance efficiency and productivity and the learning curve of employees. The essential elements of reengineering are:

1. Initiation from the top from someone with a vision
2. Leadership
3. New value system that focuses on adding value for the customers
4. Rethinking the way people perform their work
5. Emphasis on cross-functional work teams
6. Enhanced information dissemination
7. Training
8. Involvement of all participants
9. Rewards based on results

Business school Graduate school for business management and related disciplines, commonly awarding a master’s degree in business administration.

Business strategy Protocol statement outlining the plans, principles, and policies of managing a business. It sets the direction of the firm and seeks to maximize the internal competitive advantages and strengths. It specifies the ways in which this is done, whether through internal growth (expansion of existing products) or through innovation or external growth (mergers and acquisitions).

Business structure Legal form of a company as defined in its charter. Business could be a sole proprietorship, a partnership, a private company, or a public limited company.

Business system The quality of the business environment as governed by the political and economic philosophy of a nation. In most capitalist countries (see CAPITALISM), this system is called the FREE MARKET system, in which there are minimum regulations and state control, and where the market is self-governing and makes its own structural adjustments.

Bust Severe decrease in stock prices and business activity, as part of a business cycle.

Buy-back Act of buying back the shares of a company from an investor, for purposes of CORPORATE RESTRUCTURING or to remove the threat of a HOSTILE BID.

Buyer’s market Market in which there is an oversupply of goods and where the prices for them are falling.

Buyers’ remorse Emotional response involving confusion or regret on the part of a buyer in a sales transaction that was based on poor information or misleading advertisements.

Buy-in Purchase of more than 50% of a company by an outside group, with intentions of a full takeover.

Buy-in management buyout (BIMBO) Buyout in which the management of the company invests in the venture along with VENTURE CAPITALISTS, who exercise managerial control.

Buying on margin Purchase of an asset by paying the margin, or initial down payment, and borrowing the balance from a bank or broker.

Buyout Acquired rights or ownership to a company or product through monetary compensation in full; buyouts can be by employees, management, or outsiders.

Buzz group In market research, an informal group, of not more than four or five persons, chosen from a larger group to discuss ideas developed during larger sessions.

Buzzword Term for a fashionable but overused word or expression that describes a current idea or concept.

Byham, William C. (1936–) American organizational psychologist. He is the co-author of Zapp: The Lighting of Empowerment. He promoted the use of the Assessment Center Method for the selection of managers.