Tag : Definition

What Is Business Environment? Definition & Factors – Video & Lesson Transcript

#business environment

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What Is Business Environment? – Definition & Factors

Businesses do not operate in a vacuum; they operate in an environment. In this lesson, you’ll learn about the business environment, including what makes it up. A short quiz follows the lesson.

Business Environment Defined

Business environment is the sum total of all external and internal factors that influence a business. You should keep in mind that external factors and internal factors can influence each other and work together to affect a business. For example, a health and safety regulation is an external factor that influences the internal environment of business operations. Additionally, some external factors are beyond your control. These factors are often called external constraints. Let’s take a look at some key environmental factors.

External Factors

Political factors are governmental activities and political conditions that may affect your business. Examples include laws, regulations, tariffs and other trade barriers, war, and social unrest.

Macroeconomic factors are factors that affect the entire economy, not just your business. Examples include things like interest rates, unemployment rates, currency exchange rates, consumer confidence, consumer discretionary income, consumer savings rates, recessions, and depressions.

Microeconomic factors are factors that can affect your business, such as market size, demand, supply, relationships with suppliers and your distribution chain, such as retail stores that sell your products, and the number and strength of your competition.

Social factors are basically sociological factors related to general society and social relations that affect your business. Social factors include social movements, such as environmental movements, as well as changes in fashion and consumer preferences. For example, clothing fashions change with the season, and there is a current trend towards green construction and organic foods.

Technological factors are technological innovations that can either benefit or hurt your business. Some technological innovations can increase your productivity and profit margins, such as computer software and automated production. On the other hand, some technological innovations pose an existential threat to a business, such as Internet streaming challenging the DVD rental business.

Internal Factors

Organizational culture is the framework of values, vision, norms, and customs shared by the members of an organization. Your business culture affects how the employees in your business interact with each other, its customers, and other stakeholders.

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Organizational structure is the manner in which the business is organized to conduct its activities. Organizations can be organized fairly flat, with very few levels of hierarchy, or organized very vertical, with many levels of hierarchy. The manner in which an organization is structured will affect how your business is managed and how much control individual employees have over their work.

Management structure is the manner in which your business is managed. Management may be centralized, where all decision-making is made at the top and filtered down throughout the business, or it may be decentralized, where the decision-making is distributed throughout the organization and decisions are made closer to the relevant work activities or problems.

Lesson Summary

Business environment includes the external and internal factors that influence a business. External factors include political factors, macroeconomic factors, microeconomic factors, social factors, and technological factors. Internal factors are factors from inside the organization that affect a business, such as organizational culture, organizational structure, and management structure.

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What is business process outsourcing (BPO)? Definition from #businesses #for #sale


#business process outsourcing

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business process outsourcing (BPO)

Business process outsourcing (BPO) is the contracting of a specific business task. such as payroll, human resources (HR) or accounting, to a third-party service provider. Usually, BPO is implemented as a cost-saving measure for tasks that a company requires but does not depend upon to maintain their position in the marketplace.

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BPO services

Two categories BPO is often divided into are back office outsourcing. which includes internal business functions such as billing or purchasing, and front office outsourcing, which includes customer-related services such as marketing or tech support.

Back office outsourcing offers organizations services to help manage tasks like data entry. data management. surveys, payment processing, quality assurance and accounting support. Back office tasks are integral to a company’s core business process and help keep business running smoothly.

Front office outsourcing services deal with customer interactions. Examples of front office tasks include phone conversations, email. fax and other forms of communication with customers. Front office outsourcing providers’ service lists include:

Outsourcing options

BPO that is contracted outside a company’s own country is sometimes called offshore outsourcing. BPO that is contracted to a company’s neighboring country is sometimes called nearshore outsourcing. and BPO that is contracted with the company’s own county is sometimes called onshore outsourcing .

Pros and cons of BPO

The top advantages of BPO are saved money and increased time to focus on the core business. Some other benefits include:

  • Speed and efficiencies of outsourced business processes are enhanced
  • Organizations using BPO get access to the latest technology
  • Freedom and flexibility to choose the most relevant services for the company’s operations
  • Quick and accurate reporting
  • Save on resources related to staffing and training

Some disadvantages of outsourcing business processes include:

This was last updated in May 2016

Continue Reading About business process outsourcing (BPO)

Related Terms

data collection Data collection is a process for gathering information from different sources. In business, data collection helps organizations. See complete definition e-procurement (supplier exchange) E-procurement is the business-to-business purchase and sale of supplies and services over the Internet. See complete definition workflow Workflow is the series of activities that are necessary to complete a task. See complete definition

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Stock Market Definition #printable #business #cards


#stock market

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Stock Market

What is the ‘Stock Market’

The stock market is the market in which shares of publicly held companies are issued and traded either through exchanges or over-the-counter markets. Also known as the equity market. the stock market is one of the most vital components of a free-market economy, as it provides companies with access to capital in exchange for giving investors a slice of ownership in the company. The stock market makes it possible to grow small initial sums of money into large ones, and to become wealthy without taking the risk of starting a business or making the sacrifices that often accompany a high-paying career.

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BREAKING DOWN ‘Stock Market’

The stock market lets investors participate in the financial achievements of the companies whose shares they hold. When companies are profitable, stock market investors make money through the dividends the companies pay out and by selling appreciated stocks at a profit called a capital gain. The downside is that investors can lose money if the companies whose stocks they hold lose money, the stocks’ prices goes down and the investor sells the stocks at a loss.

The stock market can be split into two main sections: the primary market and the secondary market. The primary market is where new issues are first sold through initial public offerings. Institutional investors typically purchase most of these shares from investment banks. All subsequent trading goes on in the secondary market where participants include both institutional and individual investors.

Stocks are traded through exchanges. The two biggest stock exchanges in the United States are the New York Stock Exchange. founded in 1792, and the Nasdaq, founded in 1971. Today, most stock market trades are executed electronically, and even the stocks themselves are almost always held in electronic form, not as physical certificates.

If you want to know how the stock market is performing, you can consult an index of stocks for the whole market or for a segment of the market. Examples include the Dow Jones Industrial Average. Nasdaq index, Russell 2000, Standard and Poor’s 500, and Morgan Stanley Europe, Australasia and Far East index.



Business Model Definition #business #clothing


#business models

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Business Model

What is a ‘Business Model’

A business model is the way in which a company generates revenue and makes a profit from company operations. Analysts use the metric gross profit as a way to compare the efficiency and effectiveness of a firm’s business model. Gross profit is calculated by subtracting the cost of goods sold from revenues .

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BREAKING DOWN ‘Business Model’

During the dotcom boom analysts went in search of net income. The internet is a disruptive technology with the ability to revolutionize certain industries, but where was the cash flow? When analysts couldn’t find the cash flow, they settled for the business model to legitimize the industry. Instead of looking at net income, calculated as gross profit minus operating expenses, analysts concentrated on gross profit. If the gross profit was high enough, analysts theorized, the cash flow would come.

Business Model Components

The two primary levers of a company’s business model are pricing and costs. A company can raise prices and it can find inventory at reduced costs. Both actions increase gross profit. Gross profit is often considered the first line of profitability because it only considers costs, not expenses. It focuses strictly on the way in which a company does business, not the efficiency of management. Investors that focus on business models are leaving room for an ineffective management team. They believe the best business models can run themselves.

Comparing Business Models

As an example, assume there are two companies and both companies rent movies. Prior to the internet, both companies made $5 million in revenues and the total cost of inventory sold was $4 million. Gross profit is calculated as $5 million minus $4 million, or $1 million. Gross profit margin is calculated as gross profit divided by revenues, or 20%.

After the advent of the internet, company B decides to offer movies online instead of renting or selling a physical copy. This change disrupts the business model in a positive way. The licensing fees do not change, but the cost of holding inventory is down considerably. In fact, the change reduces storage and distribution costs by $2 million. The new gross profit for the company is $5 million minus $2 million, or $3 million. The new gross profit margin is 60%, which is much higher than 20%.

Company B isn’t making more in sales, but it figured out a way to revolutionize its business model, which greatly reduces costs. Managers at company B have an additional 40% more in margin to play with than managers at company A. Managers at company A have little room for error.



What is business partner? definition and meaning #business #management #salary


#business partner

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business partner

An individual or company who has some degree of involvement with another entity’s business dealings. The term ‘business partner’ can have a wide range of meanings, with one of the most frequent being a person who, along with another person, plays a significant role in owning, managing, or creating a company (two best friends who start a business together would consider themselves business partners). The term is also frequently used for two businesses that cooperate, to any degree, such as a computer manufacturer who works exclusively with another company who supplies them with parts.

  • I thought they were a really great business partner and would be with us for a long time to come and would work greatly next to us.
  • Since I am out of town this week I will call my business partner and let her know to be expecting a package to arrive at the bakery on Tuesday.
  • Having someone else to start a business with me will mean that as a business partner that I will not need to make major decisions alone.

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Cash Advance Definition #sample #business #proposal


#business cash advance

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Cash Advance

What is a ‘Cash Advance’

A cash advance is a short-term loan from a bank or alternative lender. The term also refers to a service provided by many credit card issuers allowing cardholders to withdraw a certain amount of cash, either through an ATM or directly from a bank or other financial agency. Cash advances generally feature high interest rates or fees, but they are attractive to many borrowers as they also feature fast approval and quick funding.

BREAKING DOWN ‘Cash Advance’

Credit card cash advances typically carry a high interest rate, even higher than the credit card itself, and the interest begins to accrue immediately. In most cases, credit card cash advances do not quality for low interest rate introductory offers. On the plus side, credit card cash advances are quick and easy to obtain.

Merchant Cash Advances

Merchant cash advances refer to cash advances received by companies or merchants from banks or alternative lenders. Typically, businesses with less-than-perfect credit use cash advances to finance their activities, and in some cases, these advances are paid for with future credit card receipts or with a portion of the funds the merchant receives from sales in his online account. Rather than using a business’ credit scores, alternative lenders often survey the creditworthiness of the borrower by looking at multiple data points including how much money the merchant receives through online accounts such as PayPal.

Cash Advances and Payday Loans

In consumer lending, the phrase cash advance also refers to payday loans. Payday loans are short-term loans that typically must be repaid on the borrower’s next payday, along with a fee. Rather than taking into account the borrower’s credit score. the lender determines the amount of the loan based on the laws in the state and how much the borrower earns each paycheck. If the loan is approved, the lender hands the borrower cash if the loan is being granted in a storefront, and if the loan takes place online, the lender sends an electronic deposit to the borrower’s checking or savings account. To ensure repayment, the lender either takes a post-dated check from the borrower or has him sign an agreement for an automatic payment.

Direct Deposit Advance

Another form of cash advance is a direct deposit advance. With this lending tool, banks give their customers advances on their direct deposits. Then, when the deposit is made, the bank recoups the loan and the associated fees. In most cases, the repayment for the cash advance is taken out of the account before any other checks, charges or automatic payments are allowed to post. In 2014, after receiving numerous complaints about the fees related to their cash advances, many major banks discontinued the practice.



What is business process modeling? Definition from #franchise #opportunities


#business process modeling

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business process modeling

Business process modeling, often called process modeling, is the analytical representation or illustration of an organization s business processes.

Along with business process discovery. process modeling is widely viewed as a critical component in successful business process management (BPM ). It is used to map out an organization s current (or as-is ) processes to create a baseline for process improvements and to design future (or to-be ) processes with those improvements incorporated. Process modeling often uses Business Process Modeling Notation (BPMN ), a standard method of illustrating processes with flowchart -like diagrams that can be easily understood by both IT and business managers.

Continue reading about business process modeling:

This was last updated in February 2012

Contributor(s): Anne Stuart

Related Terms

Definitions

– Risk management is a company’s process for identifying and controlling threats to its assets, including proprietary corporate data, customers’ PII and intellectual property. (SearchCompliance.com )

– Rebranding is an update of the materials and presentation used to represent a business. A company may rebrand to appear more modern or to distance itself from past issues, among other possibilities. (WhatIs.com )

– A/B testing is a statistical method used to assess proposed changes to a product or service. (SearchBusinessAnalytics.com )

Glossaries

– Terms related to business, including definitions about project management and words and phrases about human resources, finance and vertical industries.

– This WhatIs.com glossary contains terms related to Internet applications, including definitions about Software as a Service (SaaS) delivery models and words and phrases about web sites, e-commerce.

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What is business process? Definition from #business #opportunities


#business process

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business process

A business process is an activity or set of activities that will accomplish a specific organizational goal. Business process management (BPM) is a systematic approach to improving those processes. If an organization is unable to perform certain business processes internally due to cost or resources, the company might utilize business process outsourcing (BPO). Many organizations contract specific business tasks, such as payroll, human resources (HR) or accounting, to a third-party service provider.

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By submitting your email address, you agree to receive emails regarding relevant topic offers from TechTarget and its partners. You can withdraw your consent at any time. Contact TechTarget at 275 Grove Street, Newton, MA.

You also agree that your personal information may be transferred and processed in the United States, and that you have read and agree to the Terms of Use and the Privacy Policy .

To measure success of a business process, organizations track successful completion of different steps within the process, i.e. benchmarks. or reaching the end point of the process. When a business process is not helping an organization reach a goal within timeline or with the resources at hand, there are a number of strategies to execute for improvements. Business process mapping is often undertaken as an exercise during business process re-engineering and process transformation to improve a maybe unsuccessful business process. Organizations might also focus on business process visibility to identify issues in process performance or execution.

Business processes categories

Depending on the organization, industry and nature of work, business processes are often broken up into different categories. Categories include:

  • Operational processes (or primary processes): Operational or primary processes deal with the core business and value chain. These processes deliver value to the customer by helping to produce a product or service. Operational processes represent essential business activities that accomplish business objectives, e.g. generating revenue. Some examples of this include taking customer orders and managing bank accounts.
  • Supporting processes (or secondary processes): Supporting processes back core processes and functions within an organization. Examples of supporting or management processes include accounting, HR management and workplace safety. One key differentiator between operational and support processes is that support processes do not provide value to customers directly.
  • Management processes: Management processes measure, monitor and control activities related to business procedures and systems. Examples of management processes include internal communications, governance. strategic planning. budgeting, and infrastructure or capacity management. Like supporting processes, management processes do not provide value directly to the customers.

Business process mapping or modeling

Business processes are often depicted visually with a flowchart showing a sequence of tasks with certain benchmarks or decision points. Business process mapping or modeling illustrates pictorially, through graphs and charts, how certain processes flow into others.

There a few different ways to think about business process mapping and workflow :

  • Sequential business process. Sequential business processes are outlined on a document with clear start and end points. When following this process map, an organization performs the series of actions in order to complete the task within the constraints of a predetermined timeline.
  • Status-driven business process. A status-driven business process doesn’t have strict start and end points. These processes can finish at any stage depending on workflow changes, nature or production or the office culture. Also, it is typical for status-driven processes to recur or cycle on the same step in the process.
  • Parallel business process. When activities in a business process are executed in parallel, they are carried out simultaneously. In this type of business process execution, the activities on all branches must be completed before the next step in the business process can commence.

This was last updated in June 2016

Continue Reading About business process

Related Terms

CEO and other C-suite executive titles The CEO, or chief executive officer, is part of the C-suite. Other C-suite executive titles include the chief financial officer. See complete definition innovation management Innovation management is the process of managing an organization’s innovation procedure, which helps increase competitive. See complete definition product development (new product development, or NPD) Product development, or new product development (NPD), is the process of bringing new or updated products or services to a target. See complete definition

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Cash Flow Definition #most #successful #small #businesses


#cash flow business

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Cash Flow

What is ‘Cash Flow’

Cash flow is the net amount of cash and cash-equivalents moving into and out of a business. Positive cash flow indicates that a company’s liquid assets are increasing, enabling it to settle debts. reinvest in its business, return money to shareholders, pay expenses and provide a buffer against future financial challenges. Negative cash flow indicates that a company’s liquid assets are decreasing. Net cash flow is distinguished from net income. which includes accounts receivable and other items for which payment has not actually been received. Cash flow is used to assess the quality of a company’s income, that is, how liquid it is, which can indicate whether the company is positioned to remain solvent .

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BREAKING DOWN ‘Cash Flow’

The accrual accounting method allows companies to count their chickens before they hatch, so to speak, by considering credit as part of a company’s income. “Accounts receivable ” and “settlement due from customers” can appear as line items in the assets portion of a company’s balance sheet. but these items do not represent completed transactions, for which payment has been received. They do not, therefore, count as cash. (Note that the credit vs. cash distinction is not the same as it is in everyday terminology; proceeds from credit card transactions are considered cash once they are transferred.)

The opposite can also be true. A company may be receiving massive inflows of cash, but only because it is selling off its long-term assets. A company that is selling itself for parts may be building up liquidity. but it is limiting its potential for growth in the long term, and perhaps setting itself up to fail. In the same vein, a company may be taking in cash by issuing bonds and taking on unsustainable levels of debt. For these reasons it is necessary to view a company’s cash flow statement. balance sheet and income statement together.

Cash Flow Statement

Often called the “statement of cash flows,” the cash flow statement indicates whether a company’s income is languishing in the form of IOUs – not a sustainable situation in the long term – or is translating into cash flow. Even very profitable companies, as measured by their net incomes. can become insolvent if they do not have the cash and cash-equivalents to settle short-term liabilities. If a company’s profit is tied up in accounts receivable, prepaid expenses and inventory. it may not have the liquidity to survive a downturn in its business or a lawsuit. Cash flow determines the quality of a company’s income; if net cash flow is less than net income, that could be a cause for concern.

Cash flow statements are divided into three categories: operating cash flow. investing cash flow and financing cash flow. Operating cash flows are those related to a company’s operations, that is, its day-to-day business. Investing cash flows relate to its investments in businesses through acquisition ; in long-term assets, such as towers for a telecom provider; and in securities. Financing cash flows relate to a company’s investors and creditors: dividends paid to stockholders would be recorded here, as would cash proceeds from issuing bonds.

Free cash flow is defined as a company’s operating cash flow minus capital expenditures. This is the money that can be used to pay dividends. buy back stock. pay off debt and expand the business.

Real World Example

Below is a reproduction of Wal-Mart Stores Inc.’s (WMT ) cash flow statement for the quarter ended April 30, 2015. All amounts are in million of U.S. dollars.

Cash flows from operating activities:



Business Economics Definition #loans #for #starting #a #business


#business economics

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Business Economics

What is ‘Business Economics’

Business economics is the study of the financial issues and challenges faced by corporations operating in a specified marketplace or economy. Business economics deals with issues such as business organization, management, expansion and strategy. Studies might include how and why corporations expand, the impact of entrepreneurs. the interactions between corporations, and the role of governments in regulation.

BREAKING DOWN ‘Business Economics’

Economics refers to the study of the components and functions of a particular marketplace or economy, such as supply and demand and the effect of the concept of scarcity. Within an economy, issues regarding production may be examined, as well as distribution methods. Further, consumption by the associated economy’s population can be analyzed.

Factors Within Business Operations

Business economics focuses on the factors within business operations and how they relate to the economy as a whole. It integrates economic principles and strategies into standard business practices. This can include the acquisition of necessary capital, the generation of profit, the efficiency of production and overall management strategy. It includes issues of how other economic external factors can influence business decisions, such as a change in industry regulation or a sudden price shift in a necessary production materials.

Managerial Economics

Managerial economics focuses on the microeconomic factors that are used in the decision-making process with an organization. Corporations make strategic decisions that can result in a profit or loss. Managerial economic principles guide how and why corporations make certain decisions.

Managerial economics apply to the public and private sectors, and for-profit and not-for-profit organizations alike. All organizations must address issues in the internal and external economies to remain solvent, as all organizations require a source of funding to continue operations.

The goal of managerial economics is to utilize the available resources, maximizing production while minimizing waste. While nonprofits may put their focus on raising donations, for-profits instead focus on sales of goods or services. Each organization wants to limit waste to maximize the overall usefulness of the available resources. Each uses the same principles to meet the associated goals of maintaining the funds necessary to continue working within the economy.

Both also require the same forms of attention and expertise, such as advertising and community or customer support, and require leadership to make decisions regarding the best way to negotiate current economic conditions.

Economics Oriented Associations

In the United States, the National Association for Business Economics (NABE) is the professional association for business economists. The organization’s mission is “to provide leadership in the use and understanding of economics.” In the United Kingdom, the professional organization is the Society of Business Economists.