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5th Generation Management
See Management.
1992 Strategies For The Single Market
See Policy.
[[alpha]]
See alpha, Beta and Finance.
Abobe
Adobe Systems is an american company which (in the form of John Warnock) invented the
Postscript language. Warnock's work is in fact another
development from Xerox PARC. It describes all objects (letters and graphics) in terms of
mathematical equations and is used in many PC systems, especially
in desktop publishing.
Accelerated change
What is needed and will not work when a company in extreme ill health tries in order to
survive. What a company should try when doing well.
Acceptance Criterion
See Finance.
Access
See Microsoft.
Accounting For Growth
See Control and Monitoring.
Accounting Information Systems
Accounting rate of return
Not a particularly useful measure of payback period because it does not take account of the
difference between annual payback and a lump sum. Ten payments of
[[sterling]]1000 would be worth much more than on payment of [[sterling]]10,000 after ten
years because the annual payments can be used for other work.
Accounting
Accounts payable
Current liabilities to be paid usually over one year owed to suppliers for service,
supplies and raw materials. current liabilies
Accounts receivable
Are the claims upon customers that can be expected to be collected within the normal
operating cycle. Deducted from this is an allowance for doubtful
accounts. The aount of accounts receivable is not the total amount owed to the firm, but
the amount it expects to collect.
Accrual accounting
1. A). Revenue is recognised under the accrual basis of accounting when: all or a
substantial portion, of the services to be provided have been performed; 2.
either cash, or a receivable, of some other asset susceptible to reasonably precise
measurement has been received. B) Revenue earned and costs incurred are
to be accounted for at the time they occur, not when cash is received or paid. Thus, any
amounts earned will be matched by the costs incurred in earning that
income.
2. According to the accrual principle of accounting, revenue is recognised as soon as the
effort required to generate the sale is substantially complete, and there is a
reasonable certainty that payment will be received. The accountant sees the timing of the
actual cash receipts as only a technicality. For credit sales, the accrual
principle means that revenue is recognised at the time of sale, not when the customer pays.
This can result in a significant time lag between generation of revenue and
receipt of cash.
Acid test (quick ratio)
See quick ratio
Acquisition financing
Whether to use Debt or Equity to finance an acquisition; Watch for:
*If the target is profitable can make use of the tax shield
*Debt is typically cheaper than equity and has lower transaction costs (merchant bank fees
etc.)
*Equity, where it requires a call or issue to shareholders for more funds, has a signalling
effect which can be undesirable
*If the asset type being purchase is high risk, the Free Cash Flows are unpredictable (risky)
and debt should be avoided) Low beta businesses are good for debt.
*High fixed cost businesses should not be financed by debt.
Acquisitions
See Mergers & Acquisitions.
Activity based costing (ABC)
The traditional view of cost accounting holds that products cause costs. Cost is
generally seen as being driven by volume. ABC holds that products consume
activities, which in turn consume resources. Activities are the cost drivers and they are
not necessarily volume based. The object is to look for the activity that
actually causes a cost to be incurred, then determine how much of that activity a given
product requires. ABC systems have become more prominent as
companies try to attune themselves to fixed cost businesses where more than 50% of costs
are fixed and allocation becomes difficult.
ABC is a model of resource consumption, not of spending (Cooper, R. 1990) If cost is defined
in terms of spending, then frequently no instantaneous relationship
exists between activities and costs (therefore cutting one product from a range will not
result in a change in cost overall). However, if consumption is measured in this
situation, a change will be recorded..
Adjusted present value (APV) approach to company valuation
APV approach values corporations by pieces. The basic piece is the value of teh firm as
though it is an all equity firm; on top of that, if the firm has debt, you
add a piece that captures the PV of the tax shield benefit of debt; if there is risk of
financial distress, you subtract a third piece, the present cost of financial
distress and so on.
Where NPV is the value of an all equity firm, calculated using the cash flows to unlevered
equity (i.e. as though the firm is all equity financed) and the unlevered cost
of equity for the firm (i.e. based on the asset beta, and not theequity beta of the firm.
NPFV is the NPV of the effects of financing. The most common one is that associated with the
tax shield benefits of debt (i.e. TcD, where the corporate tax rate is
Tc, the face value of the debt is D, and the debt is assumed to be perpetual.
WACC, FTE, Valuation. Corporate valuation
ADPCM
See PCM-Pulse code modulation.
Adults As Learners
See Education and Learning.
Advanced Mobile Phone System (AMPS)
American and far east standard for cellular phones. Digital AMPS the new digital version
will ultimately compete with the European systems GSM and PCN.
AFNOR
An acronym for Association Française de Normalisation - the French Standards Institute.
See BSI, CEN, DIN, ETSI, ISO, ITU, and NIST.
Age Of Unreason (The)
AI
See Artificial Intelligence.
Albitz Paul
Author of the book "DNS And BIND". See Internet.
Alliances
See Strategic Aliances.
Allocation
See Chargeout.
2
Alpha
The net risk-adjusted return form a portfolio. The alpha is calculated by measuring the
risk adjusted return from the actual return:
See Beta and Finance.

Altiero Spinelli
Author of the book "Battling For The Union". See Policy.
AMADEUS, global alliances in CRS industry
See Strategy.
American Options
See Options.
Ami Pro
See Lotus.
Amortised, Amortized.
The process of allocating organisation costs, as well as other intangible assets, is
referred to amortisation, which is identical in concept to depreciation.
AMPS.-Advanced Mobile Phone System
American and far east standard for cellular phones. Digital AMPS the new digital version
will ultimately compete with the European systems GSM and PCN.
An Introduction To OSI
See Open Systems.
Analog or Analogue
See Networks.
Analytic Approach To Marketing Decisions (The)
See Marketing.
Angel
See Business Angel.
Annuity
A series of equal periodic cash flows is known as an annuity. The present value of a five
year annuity of $1,000 a year can be calculated by multiplying each
of teh five cash flows by the appropriate present value multiplier. A formula for this is
In which A is the size of the annual cash flow.(1000), r is the interest rate, P is present
value, n is the number of investments.
Alternatively
Present value at 15%
Years
Cash Multiplier (cash x multiplier)
1 1000 1/1.15 = 0.8968 869
2 1000 1/(1.15)[2]= 0.7561 756
3 1000 1/(1.15)[3]= 0.6575 657
4 1000 1/(1.15)[4]= 0.5718 571
5 1000 1/(1.15)[5]= 0.4972 497
Total
3.3522 $3,352
The relationship is: Present value = Annual cash flow x present value multiplier (3.3522 in
this example)
ANSI
American National Standards Institute. See Networks.
Antennas
Communications satellites carry one or more antennas. These radiate signals transmitted
from the satellite and gathers signals transmitted from earth. The
reflector collects signals from the earth and concentrates them to the transponder. It
also gathers signals from the transponder and aims a beam at a specified
area of the earth.
Anthony
See Information Needs.
Anthony's pyramid
For organisations shows the different requirements within the organisation for
information. At the top it is unstructured and comes from outside; at the bottom
it is structured and comes from internal sources. See Simon's type
Antonelli Cristiano
Author of the book. "Economics Of Information Networks (The)". See Networks.
3
Apple
An american maker of personal computers and software which popularised the graphical user
interface. Famous for the Apple I, II and III machines and the
Macintosh and Powerpc PC's. The company was started by Steve Jobs (later of NeXTStep) and
Steve Wozniak.
Application
See Computing and CASE.
Approach
See Lotus.
Arbitrage
The technique of using different prices on different world stock exchanges to make money
by buying in one and selling in another.
Architecture
An architecture in computing parlance is defined by Duitsman and Pinelli as: the set of
rules necessary to build an object or to interface one object with
another. An object can be anything. The ISO/OSI model uses a layering architecture to
define a common array of communications protocols. Bakers
sometimes use a layering architecture in the construction of certain cakes. Architectures
are not automatically a standard. See Computing, CASE.,
Computer Network Architecture or GOSIP.
Argyris, C.
The assumption that people work opportunistically; so give signal by saying that they
will be checked (start with the view that people cannot be trusted).
Clash between the worker with implicit knowledge of how to get things done and of the system,
and the manager who wants to know what is going on. As he tries
to find out, the worker thinks he is being distrusted and becomes resentful. Can be a
dangerous cycle. Build mechanisms on both sides based on mistrust where
perhaps none existed originally.
Artificial Intelligence
1: Software that can use its accumulated knowledge to reason and in some instances learn
from experience and thereby modify its subsequent reasoning.
Examples include: natural language, visual recognition, and expert systems. 2: A broad
based technology that encompasses work in fields such as natural
languages, language translation, computer vision, speech recognition and expert systems.
See ExperTAX case.
Artificial Intelligence In Accounting And Auditing
ASCII
An acronym for the American Standard Code for Information Interchange. It represents one
of the most basic computing standards because is specifies the
machine codes which letters and numbers. This is now almost a universal standards -the
glaring exception being IBM which uses its own EBCDIC system.
Asset allocation
Dividing investment funds among markets to achieve diversification or maximum return.
Asset turnover
Equals Sales divided by Capital employed. This ratio compares the level of sales a
company cana generate from a given level of capital employed. Capital
intensive industries (eg. heavy engineering) will tend to have low figures for asset
turnover. The asset turnover can be improved by generating a higher level of
sales from a given asset base or by disposing of assets which are not productive.
Assets
The resources which are owned and controlled by the company. Assets = Liabilities +
Owners equity. Assets are unexpired costs (Expenses are expired
costs).
The value of an asset is the sum of the expected future cash flows which an asset delivers
discounted to the present day. See Finance and Cash Flow.
Association Française de Normalisation
See AFNOR, BSI, CEN, DIN, ETSI, ISO, ITU, and NIST.
ATM
See Networks or Finance Industry.
Auditing
Is a process by which a competent, usually independent person accumulates and evaluates
evidence about an entity or unit for specified purposes (e.g.
4
financial, safety, environmental etc.) (Arens and Loebbecke 1991).
Auditor
The general who comes after the battle and shoots the wounded. See Control and
Monitoring.
aufsichtstraat
German for supervisory board. See Corporate Governance.
[[beta]]
See Beta and Finance.
Baby Bells
The name given to the American regional telephone operators which AT&T was forced to
create in 1984. Along with the long distance operators they have
created a competitive telecommunications industry in the USA. These effects are now
spreading rapidly into other countries. See Networks.
Backbone Network
See Networks.
Backtracking
The process of going back to a state that has been tried.
Backup
The act of storing digital information (including programs) in a second place or form.
The main reason is data security - so that you have a copy of the
information which can can use to recover from a corruption in your computer environment.
Balance of payments
The orderly transaction between the citizens of one country and those of another.
Transactions can involve Assets or goods and services.
E.g. exports from US $319 billon in 1988 and imports of $446 billion. The export of services
$108 billion and imports $93 billion. Net balance being $-112, plus
unilateral transfers (foreign aid) gives a current account deficit of $127 billion. This is
matched by import of capital $219 billion and export $82. There is a net capital
import (net borrowing by the states) of $137 billion. There are statistical deviations).
Balance sheet
The balance sheet is, in essence, an expression of the funamental accounting equation (A
= L + OE). The double entry system is a manifestation of the
accounting equation. The fundamental equation of accounting yields an expression of an
individual's or firm's financial position at a moment in time. When it
lists specific Assets and Equities it is called a balance sheet.
To prepare a balance sheet it is necessary only to sum the debits and credits in each account
and to list and clasify the accounts and balances.
Balanced scorecard
Standard methods for management to assess business performance have serious limitations.
Companies should not be measured simply using financial data,
they should be assessed according to whether or not they are progressing and performing
in accordance with Strategy.
One recent methodology is the Balanced scorecard, which uses financial data, operational
measures, customer satisfaction, internal processes annd the organisation's
innovation and improvement activities (indicators of future financial performance).
* Customer concerns tend to fall into 4 categories: time (lead time, time to quote etc),
quality, performance and service, cost.
* Internal measures should stem from the business processes that have the greatest impact on
customer satisfaction: cycle time, quality, employee skills, productivity.
Companies should also identify critical core competencies and try to guarantee market
leadership.
* Innovation can be measured by change in value (employee value, shareholder value, percentage
and value of sales from products less than x years old)
* Financial measures should include obvious analysis, inventory turns, payable and collection
periods etc.
Balanced scorecards could be considered for different layers in the company, to show operators
at different levels how what they do is important. They should be
developed, not from above only, but also by the operators themselves.
Banker
A UK based financial magazine which contains regularly profiles of countries, markets and
people. One of the three best general international financial
magazines currently available. See Institutional Investor and Euromoney. For more
5
specialist international finance information see Risk for detailed articles
on pricing models and deal structures, International Financing Review for detailed
articles on market activities and deal structures.
Banking In The Ec, 1991
See Financial Industry, The.
Banking
Banking Technology As A Competitive Weapon
Bankruptcy
The distribution of liquidation proceeds in bankruptcy is determined by the rights of
absolute priority. At the head of the line are, the government for past due
taxes and teh bankruptcy lawyers who wrote the law. Among investors, the first to be
repaid are senior creditors, then general creditors, then subordinated
creditors. Preferred stockholders and common shareholders bring up the rear. Because each
class of claimant is paid off in full before thenext class receives
anything, equity shareholders frequently get nothing in bankruptcy.
Bar Code
A coding system much in use in the retailing and manufacturing industries as it allows
the automatic reading of items. Scanning devices are
connected to computers and they can rapidly read the information contained in a bar code.
In more recent times bar codes are spreading into
other uses which require high speed or that deal with large inventories. Example include
railways and road transport where cargos and even
drivers are being bar coded.
Bar François
Author of the book. "Information Networks And Competitive Advantage, vol. I: issues for
government policy and corporate strategy". See
Networks.
Barriers to entry
One of Porter's five forces. There are 6 major sources of barriers to entry. 1. Economies
of Scale - This forces a new entrant to come in with high volume or
accept a cost disadvantage. Affects all aspects of the business: research, sales,
distribution, production etc.
2. Product differentiation. Brand identification creates a barrier to entry, forcing the new
entrant to promote heavily
3. Capital requirements. Highly capital intensive busiesses are harder to enter. Capital is
needed for plant and equipment and for funding customer credit
4. Cost disadvantages independent of size. Learning curve + experience curve advantages held
by existing companies help guard against entry. Might also have
patent advantages and better access to raw materials and service/maintenance.
5. Access to distribution channels. Graphically demonstrated in the Japanese beer case. Also
obvious in the fight for supermarket shelp space for new products.
6. Governement policy. Entry can be controlled by license requirements and limits on access to
raw materials.
Baseline
A baseline is a coordinated project state to which everyone participating in the project
can refer. When a project has reached a baseline, intermediate
products are in well defined states. Checkpoints are those points in time when it has
been decided toassess whether a baseline has been reached. A phase is
those set of actvities that take place between checkpoints.
Basic
Beginner's All purpose Symbollic Instruction Code. First programming language for non
programmers . Has now been lagely replaced by Visual Basic, an
object oriented programming language. See Computing.
Batch Processing
A technique in computing where several computer tasks are grouped together and processed
in one `batch'. Nowday's on-line processing receives all the
attention but most mainframe computers still work on the basis of batch processing. You
just don't notice this as a user because the machines are so fast or the
application is built with features such as batch report processing. See On-line
Processing.
Battling For The Union
6
See Policy.
Bear run
Fast falling stock market
Bear run
See Finance.
Beaud Paul
Author of the book. "European Telematics : The Emerging Economy Of Words". See Networks.
Beckhard Richard
Author of the book "Changing The Essence". See Education, Learning and Change.
Behaviorism
Americas only home grown psychology. Aspires to develop a universal code of principles
unilaterally applied, which allow E, the experimenter, to condition
the responses of S, the subject, by prepared schedule of reinforcements designed to
reward and punish. . Such a science regards wants and motives of S as
irrelevant and any reltionship between E and S as likely to contaminate the results. and
any relationship between the two as contaminants to the result.
Behaviourism has been highly influential in providing teh rewards of external wage
incentives, stock options, and bonuses for behaviors sought by
management.
Belbin Team Roles
R. Meredith Belbin was a researcher in the dynamics of team work. He developed a model of
teams and categorised team members into 8 roles:
1.
Chairman. The controller of the team. Someone who co-ordinates the resources, maximises
their effectiveness within the team and ensures that the objectives
of the group are met.
2.
Company Worker. Translates the concepts of the group and produces a practical plan for
meeting them. Is a systematic and efficient executor of plans.
3.
Completer Finisher. The one who focuses on areas which need close attention to
successfully complete. Keeps a feeling of urgency in the team.
4.
Monitor Evaluator. A problem analyser who can evaluate ideas and make a balanced
decision.
5.
Plant. The proposer of new ideas and strategies.
6.
Resource Investigator. Handles external contacts for the group.
7.
Shaper. Shapes the teams efforts and the way the group works.
8.
Team Worker. Supports the other members of the team when difficulties are encountered. A
good communicator who fosters team spirit.
One the most interesting implications of Belbin's ideas are that a successful team needs most,
if not all, of the eight role types.
Benchmarking Global Manufacturing
See Manufacturing.
Best practise
A process of benchmarking against competition to find out how the best is done. At GE
this involves less of measuring and more of how the processes are
managed. The GE approach teaches possibly complacent staff that other companies have
things they can teach GE. Involves Process mapping.
Beta
Equity Beta (levered)
Asset Beta
Beta is a coeficient of risk.
Where ßE = Equity beta: ßA = Asset beta
Equity beta = Asset beta (or business risk) + Asset beta * Debt equity ratio (financial risk),
or:-
Beta
Measures the volatility of an asset relative to a broad market measure (such as a
7
diversified portfolio of world stocks). It is often abbreviated to the Greek
symbol [[beta]]. A [[beta]] = 0 is risk-free (it doesn't change) and if [[beta]] = 1 then
the change in the asset matches the change in the market measure.
Many companies publish beta calculations based upon broad measures, both S&P and Morgan
Stanley Investment Corporation publish such betas. See
levered beta, unlevered beta and Finance.
Beyond National Borders, reflections on Japan and the world
See Policy.
Big Bath, the
Companies which accept financial losses in one single charge against income. IBM's 1992
charge (and the resulting record loss) against reorganisation and
redundancy costs was an example of this.
Bill of materials (BOM)
A diagram, or record, that shows all the components for an item, their parent component
relationships, and their usage quantities.
Billion
Despite some british protests the American system prevails:
1 trillion
= a million millions
1 billion
= a thousand millions
Bimbo
Term describing a deal involving both existing and outside managers: buy-in/management
buy-out. About half of all buy out deals are of this type.
Black Friday
In the financial community there have been a number of black friday's and other days of
the week:
Black Friday
24 September 1929 US stock market panic
Black Monday
19 October 1988 World stock markets drop
Black Thursday
22 October 1988 World stock markets drop
Blue Chip
The largest and safest companies are termed blue chip companies. Stocks in these
companies are called blue chip stocks.
Bollinger
See Reuters.
Bond rating
Independent companies assess the health of companies and judge on how risky it would be
to buy their bonds. Ratings from AAA to CC; CC being junk
bonds. The interest paid increases with risk. The government bond would be AA rated.
Bonds
Something sold by an organistion or company for money which is repaid at the end of a
stated term (eg. 5 years). May be interest paying, so that the buyer
receives interest on the money paid, or interest free (zero rated). Similar function to a
loan. Secured against either the company or some stated asset.
Companies are bond rated, from A to C. Rating depends on the risk that the company will
fold and not meet its committments. C rated bonds are known also
as Junk Bonds. The lower the rating the higher the interest that has to be paid to
persuade people to buy.Some bonds are Callable; they can be called back
by the issuer, usually for a premium. This would happen if the companies rating rises or
if interest rates change.
Similar to notes, but differ in that the promise to pay is usually included in a more formal
legal instrument and the term of the loan is usually longer. Can be either a
current or a non current liability in the balance sheet, or both at the same time (portion due
in one year being current, portion due in subsequent year being non
current).
Book list
Handy * 2
Agyris
Galbraith
Hermann Hess, the Glass bead game (C 1940)
8
Shapiro, E. & Carr, W.
Peter Sage, the fifth dimension
Book value vs Market value
of a company. A balance sheet will show the value of shareholders equity which is also
known as the book value Book value has little real meaning because it
reflects purchase price adjusted by depreciation which might not reflect true value
(perhaps higher if the asset is land, lower if the asset is obsolete equipment).
Shareholders invest for future value, not for present value, book value does not reveal this.
Also a company will have many assets which do not appear in the
balance sheet, eg., patents, also reputation, management ability, available technology etc.
Unrecorded liabilities include law suits, inferior managment.
Market value of equity is calculated for quoted companies by multiplying the common share
value by the number of shares outstanding.
Borrhus Michael
Author of the book. "Information Networks And Competitive Advantage, vol. I: issues for
government policy and corporate strategy". See
Networks.
Boss
Managing the boss. Managers who work effectively with their bosses seek out information
about the boss's goals and problems and pressures. The actively
test assumptions about the boss's capabilities and expectations. How does he like
communications to come (a listener - brief verbally then send a memo, or a
reader, brief via a memo then discuss). Is he a formal or and intuitive type. (from
Managing your boss, Gabarro & Kotter).
Make sure you understand your boss and his or her context, including:
*
Goals and objectives
*
Pressures
*
Strengths, weaknesses, blind spots
*
Preferred work style
Assess yourself and your needs, including:
*
Strengths and weaknesses
*
Personal style
*
Predisposition toward dependence on authority figures
Develop and maintain a relationship that:
*
fits both your needs and styles
*
Is characterised by mutual expectations
*
Keeps your boss informed
*
Is based on dependability and honesty
*
Selectively uses your boss's time and resources
Boston consultancy group
See market growth rate.
Bottlenecks
Are 1. operations that limit output; also referred to critical resources.
2. Resources for which the requirements equal or exceed capacity over a specified period of
time.
Managing bottlenecks:
* what does it do that it does not have to do
* is it making things that have not been ordered
* what are the lot sizes
* does all of its work need to be processed by it
* are there quality problems, is work being done on parts which are already defective but
9
which have not yet been inspected.
* does it do work well, or does it have to rework on poor output
* how much down time is there (between work or because of breakdown)
* can set up times be reduced
Bottlenecks are often caused because it or its operators (or other processes) are evaluated as
cost centres rather than the business unit as a whole being evaluated
on throughput.
Bought deal
When a deal maker provides all of the finance needed for a buy out deal, and then sells
on or syndicates part of the funding to other investors later. Done by
the larger providers of finance when speed or confidentiality are particularly important
for the deal to succeed.
Bridge financing
Short term funding provided when a company is about to raise a new round of equity, or is
about to go public.
Bridge
See Networks.
British Standards Institute
See BSI, AFNOR, CEN, DIN, ETSI, ISO, ITU, and NIST.
Broadband
See Networks.
BSA
An acronym for Basic Service Agreement. See ONA.
BSE
An acronym for Basic Service Element. See ONA.
BSI
An acronym for British Standards Institute. See AFNOR, CEN, DIN, ETSI, ISO, ITU, and
NIST.
Bug
An error, usually in a computer system, but especially in computer programs. Bugs usually
are caused by the complexity of the systems and either:
1. incorrect or incomplete instructions given to the writer of the system or program.
2. mistakes by the program writer.
A note for trivia fans is that the expression originated from the earliest days of computing
when computers consisted of many thousands of valves. Bugs (the creepy
crawly variety) occasionaly caused the computer tos misfunction when they crawled into the
computer (which were the size of buildings in those days). Hence the
expression `there's a bug...'. See CASE.
Building The Future Together
See Policy.
Building Total Quality
See Management.
Bull run
Fast rising stock market
Bull run
See Finance.
Burn out
Common causal conditions (after Levinson, H).
* Exposure to prolonged repetitive pressure,
* engendered enormous burdens on the managers
* promised great success but made attaining it nearly impossible
* exposed the managers to risk of attack for doing their jobs, without providing a way for
them to fight back
* aroused deep emotions - sorrow, fear, despair, compassion, helplessness, pity, and rage. To
survive the managers would try to harden outer shells to contain their
feelings and hide their anguish
* overshelmed the managers with complex detail, conflicting forces, and problems against which
they hurled themselves with increasing intensity - but without impact
* exploited the managers but provided them little to show for having been victimised.
* isolation.
* to do the job as prescribed is to commit career suicide
Definitions
(after Freudenberger, H) Burn out is follwed by physiological signs such as the inability to
10
shake colds and frequent headaches, as well as psychological symptoms
like quickness to anger and a suspicious attitude about others.
(after Maslach, C) Burn out refers to a syndrome of emotional exhaustion and cynicism that
frequently occurs among people who do people work - who spend
considerable time in close encounters. People suffering burn out generally have identifiable
characteristics: 1, chronic fatigue; 2, anger at those making demands; 3.
self criticism for putting up with the demands; 4, cynicism, negativism, and irritability; 5,
a sense of being besieged; and 6, hair trigger display of emotions.
Bush, Vannevar
The founder of hypertext who wrote a seminal article on information in July 1945 titled
Às We May Think`. Click Here to see the complete article.
See also Engelbart, Kay and Nelson.

Business Angel
A wealthy individual or group of individuals who fund business start-ups. A source of
private venture capital.
Business Data Communications
See Networks.
Business International
A company of the Economist Group which publishes reports of interest to managers. The
reports are usually of high quality and have dealt with management
of technology issues. Used to be called the Economist Intelligence Unit.
Business Organization And The Myth Of The Market Economy
See Policy.
Business plan
Document put together by managers to fustify their application for finance. Should
contain summaries of past and projected profit and loss accounts, balance
sheets and cash flws. Also details of products and services, markets, future strategy,
and profiles of the managers. A warning: should not be too optimistic or
too long.
Business portfolio concept
Argues that relative competitive position and market growth are the two fundamental
parameters which must be considered in determining a strategy that a
business should follow.
Business Process Redesign
See Reengineering.
Business process reengineering
The heart of reengineering is the notion of discontinuous thnking - of recognising and
breking away from the outdated rules and fundamental assumptions that
underlie operations. Incremental progress is not reengineering.See ford example under
Accounts payable, purchasing. IT should not be used to automate in
these cases it should be used to enable a new process.
Business process
see reengineering. Typical processes in a manufacturing firm include:
Operational:
Product development
Customer acquisition
Customer requirements definition
Manufacturing
Integrated logistics
Order management
Post sales service
Management:
Performace monitoring
Information management
Asset management
Human resource management
Planning and resource allocation.
In functionally orientated organisations, handoffs between functions are frequently
uncoordinated. Often process and transfers which are not productive (do not add
value) are in build. Process innovation demands that interfaces between functional or product
units be either improved or eliminated and where possible, sequential
flows become parallel.
11
Business Reengineering
See Reengineering.
Business systems planning (BSP)
IBM program. Provides a general methodology for information systems planning similar to
Nolan's stage process.
Business Television
A television service within a corporation. Used for one way communications such as
training and corporate HQ messages. The advantages are that this traffic
can use existing corporate network facilities. It is gaining popularity in large scale
retailing. See Videoconferencing.
Business Value Of Computers (The)
See Computing.
Business value added
the firm's total revenues (which it earns from selling its products and services), minus all
taxes and purchases (the cost of raw and finished materials, parts, energy
and services, including interest payments.
Business value added
See Economics.
Butt Case
See H.E. Butt Grocery Company case.
Buyer power
One of Porter's five forces. Buyers are powerful if:
1. it is concentrated or purchases in large volumes. Large volume buyers are particularly
potent if the producer is in a high fixed cost business.
2. if the products it purchases from the industry are standard or undifferentiated. Buyers in
this example know that they can always go elsewhere.
3. If the good represents a high component of total cost in a manufactured product. These
buyers will shop around for good prices.
4. Low profit customers will presure the producer for good prices.
5. The product is unimportant to the buyers business.
6. The product does not save the customer money.
7. The buyer could integrate backwards of needed.
Buyer readiness
A decision to buy usually follows a series of steps. Each may be long or short dependent
on the nature of the purchase and the complexity of the decision. 1.
Awareness of the product. 2. Kowledge of the benefits available. 3. Initial interest and
attraction. 4. Preference after selection from competing alternatives. 5.
Decision to buy. 6. Purchase. 7. Satisfaction or otherwise.
CAD/CAM
An acronym for Computer Aided Design/Computer Aided Manufacturing. These are specialised
computers and applications for designing and then making a
large variety of goods. CAD/CAM systems can merely be employed to help draw a design for
a part or they can directly control machines which manufacture
the part. This is basically the range of activities involving CAD/CAM.
Call option
The right to buy a given stock, commodity, index, or futures contract at a fixed price on
or before a speficied date.
Call Options
See Options.
Call provisions
Virtually all corporate bonds contain a clause giving the issuing copany an option to
retire bonds prior to maturity. See delatyed call
Call
See Option
Callable Bond
A bond which can be called back before its issue period is over. A bond sold for $1
million dollars would be called back with a premium payment (for
example $1 million 5,000).
Canonical practise
The method used for formal education and training which omits experience factors.
Employees who have manuals seldom operate according to the rules if
they are to be successful; they develop their own methods and adopt Non canonical
practices.
12
Capability based Competitor
Companies that combine scale and flexibility to outperform competition along 5
dimensions: 1. Speed, to respond quickly to customer or market demands
and to incorporate new ideas and technologies into products. 2. Consistency, to produce a
product that unfailingly satisfies customer expectations. 3. Acuity,
the ability to see competitive environments clearly and thus to anticipate and respond to
customer evolving needs. 4. Agility, ability to adapt simultaneously to
many different business environments. 4. Ability to innovate. Mediquip example (in
Howard, R.) changing a no win (lose margin or lose share) situation into a
competitive triumph by improved use of capabilities when linking service to sales.
Honda's success in motorcycles came as much from dealer management as from build quality:
providing training in business. It has been able to diversify into
outboard motors and mowers by using these capabilities. Lessons here for diversification.
Capability
see core competence, capability based competitor.
Capacity requirements planning (CRP)
Used in manufacturing (MRP). A technique for projecting resource requirements for
critical work stations, generated from scheduled receipts and planned
order releases.
Capacity strategy
The capacity of a business unit is the capacity of the bottleneck. Two key questions: how
do you manage bottlenecks and where should the bottleneck be
located.
Capacity
The ability of a database to handle requests for data. It is vital to plan a database for
the peak loads expected as volumes often vary over time. Commonly
there are daily peaks at the start and end of the working day and before and after lunch.
Capital Asset Pricing Model
rasset = rmarket+ ß * market risk premium. Check this formula
Capital employed
The finance employed by the business. Seen fro the funding side it is the shareholders
funds plus long term liabilities. Seen from the asset side it is thefixed
assets plus working capital
Capital investment
Factors involved in capital investment decisions include: initial cost of the project,
phasing of expenditure, associated working capital involved, estimated life of
the investment, amount and timing of resulting income, effects on related operations of
the company, risk and probability of obsolescence etc., company's cost
of capital, expected inflation rates, government policy towards taxation, grants,
allowances etc., the degree of postponability of the project, what happens if no
investment is made.
Capital Management
See Reuters.
Capital Markets: Institutions And Instruments
See Finance.
Capitalised, capitalized.
A cost is capitalised when it is recorded as an asset. Can be tangible or intangible.
Caps, Collars and Cylinders
Clauses in buy out deals which limit the extent to which the interest rate charged on
borrowed funds can rise or fall. A safeguard against borrowing costs rising
to the point where they endanger the company. Such agreements usually have a limeted life
of one or two years. The longer teh period of cover, the more
expensive the collar or cap.
Career systems
Are the collection of policies, priorities, and actions that organisations use to manage
the flow of their members into, through, and out of the organisations over
time. It involves: 1, entry (including HR planning, recruiting, and selection), 2,
development (involving socialisation, training, career planning, succession
planning, and promotions), 3, exit (including retirement, layoffs, resignations, and
dismissal).
Models of career systems include:
Carried interest
A stake, typically 20%, taken in the investee company by the venture capital or buy out
13
fund managers. can be in the form of options.
Carrier sense multiple access with collision detection (CSMA/CD)
Protocol uses for LANs. Is the standard protocol for network software used in Ethernet. All
devices on the network share a communication channel (Ethernet uses
bus topology and baseband coaxial cable). When a node on the network has a message to transmit
it first checks to see whether there is any other data on the
channel. If the channel is free the message is sent. If the channel is in use the node waits.
Collision can occur if two nodes send at the same time. If this occurs
collision detection is a means of listening to the line while the message is being
transmitted. When a collision is detected the device stops transmitting, waits for
cleanup and starts again. This is efficient since the entire message is not sent each time.
Carry over effects
Represent the influece of current expenditure on future sales. Two tyes of carry over
effects can be distinguished. Delayed response effects are the delays
between time when marketing expenditure is made and purchase occurs (explained in the S
curve). The hold over effect arises from new customers created
by marketing who remain customers for future periods. The holdover effect results from
the difference between the customer retention rate and the customer
decay rate.
CASE
See CASE.
Case Is Software Automation
See CASE.
Case study
A popular method of teaching used by business schools. A case is usually a short story
outlining a situation faced by a business.
Cases in General
Always look at the logic of the case. That's the easy part. Then you have to look at the local
content of the case. Think about such things as the politics, power and
people involved. How do these effect the case? This is a lot more complex to do.
Additional Resources
ECONOMIC AND FINANCIAL KNOWLEDGE-BASED PROCESSING by PAU Louis F.,GIANOTTI Claudio. See
Finance.
EUROPEAN APPROACHES TO LIFELONG LEARNING
OTALA Leenamaija. See Education and Learning.
EUROPEAN CASES IN STRATEGIC MANAGEMENT
HENDRY John,ECCLES Tony,GOSHAL Sumantra,JENSTER Per,WILLIAMSON Peter J.
See Strategy.
FLEXIBLE AND DISTANCE LEARNING
Van Den BRANDE Lieve. See Education and Learning.
LIBERATION MANAGEMENT
PETERS Tom. See Management.
MICROCOMPUTERS IN BUSINESS AND SOCIETY
SCHATT Stan. See Computing.
PRISONERS OF LEADERSHIP
KETS DE VRIES Manfred F.R. See Management.
STATE POLICIES AND TECHNO-INDUSTRIAL INNOVATION
HILPERT Ulrich. See Policy.
STRATEGIC ALLIANCES
LORANGE Peter,ROOS Johan. See Strategy.
STRATEGIC INFORMATION TECHNOLOGY MANAGEMENT: perspectives on Organizational Growth and
Competitive Advantage
BANKER Rajiv D.,KAUFFMAN Robert J.,MAHMOOD Mo Adam. See Strategy.
TEACHING AND THE CASE METHOD
CHRISTENSEN by C.Roland. See Education and Learning.
TOPPAN PRINTING COMPANY (B)
NAVOTH Eran,KOSAKA Masaru. See Innovation.
TRADE CONFLICT IN HIGH-TECHNOLOGY INDUSTRIES
D'ANDREA TYSON Laura. See Policy.
XEROX: AMERICAN SAMURAI
JACOBSON Gary,HILLKIRK John. See Strategy.
Cash Flow Time Line
See Finance.
14
Cash flow
Reports on changes in the cash position during a period of time. It tells how a company
acquired cash and what it did with it. It accounts for cash on hand at
the begining of a period and that on hand at the end.
Preparation of cash flows is conceptually simple. It is a summary of cash receipts and
disbursements - all transactions that affect the cash account. the transactions
are divided into three groups:
1. Operating activities, which include a fim's production, selling, and administrative
activities.
2. Investing activities, which include teh purchase and sale of marketable securities, plant
and equipment, and the payment and collection of loans to others.
3. Financing activities, which incorporate the issue and retirement of stocks and bonds and
the payment of dividends.
See Finance.
Cash flow statement Direct method
The most important differences between direct and indirect methods of presenting cash
flow statement occur under the first heading, cash flows from
operating activities. The simple direct method shows how much went into the till, how
much was paid out and what was left over. The indirect method begins
with Net income, an accrual accounting number, the indirect method makes a series of
adjustments intended to transform net income into cash flows from
operations.
These adjustments are of three types: 1. Expenses not nvolving cash outflows are added back,
2. cash outflows not treated as expenses are subtracted, and 3.
revenues not involving cash inflows are subtracted as well.
1. Depreciation, deferred taxes, increased accounts payable, and increased accrued interest
payable are all expenses that do not involve cash outflows during he
period. Hence they must be added back to net income to put it on a cash basis.
2. Increases in inventory correspond to cash outflows not recorded as expenses, and so must be
subtracted from net income.
3. Finally, increased accounts receivable, increased accrued interest earned, and gain on sale
of property are all revenues that did not generate cash during the
period, and so must be subtracted.
Whenever cash is generated by the sale of property it will appear on the cash flow statement
as proceeds from the sale of property under the heading Cash flows
from investing activities. The gain on sale of property is the difference between the property
selling price and its balance sheet value when sold.
Cash flow statement indirect method.
See cash flow statement direct method.
Cash
The term cash in the balance sheet refers to real cash and savings bank or commercial bak
deposits.
CBOT Market Profile
See Reuters.
CCIR
An acronym for Comité Consultatif International des Radio-Communications - the
International Radiocommunications Consultative Committee. See AFNOR,
BSI, CEN, DIN, ETSI, ISO, ITU, and NIST.
CCITT
An acronym for Comité Consultatif International des Téléphonique - the International
Telegraph and Telephone Consultative Committee. See AFNOR, BSI,
CEN, DIN, ETSI, ISO, ITU, and NIST.
CCITT
See Networks.
CCM
CCPPO
Cumulative, Convertible, Participating, Preferred dividend, Ordinary - shares. The best
shares you can have, often demanded by venture capitalists. Tend to
overcome the 75% shareholding regulations giving the holder effective control of a
company.
CD-I
See Multimedia.
15
CD-ROM
See Multimedia.
CDA Spectrum
See Reuters.
CDPD
An acronym for Cellular Digital Packet Data network technology. This is a standard for
transmitting packet data over cellular wireless communications
channels.
Cellular Communications
See Networks.
Cellular Digital Packet Data
See CDPD.
CEN
An acronym for Comité Européan de Normalisation - the European Committee for
Standardisation. See AFNOR, BSI, CEN, DIN, ETSI, ISO, ITU, and
NIST.
Centralised Diffusion
Decisions about diffusion, such as when to begin diffusing an onnovation, who should
evaluate itt, and through what chhannels it will be diffused, are made by
a small number ofofficials and or technical experts at the head of a change agency. In a
decentralised diffusion system, such decisions are more widely shared
by the clients and potential adopters; here, horizontal networks among the clients are
the main mmechaanismm through which innovations spread. In
extr4emmmely decentralised diffuusion sysstems there mmay nott be a change agency;
potential adopters are solely responsible for the self management of the
diffusion of innovations. New ideas may grow out of the ppractical experience of certain
indi iduals in teh client systems.
Certainty equivalence
A risky choice can often be compared with a no risk or certainty equivalent one. What is
the smallest value of money that I would accept in return for not
taking the risk.
CFO
See Chief Financial Officer.
Chaining
Forward chaining It is a technique used when a program works from the initial state
towards the goal state.
Forward chaining is a good technique to use when all or most paths from any one of many
initial or intermediate states converges on one or a few states.
Backward chaining
The program is looking for a path through the problem by starting the goal state and
seeing how it can be modified to bring it closer to the initial state.
It is an efficient technique to use when any of many goal states will satisfy the requirements
of the problem while the initial state are few; the situation in this case
presents many goals converging on one or a few initial states.
Challenge Of Strategic Management (The)
See Management.
Chamoux Jean-Pierre
Author of the book. "Telecoms, La Fin Des Privileges". See Networks.
Change Implementation
The sofware case. Why organisations don't learn from success or from failure. The
importance of habits, people used to heirachical structure and organisation
will have great difficulty when trying to change structure. There are, however,
flucturations in behaviour which can be used as the basis for innovation and
change. Recognise the differences between bottom up ideas (which tend to be culturally
specific) and imposed change by consultants or from top down.
Changing The Essence
See Education, Learning and Change.
Chargeout
An accounting method used to allocate cost-centre costs to profit-centres. In technology
this technique is often used when allocating computer centre costs to
user departments.
Chief Financial Officer
Is generally responsible for long term financing, dividend policy, capital investments,
16
cash flow management and resource allocation. The CFO generally has
three direct reports: Treasurer, Director of Internal Accounting and the Controller. The
Treasurer is primarily concerned with the management of
short-term cash flows. Financial engineering of increasing numbers of financial products
has made the treasurer a sophisticated member of the global capital
markets.
Chief Information Officer
The CIO is the person in a corporation with management responsibility for the
corporations information systems and their related resources. The CIO is not
responsible for the day to day running of data centres - rather they tend to concentrate
on strategic information issues.
Chips
Jargon for computer microprocessors. Computer circuits are miniturised and embedded on
the surface of thin waifers of silicon. They form the heart of
modern computer controlled devices - from PC's to washing machines. See Computing.
Chooser option
As-you-like-it option which enables the holder to convert from one style of option to a
different style of option over a preset period of time.
Churning
Stereotype of the Japanese approach to marketing. Typically they will enter second or
third into a new market after looking at existing products, identifying the
best and improving it. They will enter with multiple products targeted at different
sectors and they will modify following careful product perforance analysis in
the market. This recognises their strength as competitors in production and delivery.
CIM
An acronym for Computer Integrated Mnufacturing. This is a term applied to a hotch-potch
of computer technologies - from accounting systems to robot
factories - which are applied to manufacturing. The emphasis of these technologies is to
streamline the manufacturing process by:
1. automating the flow of information throughout the manufacturing process.
2. integrating manufacturing operations in separate, but co-operating companies.
3. linking the manufacturing process to other information systems in the company.
See CAD/CAM and Manufacturing.
Circuit Switching
See Networks.
Clearing house
An affiliate of a futures or options exchange which matches and guarantees trades and
holds performance bonds posted by dealers. Acts as a counterparty to
every trade, reducing credit risk.
Client/Server Computing
See Databases.
Co-operative Processing
The use of distributed computer networks to process information. See Networks, Databases,
Batch Processing and On-line Processing.
COBOL
COmmon Business Oriented Language. Programming language specifically designed for
business. See Computing.
Coding System
See ASCII.
Collection period
A control ratio.
This reflects the success of a company in collecting its accounts receivables.
Collins Timothy
Author of the book "Les Alliances Strategiques / Teaming Up For The 90s".
See Strategy.
Comanor W.S.
Author of the book "Competition Policy In Europe And North America: Economic Issues And
Institutions". See Policy.
Comer Douglas E.
Author of the book "Internetworking With TCP/IP". See Internet.
Comité Consultatif International des Radio-Communications
See CCIR, AFNOR, BSI, CEN, DIN, ETSI, ISO, ITU, and NIST.
Comité Consultatif International des Téléphonique
17
See CCITT, AFNOR, BSI, CEN, DIN, ETSI, ISO, ITU, and NIST.
Comité Européan de Normalisation
See CEN, AFNOR, BSI, CEN, DIN, ETSI, ISO, ITU, and NIST.
Commodity Options
See Options.
Common Prograammin Interface
(CPI) IBM, specifies standards for the application generator.
Common stock as an investment
A common stockholder receives a return on his investment in two forms: dividends and
possible share price appreciation. If d0 is the dividends per share
during the year and P0 and P1 are the begining of year and end of year stock price, the
annual income earned by the stockholder is
Dividing by the beginning of year stock price, the annual return is:-
or:-
Common stocks are an ownership claim against real assets.
Common stock
Is the residual income security. The stockholder has a claim on any income remaining
after the payment of all obligations, including interest on debt. If the firm
prospers, stockholders are the chief beneficiaries, if it fails they are the chief
losers. The board of directors may elect to pay dividents from profit to
stockholders.
Common User Access
(CUA) defines a set of three types of user interfaces for SAA applications to be
implemented regardless of differences in operating environment and
hardware.
Communication
Is a process in which participants create and share information with one another in order
to reach a mutual understanding. This definition implies that
communication is a process of convergence (or divergence) as two or more individuals
exchange information in order to move toward each other (or apart) in
the meanings that they ascribe tocertain events.
We regard communication as a two way process of convergence, rather than as a one way, linear
act in which one individual seeks to transfer a message to another.
See Diffusion, Persuasion.
Communications
See Networks.
Communities of practise
Group of people with diverse views and experience who engage in real work with real tools
over a significant period of time to build, solve, invent, learn,
negotiate meaning. They evolve, they cannot be regulated or designed; they tend to be
local.
Compact Disk
See Multimedia.
Company
Shareholdings
Alternative to partnership. Has advantages and disadvantages.
+ Commitment from founders because of equity investment
+ Limited liability for founders
+
- Up front and fixed costs. Equity and maintenance
- Inflexible
- Hard to close
- Hard to add new shareholders
Any shareholding over 50% allows control over normal resolutions. Eg. payments to managers,
appointment of directors, share holder agreements, ordinary
dividends. Over 75% have control of constitution, and capital structure. Over 50% can force
out minorities by acquiring their shares (price agreement might have to
be by arbitration if dispute).
Between 10.1% and 24.9 percent have minority shareholder protection. Does not give power but
does give valuable protection.
Venture capitalists may have flexible dividends, either fixed rate from the start or
percentage of profits, whichever is greatest.
Equity should not be given in exchange for skill, it should be given for committment.
18
Compatability
See Open Systems.
Competence
see core competence, capability based competitor.
Competition
Is rooted in the economics of the industry. (Porter, M. 1979). See Strategy. Competitive
forces go beyond the established combatants in a particular industry
(see five forces)
Competition Policy In Europe And North America: Economic Issues And Institutions
See Policy.
Competitive Advantage
The ability to either sell a product or service at a lower cost than your competitors or
the ability to differentiate your product or service and charge a higher
price.
Competitive scope (the breadth of activities) is often used to find competitive advantage.
Broad scope can allow you to exploit interrelationships between the value
chains in your different market segments. For example by sharing a sales force to sell two
product ranges.
The value chain is the process of adding value to a good or service sold by a company. The
role of information technology in take value chain is discussed in "How
information gives you competitive advantage" by Michael E. Porter and Victor E. Millar,
Harvard Business Review, July-August 1985.
Competitive Edge, the semiconductor industry in the US and Japan
See Policy.
Competitive position
Competitive position interacts with strategy in determining business performance in two
ways (from Buzzel and Gale)
* First, the strategy options available to a business depend on its "going in" position. A
program of extensive product innovation along with a policy of premium
pricing, that would produce outstanding results for a market leader, might make no sense for a
small share competitor.
* Second, performance in a given time period is heavily influenced by beginning competitive
position as well as by current strategy moves. This implies that, in order
to develop measures of how performance relates to strategy, we must disentangle the effect of
beginning position and changes made during a given time.
In appraising competitive position consider the following table

The table assumes three equivalently sized companies in different markets (unattractive,
average, attractive). Market growth rate, inflation, the role of major
suppliers, and whether or not the industries are unionised all affect Return on Investment
(ROI). Taken from Buzzell and Gale. The point of the illustration is that
picking the right kinds of markets and products can make a big difference. See quality
Compounding
The process of reinvesting interest earned on principle so that the principle is
increased and in the next period interest is earned on interest.
See Finance.
Compuserve
A network service based in the USA which has several million users. It provides a wide
range of services from Email to financial information. Similar to
Internet but without the academic emphasis and it is run for profit. Costs approximately
$9 per month for membership.
Computer And Communication Systems Performance Modelling
See Networks.
Computer Network Architecture
See Networks[[ogonek]]
Computer Networking Book (The)
See Networks[[ogonek]]
Computer program life cycle
The standard process used to develop software, including: defining the problem to
testing.
Computer-Aided Software Design, build quality software with CASE
See CASE.
Computerization And Controversy, value conflicts and social choices
19
See Computing.
Computers As Theatre
Computers
See Computing.
Conceptual design rendering system (CDRS)
Creates three dimentional models for car vehicle bodies, providing data to CAM decisions.
Used by Ford for new car design and has cut three months of the
model stage of new development.
Concurrent Access
The ability of two processes (programs) to use the same piece of data at the same time.
Concurrent engineering
The simultaneous execution of previously sequential tasks, as a normal working practice.
Conjoint analysis
Approach used to identify factor important in buyer decisions in the market place.
Assists new product design and old product assessment of competitiveness.
Connectivity
See Open Systems and Networks.
Consistency
A consistent estimate is one whose range reduces as the sample size increases.
Consistency concept
The accounts must be prepared on the basis that similar items are treated in the same
way, both within the year being reported on and from one year to
another.
Consolidated Alliances
In these, a company acquires a majority of the outstanding stock of another company while
leaving a significant portion of the day to day control of the newly
consolidated company in the hands of existing management.
Consolidated Physical Commodities
See Reuters.
Consolidation
US companies with substantial ownership of other companies constitute a single overall
economic unit that is composed of two or more separate legal entities.
This is usually a parent subsidiary relationship where one corporation owns more than 50%
of the outstanding voting shares of another corporation..
Consumer
The person who uses the product or receives the benefit of the service (see customer)
Conti Tito
Author of the book "Building Total Quality". See Management.
Continuity Equations
Is the idea of controlling processes through targeting variables whose unit of
measurement changes as the process being controlled proceeds. In this context
the control must be specified in terms of key control variables, transition rations and
their stability.
Continuous Control Monitoring
Continuous Process Audit
Continuous review system
see reorder point system.
Contribution
Is the difference between variable cost of production and total revenues. Deduction from
contribution of fixed costs leads to Profit before interest, tax (and
other expenses). An a dvantages of using contribution as a measure is that it emphasises
sensitivity of profit to variations in the use of capacity. This will tell
whether or not the company is constrained by fixed or variable costs (volume sensitive or
not). A significant disadavantage is that the classification of costs into
fixed and variable is entirely a matter of opinion (e.g. two different managers in the
same situation might classify labour either as fixed or variabl).
Control (Financial)
Consists of managements efforts to (1) prevent unwanted departures from planned results
and (2) take action in response to signals that the plan is no longer
appropriate or isn't being executed properly. Begins with formulation of the business
20
plan; next mangement follows results by directing, supervising and
observing operations. Controls employed include: Yes/No controls, Steering controls
(provide signals to reassuer that present course is satisfctory or to
indicate need for some kind of action. Spotlight differences between actual and planned).
Scorecard controls, (summary reports on the performance of (1) of
various activities or organisation segments and (2) of the managers responsible for
them).
Control ratio
Really just an asset turnover measure for a particular asset. In each instance, the
firm's investment in the asset is compared to net sales, or a closely related
figure. An example might be total inventory (a current asset):sales
Controller
Controller
The financial controller of a company compares the past performance of the company
(Accountancy function) with the plans and budgets of the company.
Convergence Between Communications Technologies
See Networks.
Cordless Telecommunications In Europe
See Networks.
Core competence
The combination of individual technologies and production skills that underlie a
company's myriad product lines. (Hamel, G. and Prahalad, C.). This definition
implies a skills based competence (e.g. Sony - miniaturisation, Cannon - imaging, Honda,
small engines). However this might not be a good representation of
a business's skills. Honda's success may have been more due to service centre management
(see Capability based competitor).
Competencies and capabilities represent essential and complimentary attributes
Corporate Data Modelling (CDM)
This is modelling exercise for data which determines, in simplest terms, what is located
where, and what its relationships are with other data items and
systems.
Corporate Governance
Is the control structure of a corporation. The governance system consists of "incentives,
safeguards, and dispute resolution processes used to control and
co-ordinate" (Harvard Business School, `Note on Corporate Governance Systems: the United
States, Japan, and Germany', 1991) stakeholder actions.
Three main systems exist today.
The US:
Is founded on the òne share one vote' principle where the shareholder is the sole owner of
the firm. The board of directors is the corporate body accountable to
society. Consequently most directors are people from outside the firm. [2]/3 of directors are
also CEOs. Relationships between employees, suppliers, lenders and
the board are kept at arms-length. 50% of shares are held by the public, the other 50% are
held by large institutions, with pension funds holding 25% of this amount.
The emphasis is on contracts (the law) rather than trust. Hostile corporate takeovers
originated here and the courts are used to resolve disputes (such as after
bankruptcies).
Germany:
There are two boards - the supervisory board (aufsichtstraat) with employee representatives,
banks (hausbank) and shareholder representatives, and the
management board (vorstand) with the senior management team. The banks have large proxy voting
power because they hold shares on deposit. Unions are
powerful
Japan:
The emphasis is on long-term consensus relationships with the emphasis on trust. Groups of
companies (keiretsu) dominate and there is horizontal movement within
them. The boards are dominated by inside directors and personal relationships are primary.
There are almost no hostile corporate takeovers and bankruptcies are
informally resolved.
See Control & Monitoring.
Corporate governance
The nature and structure of: 1. incentives, 2. safeguards, 3. contracts, 4. dispute
21
resolution processes to control and coordinate the diverse interests of
corporate stakeholders.
The corporation is viewed as funamentally a nexus of a set of implicit and explicit contracts.
Awareness of different forms of corporate governance and the economic purposes that these
various arrangements of ownership and control are intended to serve
will better enable managers to contract abroad, structure joint ventures, and control foreign
investments. The ability of the manager to maneouver within and across
these systems will, in part determine their success in the international business environment.
In the US Corporate Governance seeks to maintain the accountability of corporate managers to
corporate owners, through the board of directors, and the proxy
voting mechanism.
See Governance.
Corporate Valuation
This is an area of much contention in the financial community, especially in the wake of
some of the 1980s takeovers which paid huge earnings multiples for
firms and then financed these with debt. See Finance.
Corruption of Data
See Backup.
Cost centre
An organisational unit used in budgeting where the main cash flows are negative (i.e.
costs) rather than positive (i.e. earnings). See Profit Centre.
Cost of equity
see imputed cost
Cost of sales
The direct costs of buying or providing the product or service.
Cost push Inflation
Unit costs of production push up prices (eg rising oil prices). If demand is stable there
will be reduced production, higher unemployment, and rising prices
(inflation). The recession of the '70s was caused by this.
Opposite of Demand pull inflation in which shows that inflation reduces unemployment.
Cost value logic
The use of economic definition of costs to reveal which parts of a business should be
retained, sold or shut down and which should be kept or expanded: based on
the notion of opportunity cost and economic rent.
Cost value logic
See Economics.
Country Analysis Framework
A framework that takes the nation as the unit of analysis.
Strategic analysis should address the following questions
* what is the government's strategy (goals and policies)
*what are the relative priorities among the goals
*how are the policies interrelated? are they contradictory or re-inforcing
*how will the policies contribute to achieving the goals.
Goals commonly include GNP growth, price stability, full employment, and rising consumption.
Political goals might include sovereignty, stability, preservation of
aparticular type of political system, or survival of a specific regime. Social goals might
include improving the population's educational levels or health status, or
increasing housing.
Country Risk
The risk relating to the country investment. For example an investment in a less
developed country may involve the investor in bearing risk because the
economic management of the country may effect the economic performance. Country risk
means that a higher return will have to be earned in order to
compensate the investor for the added risk.
Covenants
Normally creditors, including bondholders do not have a say in company decisions.
Bondholders and other long term creditors exercise control through
protective covenants specified in the indebenture agreement. Typically covenants include
a lower limit on the company's current ratio, an upper limit on its debt
to equity ratio, and perhaps a requirement that the company not acquire or sell major
assets without prior creditor approval. If the company breaks the
covenant the creditors assume considerable power, including the ability to force
bankruptcy.
22
Coverage
A term used in Finance to refer to the number of times which the assets of a company
cover its debts.
Coverage ratios
These focus on the balance sheet value of liabilities. Relate, not to the size of debt
but on the companies ability to pay.
To measure the annual finacnial burden placed on a company by its use of leverage, it is
useful tocalculate what are known as coverage ratios. The two most
common are
Both ratios compare income available for debt service to some measure of financial obligation.
The one tends to be too liberal, the other the reverse.
Covered Interest Parity (CIP)
Is the mechanism through which an equilibrium relationship is established between spot
and forward exchange rates, and domestic and foreigh interest rates.
This relationship is alsosometimes referred to as the interest rate parity theorem, or
the covered interest arbitrage condition. See Interest rate parity
CPU
See Computing.
Crane Rhonda
Author of the book. "Telecommunications Revolution (The". See Networks.
Credit ratio
Is the average payment period.
This gives the amount of creditors (in days) outstanding at the year end.
Creditor Equity
See liabilities
Credits
See debits.
Cricket Liu
Author of the book "DNS And BIND". See Internet.
Critical path method (CPM)
A project planning method that is based on the assumption that all activity times are
known with certainty.
Critical path
The sequence of activities from the start of a project to its completion having the
greatest cumulative elapsed time, thereby determining the time duration of the
entire project.
Critical success factors (CSF)
The CSF approach homes in on individual managers and their information needs. CSF for any
business are defined as "the limited number of areas in which
results, if they are satisfactory, will ensure successful competitive performance for the
organisation. They are the few key areas (usually 3-8) where things must
go right.
When first introduced by Rockart in 1979, its primary use was to help individual managers
determine their information needs. It is now thought to be another tool,
like IBM's business systems planning (BSP) or Nolan's stages to guide organisations in the
information planning process.
See MIS. MSS, DSS, EIS, SIS, Anthony's pyramid.
Cross Border
Cross elasticity
One way to find out what business you are in is to examine the so-called Cross price
elasticity of demand - the sensitivity of demand for your product, with
respect to the price of related, competing products. High, positive cross elasticities of
demand mean that if your competitor raises his price, an dyou don't,
many of his customers will buy yours insead. see elasticity.
Cross Patricia
Author of the book "Adults As Learners". See Education and Learning.
Cross Price Elasticity
See Elasticity.
Crowding out
in macro economics. While individuals and businesses save, governments 'dissave'- spend
more than they earn. Hence when businesses go to the capital
23
markets to borrow funds for building plants and buying new machinery, they find a
powerful competitor there; the governement, anxious to borrow money to
pay for its deficits. The result is higher interest rates and lower investment. This is
known as crowding out.
CRS
An acronym for Computerised Reservation System.
CSCW
An academic acronym for groupware
Culture
Culture is one of the buzz words of the business guru. Peters and others claim that
strong distinguishable culture is a key component of the excellent
companies. Stacy (chaos frontiers) believes that strong corporate culture block group
learning and therefore some innovation.
Apparent culture: the culture which we see (executive toilets or open plan offices).
Unconscious culture relates to subconscious behaviour patterns (expected
behaviour). Unconscious culture is very difficult to change particularly if the culture is one
of take out what you can.
Currency Options
See Options.
Current asset
A current asset can be sold or transformed into cash and a current liability can be
satisfied within one year or within the normal operating cycle of the business.
Includes cash.
Current liabilities
Are expected to be satisified out of current assets (or through the creaton of other
current liabilities) whithin a relatively short tie, usually one year. Include:
wages and salaries, payments to suppliers for service, supplies and raw materials (trade
accounts, or accounts payable); to the government for taxes (taxes
payable); and to banks or other lenders for loans (notes payable) and for interest on
loans (interest payable) that is payable within one year.
Current liability
A current liability can be satisfied within one year or within the normal operating cycle
of the business
Current ratio
see liquidity
Cushing Barry E.
Author of the book "Accounting Information Systems". See Control and Monitoring.
Customer analysis
The Decision Making Unit. The how, why and when of the buying decision.
Customer
Someone who purchases a product or service. What does a customer want: benefits, which
may be. 1. financial (gain money or cost reduction opportunities.
2. Product related (e.g. proven reliability). 3. Socio-political (e.g. enhanced status).
4. Personal (e.g. seen as a shrewd purchase.
Customer
The person or organisation buying the product or service (see consumer)
Danthine A.
Author of the book "Computer Network Architecture". See Networks.
Data Communications Dictionary
See Networks.
Data Communications
See Networks.
Data Dictionary
A matrix that links the field names, their aliases, formats, physical location, schema
and sub schema in a database.
See also Schema and DBMS.
Data Elements
A bit is a 0 or 1.
4 bits
= 1 nibble
8 bits
= 1 byte
24
several bits
= 1 field
fields
= 1 record
records
= 1 file
files
= 1 database
databases
= 1 database cluster.
Data Model
Is a set of tools to describe:
* Data.
The basic unit of the database.
* Data relationships.
The relationships between different items in the database.
* Data semantics.
The meaning of the data.
* Data constraints.
The context within which the data has meaning.
The data model is simply the structure which defines these four items.
Data models typically describe these four things in one of three frameworks:
* Physical Data Models.
The way that data is stored on the physical media (such as a hard disk). The links
between the data consist of physical addresses. This means that the view of
the data is inflexible - if a piece of data is moved then all of the links to that data
must be changed. The main drawback with this view is that if an address is
corrupted (i.e.. becomes unreadable to the computer), then the data will be lost
(unretrievable). This model is almost no longer used in DBMS today.
* Record-based Logical Models.
The physical addresses are no longer important as all data is placed in records which
have a unique name within the database. As long as you know the name
of the record you can retrieve it. The names of the records are stored in a table and the
links between data items are described in terms of relationships
between these named records. Most databases will consist of a number of tables.
* Object-based logical models.
The most modern approach. the data is described purely in semantic terms. No description
is held of either the records or the physical addresses of the data.
It is a logical description of how the data relationships are established. Constraints
are defined in terms of these objects. The main challenge of object-based
modelling is describing the objects (called entities) so that the system understands what
you mean. A data dictionary is used to tell the system what the entities
are and the entities are described in terms of their data relationships and constraints.
See Databases.
Data
See Information.
Databank
A collection of data on a specific subject or range of subjects.
Database
See Databases.
Database System
A computerised system whose overall purpose is to maitain information and make that
information available on demand. A further requirement is that the
information supplied when you need it, in the place you need it and in a form that is
usefull to the user. A database system has four components:
* hardware
* software
* data
* users.
An important difference between a database system and a `normal' dataprocessing system is that
the database system seperates data from the use of the data - in
other words the data is (largely) independent of the applications which use the data.
See Databases.
25
Datagram
In datagram networks, a user simply pushes an information element into the network
bearing the address of the destination. Routing algorithms within each
node do the rest. where a system has multiple nodes, and therefore multiple possible
routes, all routes are taken simultaneously (as compared to the virual
circuit approach of OSI).
Datamation
A U.S. periodical published bi-weekly giving information on the latest information
technology developments. The articles are typically short and aimed at a
market between the expert user and popular computing magazines. Every June there is a
survey of the top 100 technology companies (The Datamation 100)
and every April there is a survey of data processing budgets in large companies.
DAVIS Roscoe K.
DBMS-database management systems
A specilised set of computer programs that manages data bases, The DBMS acts as the
interface between te data in a data base, the related application
programs and the operting system. See Databases.
DCC/DCS-Digital cross connect systems
The interconnection points for terminals, multiplexers and transmission facilities.
Connecting T1 and T3 lines is an emerging requirement among high volume
trffic users, telcos, and interexchange carriers. Digital cross connect systems (DCSs)
that electronically remap DS1/DS3 lines to various transmissionlevels are
very much in demand.
DCF
An acronym for Discounted Cash Flow. See Discounted Cash Flow and Finance.
De Meyer Arnoud
Author of the book "Benchmarking Global Manufacturing". See Manufacturing.
Dead mans spiral
Term used by J Forrester to describe the misinterpretation of data and incorrect
corrective action which leads to disaster. The pilot who thinks he is in a dive
and tries to correct by turning until the wings fall off. Used as an analogy to business.
Deal flow
The rate at which investment propositions come to the deal maker or financier. Many claim
to select only one deal in 50, though deal flow numbers are treated
by some as a sort of virility symbol.
Deal Manager
See Reuters.
Dealing 2000
See Reuters.
Debits
Entries, in a double entry , which increase assets are referred to as debits. Those that
decrease equities are known as credits..
Entries which increase equities are referred to as credits. Those which decrease equities are
known as debits.
Use of debits to signify an increase in an entity's assets and credit to indicate an increase
in its liabilities is important to understand.
Debt capacity
1. companies with normal sustainable capital structures
* affordable cash flow to interest divided by interest rate equals debt capacity.
How much debt capacity to use is decided (principally) by the company taking into account
* CAPEX (at NPV >0)
* Dividend clientele
* Competition and technology
* Asset mobility
2. Companies in transition (ownership change: LBOs, recapitalisations, workouts)
* lenders' criterion determines debt capacity:
time to recover senior
* how much can the company borrow such that
it will pay interest
it will amortise senior in a relatively short time
and then become able to refinance junior in order to attain a 'normal' capital structure.
3. Using the EBIT multiple.
26
Debt
Money owed. In Finance, debt is money owed by a company excluding equity (shares, etc.).
Decentralisation
Companies decentralise because they want divisional managers to act as though they were
managing independent companies. Problems often associated with
decentralisation include: managers act in the interests of the decenctralised unit and
not in the interests of the group; there is often duplication of function and
therefore higher staff numbers.
Decentralised Diffusion
See Centralised Diffusion.
Decentralised vs. Centralised
See Structure.
Decision 2000
See Reuters.
Decision Analysis
A modelling technique first developed in the 1960s to model decision makers multiple
objectives and alternatives. It attempts to model the complete decision
making environment including difficult to quantify elements such as value judgements. See
Control and Monitoring, Economics and Education, Learning
and Change and System Dynamics..
Decision Support Systems
Intelligent Decision Support System: a computer-based interactive tool of decision-making
for well-structured decision and planning situations.
Decision aids based on decision theory. For decision making:
a) alternatives
b) state descriptions
c) relationship
d) preferences.
Influence diagrams (acyclic graph)
Also called DSS. See Education, Learning and Change and Artificial Intelligence.
Decision technology
A marriage between System dynamics and Decision analysis. Using desktop computers, allows
an executive, to recreate his own business as an on-line
case study. Instead of asking planners what-if questions and waiting weeks for an answer
he can do it himself.
Deferred charges
Outlays made in one period to benefit future periods. E.g. prepaid expenses. May be
included among on-current assets if the life of the product puchased
has a life of more than one year, otherwise appears in the current assets. Some prepaid
expenses could include legal fees which will benefit the copany over a
long period. These can be Amortised, in a similar manner to depreciation of capital
assets, over a number of years.
Deferred credits
"Advances received from customers", "Revenues received but not yet earned". Prepayments
for services or goods become a liability until delivery of the
goods or services. These can be classified as current or noncurrent depending on the
timescale for delivery.
Delay
is a measure of the time needed for a communication system to move data from the sender
to the receiver
Delayed call
Means that a company may not call a bond back until it has been outstanding for a
specified period, usually 5 or 10 years. Government bonds do not have call
options (see call provisions, bonds)
Demand analysis
Has the objective to Predict and to explain. Demand decomposition
Salest = Nt.Tt.Rt Where N is the number of potential customers at time t; T is the % of
potential customers transacting at time t; R is the rate or intensity of buying at
time t (this involves the amount bought). The 4Ps of the marketing mix idea all influence
sales through N,T and R.
Before answering the question "what is the market" consider:
Considering these questons leads to Market position.
27
Demand curve
Shows changes in sales, in relation to changes in price, with all other demand factors
held constant.
Demand decomposition
See demand analysis
Demand pull Inflation
Keynsian idea that if prices are rising there must be excess demand. As a consequence
ouput/supply will rise and unemployment will fall. If supply is restricted
and there is excess demand, prices will rise causing inflation. If there is spare supply
capacity prices will ultimately balance resulting in inflation, but less than if
supply restriced. Following a recession there is likely to be spare capacity (2 shifts in
production factory instead of 3). See Cost push inlation. Demand pull
inflation is good for stock prices. Cost push inflation is not good for stocks.
Indicators to distinguish cause of inflation are wages, unit costs (including interest rates),
retail sales, disposable income, performance of the stock market.
Cycle starts with demand, but as demand fuels supply wages increase and unemployment falls. At
some stage inflation changes to cost push because demand stops
increasing but costs are high. GDP stabilises and then falls as recession hits. Eventually
capacity falls and unemployment rises as costs fall. The cycle starts again.
Demogaphy
The study of population and its characteristics. It is one of the most useful tools in
listening to the voice of the market, because it provides exceptionally useful
information about buyers without the need of directly eliciting it from them.
Demographics
Used by advertising and marketing experts to refer to data about numbers of people in
markets and their chacteristics - age, gender, family status, occupation,
income, wealth, education, etc.
Dependent demand
In manufacturing. Demand for an item that results from the production decisions for its
parent items. An order for a parent part can only be completed if all of
its components are available.
Depreciation
The process of allocating (spreading) the cost of an asset over its useful life.
Depreciation on each individual asset or group of similar assets is computed
separately, and the total amount accumulated is a function of the original cost, age and
expected useful life of the asset. Land is not depreciated.
Derivative
Financial term. A contract the value of which changes in concert with the price movements
in a related or underlying commodity or financial instrument. The
term covers standardised, exchange-traded futures and options, as well as over the
counter swaps, options, and other customised instruments.
Design computer system (DCS)
Used by Ford. Significantly reduces product development times by allowing construction,
manufacturing, project planning and other divisions to be closely
involved with a model programme at the earliest design phase.
Desktop Publishing
The use of PC's to publish information which used to be done by publishing and printing
companies. The desktop publishing (DTP) industry was started by
Apple and Adobe Systems in the early 1980's when the Macintosh computer and Postscript
were launched.
Development capital
Later stage capital for more established companies which are profitable or nearly
profitable. Less risky generally than earlier stage finance.
Dictionary Of Scientific Literacy
Brennan Richard
John Wiley And Sons
1/01/91
This dictionary includes over 650 scientific and technical terms, concepts and principles.
Dictionary
See:
Dictionary Of Scientific Literacy
IBM Dictionary of Computing in Computing Section.
28
Differentiation and SIS
Information systems used to support of shape the firm's expected product do so with
respect to the marketing mix elements.
* Product - is it modifiable, compatible, extendible
* Price - is credit extended? are allowances made
* Place - are customers' expectations met with respect to time of delivery, channel of
distribution, quantity of product
* Promotion - is advice available before, during, and after sales?
+ DIY paint and fabrics information systems are a good example of Proudct
+ Computer generated quotation systems enhance quote speed and allow for greater accuracy and
lower cost (in quote preparation).
+ Analysis of delivery point.
Differentiation
Characteristics of a product which add value
Diffusion (of innovation)
Is the process by which an (1) innovation is (2) communicated through certain channels
(3) over time (4) among the members of a social system. It is a special
type of commincation, in that the messages are concerned with new ideas. See
Communication.
Getting a new idea adopted, even when there are obvious advantages is often very difficult.
There is a wide gap in many fields, between wwwhat is known and what
is actually put into use. Maany innovations require a lenngthy period, often some years, from
the time when they become availeable to the time when they are widely
adopted.
Diffusion success can be measured (in a worrd) by whether the innovation to be adopted
embodies inforrrmation that can reduce uncertainty about caause effect
rellationships in problem solving. Try to frame diffusion ideas based on information and
uncertainty. See Centralised diffusion, Decentralised diffusion. Many
technologists believe that advantageous innovations will sell themselves. Unforrtunnately,
this is seldom the case.
Diffusion should be seen in a wide context; it is part of a large process that begins with
perceived problem or need, through research and development and on to a
solution. Then the decision by a change agent that this innovation should be diffused and then
the diffusion itself. See Persuasion.
Diffusion tends to be linear with one person trying to persuade another and so on (CEO tells
manager tells department heads, tells supervisors etc) rather than
convergence (in which tthe participants create and share information with one another to
create a shared understanding and common parallel progress in adoption).
Digital channel banks
Convert analog voicetodigital code or vice versa and combine or multiplex the resulting
digital streams.
Digital
See Networks.
Direct cost
Costs which can be directly related to a product or service
Direct data exchange (DDE)
A virtual circuit mechanism, like OLE and Apple Events
Director
non executive
In law has the same responsibilities as executive directors regardless of whether or not
he has shares or is paid. Particularly important to understand if a
company is wound up or involved in action relating to recklessness. The only action a non
exec has when he has no shares or does not represent a
shareholder, is to resign if he believes management is not acting as it should. This
sends a message to banks etc.
Director of Internal Accounting
Discount Rate
The interest rate used to calculate the present value of cash flows expected in the
future.
See Economics and Finance.
Discount rate
The rate at which the federal bank charges interest to commercial banks who borrow from
29
it (supplying loans, sometimes in cases of dire distress on the part
of the borrowing bank). When the discount rate is raised, it signals commercial banks
that they too ought to raise their interest rates. When the US Federal
Reserve raised rates from 5.5% to 6% in September 1987 some economists believe it caused
the stock market crash.
The discount rate is a rather blunt tool for changing money policy, it is not suited for small
changes in money supply or interest rate. See Open Market Operations
Discount
When the difference between the spot rate and the forward rate is positive
(spot-forward<0) then the currency is trading at a discount. If the rate is for $ to
[[sterling]], then the $ is trading at a discount and the [[sterling]] is trading at a
premium. See Premium and Foreign Exchange Risk.
Discount yield.
In capital investment appraisal, discounts the future cash flows by a variety of discount
rates until the net present value of the project is zero. This rate gives
the time rate of return, i.e. that at which the present value of the cash flows just
equals the initial investment.
Discounted Cash Flow
The net present value of future sources of cash. See Finance.
Discounting
Calculating the net present value of an amount in the future.
See Economics and Finance.
Discounting
The process for identifying net present value of investments.
Disk
See Computing and Multimedia.
Diversification
The move into new products (see Vertical integration)
Divestiture
Sale of a portion of a firm to an outsider. Cash comes into the firm. The reverse of
acquisition
Dividend cover
This ratio measures the number of times the dividend forthe year could have been paid out of
the year's earnings, It is a measure ofteh safety ofthedividiend.
However, profit is not the only constraint on the ability of a company to pay a dividend. If a
company does not have enough cash a dividend is not possible.
Dividend Growth Model
States that
where:
P = price per share
d = next dividend
Ke =
g =
Dividends
Payments made by the company to the shareholders.
Divident yield
This ratio indicates the current income yield provided for an investor in relation to
thepresent market price of the share, assuming a tax credit at a 25% standard tax
rate.
DNS And BIND
See Internet.
Documents of value
Normally means an IOU issued by a bank etc.
Domain
Consists of an SSCP and the network resources that it can control.
Doorley Thomas
Author of the book "Les Alliances Strategiques / Teaming Up For The 90s".
See Strategy.
Double entry system
Is a manifestation of the accounting equation (see balance sheet). Every transation or
event that increases or decreases the left side of the equation (assets)
30
must increase or decrease the right side (equities) by an identical amount.
Thus an increase in assets must be matched by an increase in claims against the assets either
by creditors (Liabilities L) or by the owners (Owners equity OE). See
debits and credits
Drum buffer rope (DBR
Goldratt answer to perceived weaknesses of JIT. Tie different processes to the speed of
the rate limiting resource so that the entire process runs at the correct
speed to keep inventory low. (taken from the idea of soldiers marching)
DSS
See Education, Learning and Change.
Duck/Rabbit
The classic example of two views of the same thing.
Is it a duck or a rabbit?
Dudley James
Author of the book "1992 Strategies For The Single Market". See Policy.
Due Diligence
The process of checking that a company is really in the state which it claims to be in.
An American term used by venture capitalists when they are looking at
an investment. This is also a process to protect the venture capitalist from law suits by
his backers if the investment failed.
Due dillegence
Detailed analysis and appraisal of the background of tehentrepreneur and his business
plan.
Dunlop Charles
Author of the book "Computerization And Controversy, value conflicts and social choices".
See Computing.
Dyer Robert
Author of the book "Analytic Approach To Marketing Decisions (The)". See Marketing.
Dynabase
A dynamic database that contains notes, sketches, papers and other documents created over
a long period of time. Very difficult information retrieval if large.
Wide Area Information Servers (WAIS) are designed for free text search. WAIS is a client
server system; there are 200 on the Internet; public domain
software is available for MAC, DOS, 'Windows etc.
Earinings (Profit attributable to shareholders)
Trading profit less interest, extraordinary items and tax.
Earinings per share (EPS)
The EPS is a stock market ratio widely used to measure changes from year to year
Earn out
Either a formula for relating to the final purchase price of a company to actual future
earnings, or a means of encouraging management to perform by payment
on the basis of future performance.
EBCDIC
See ASCII.
EBIT
An acronym for Earnings Before Interest and Tax. See Finance.
Economic evaluation
Considers 4 factors: Profit contribution, Net income, Return on investment, Residual
income.
Economic income
The amount an individual or business can afford to spend during a period and be as well
off at the end of the period as at the beginning. See realised income.
Economic Profit
Defined as sales revenues minus operating costs, including an opportunity cost charge for
capital. See Economics.
Economic rent
Is a opportunity cost, a what could have been calculation: the difference between what
labour or capital are actually earning and the most they could earn
when used in some other place or company or investment. See Economics.
Economics Of Information Networks (The)
See Networks.
31
Economist Intelligence Unit
See Business International.
EDI
An acronym for Electronic Data Interchange. This is the electronc exchange of
instructions and documents between companies. Its aim is to increase
effeciency and reduce paper work by streamlinig the flows of information. It is being
increasingly used by industries as diverse as the automotive and banking
industries. The main difficulty in EDI is agreeing on standards for these interchanges.
The main EDI systemswhich exist today are those established between
either a large manufacturer and its many suppliers (such as GM) or industries with large
throughputs such as port cargo handling in Rotterdam. Transactions
with EDI become faster, with less errors and easier to administer.
EDIFACT
The ISO standards for EDI.
EDP
Electronic Data Processing.
EDP-Electronic Data Processing
An EDP system is oriented towards the automation of transaction processing, record
keeping, and reporting, i.e. mechanical effiency.
Effective exchange rate
Is a multilateral rate that measures the overall nominal value of the currency in the
foreign exchange market. The effective US dollar exchange rate com bines
many bilateral exchange rates using a weighting scheme that reflects the importance of
each country's trade with the US. Several institutions (e.g. the IMF, the
Fed, Morgan Guaranty Trust Bank) regularly calculate and report the effective exchange
rates. . See Foreign exchange rate, Purchasing power parity theory
(PPP).
Effective interest rate
The ration of (1) the actual interest earned in a year to (2) the debt's beginning of
year present value. When interest is compounded twice a year the effective
interest rate is slightly higher than the Nominal interest rate.
Efficiency
The efficiency of an estimate is a measure of how an estimate is spread around its true
value.
Efficient market theory
H Roberts has defined three levels of market efficiency (Brearly & Myers).
* Prices reflect all the information contained in the record of past prices
* Prices reflect not only past prices byt all other published information
Information released to the public rapidly finds itself expressed in changes in share price.
* Prices reflect not just public information but all theinformation that can be acquired by
painstaking funamental analysis of the cmpany and economy.
EFTPOS
An acronym for Electronic Funds Transfer at Point Of Sale. See Finance Industry.
EIS
Elacticity
The ratio of the percentage change in demand to a percentage change in price. Normally
demand will fall as price increases. Cross Price Elasticity is the
change in demand for one good as the result of a change in the price for a competitors
good. Price sensitivity is greater the more alternatives or substitutes
there are. Elasticity is related to the demand curve. See cross elasticity.
Electronic Data Interchange
See EDI.
Electronic Mail
Messages which are sent over a network. Also called Email.
Electronic Markets
life cycle: 1. Autonomous EM's bias the market (American Airlines introduction of SABRE
led to increased sales of AA tickets). 2. Competitors' response to
correct the bias. 3. Personalised EMs.
Enacting an electronic market: special because the product is information. How to start.
Difficult for the customer to test evaluate because he must have the
information to test it. Once acquired it can be copied in a limitless fashion. A product like
Minitel needs critical mass for success (France Telecom had to give away
32
free terminals) and it still looses money.
Elton Martin
Author of the book. "Integrated Broadband Networks, the public policies issues". See
Networks.
EMail
See Electronic Mail.
Employee buy out
a deal involving not just the top management buy also all, or a large n umber of more
junior employees. The difficulty of involving large numbers of employees
without disclosing a deal prematurely has meant that relatively few of these deals have
been made.
Employee share ownership plan (ESOP)
A trust which is established to acquire shares in a company for subsequent allocation to
employees over a number of years
Encryption
The encoding of digital information so that only authorised people can read or use the
information.
End-user Computing
The name given to the user of technology also being the controller of it., instead of
control being given to a central computer department.
Engelbart, Doug
A founder of hypertext
Enterprise Resource Planning (ERP)
Products that attempt to achieve company wide integration of business and technical
information are known as Enterprise Resource Planning (ERP), or
sometimes as Customer Oriented Manufacturing Management Systems (COMMS).
Enterprise Transformation
See Reengineering.
Entities
In a database is a group of related files stored together to minimise data redundancy and
improve access to data. The data held in databases relates to actual
things of importance to an organisation. Customers and products are good examples. In
database terminology these are called entities. Files are related when
there is a link between the data held about entities.
Ephemeral Data
Also called transient data. Data which normally only exists for a brief time. Typical
examples are input data (transaction information) and output data (report
information). Ephemeral data may become persistent data at a later point (i.e. by being
stored permanently in a database). There are no hard and fast rules
to distinguish persistent from ephemeral data.
EPS
An acronym for Earnings Per Share. See Finance.
Equations
Equity carve out
sale of a portion of the firm via a new stock offering to a group of outsiders, in other
works, a new set of shareholders own a portion of the previously existing
firm
Equity
The share capital of a company. See Finance.
ERP
An acronym for Enterprise Resource Planning. These are successor systems to MRP II
(Manufacturing Resource Planning) systems used in CIM (Computer
Integrated Manufacturing). ERP is touted as the next generation of MRP but with an
additional organisational focus.
ES
ESOP
An acronym used in the US for Employee Stock Ownership Plan. This is a corporate plan
which gives (usually preferential) access to stock for its employees.
Under these plans employees are able to purchase limited amounts of the companies shares.
ESPRIT
See Networks.
33
Essinger James
Author of the book "Banking Technology As A Competitive Weapon". See Financial Industry,
The.
Ethernet
A widely used standard for LAN communications. See Networks.
Eurobond
A bond marketed internationally
Eurodollar deposit
Dollar deposit with a bank outside the US
Eurodollar market
A transaction is said to take place in the Eurodollar market when the currency employed
is outside the control of the issuing monetary authority. Eurodollar
markets are a free market response to regulated domestic financial markets. Competition
from the Eurodollar markets has pressured domestic markets to
deregulate or lose business.
Euromoney
A UK based monthly financial magazine which contains many discussion of financial
engineering and more general finance and banking issues. One of the three
best general international financial magazines currently available. See Institutional
Investor and The Banker. For more specialist international finance
information see Risk for detailed articles on pricing models and deal structures,
International Financing Review for detailed articles on market activities and
deal structures.
European Committee for Standardisation
See CEN, AFNOR, BSI, CEN, DIN, ETSI, ISO, ITU, and NIST.
European Options
See Options.
European Telematics : The Emerging Economy Of Words
See Networks.
Eurostat
Statistical offices of the European community. Holds 5 million series of data relating to
all members of the EC and other countries, currently moving towards
harmonisation of geographical data for such applications as agricultural administration
(common agricultural policy)
Excel Real-time Spreadsheet
See Reuters.
Excel
See Microsoft and Reuters.
Exchange offer
Basically an exchange of one tye of paper for another, e.g. debt for equity, equity for
convertibles.
Exchange Rate
The value of one currency expressed in terms of another. For example [[sterling]]1 =
US$1.4875. See Spot Rate and Forward Rate.
Exchange rate risk
In business it is essential to understand risk exposure when trading in multiple
currencies.
Questions to ask.
*Is the exposure long or short
*What currencies are involved (the HK$ is tied to the $)
*In a particular deal, what proportion is it of normal trading/profit
*What range has the currency moved over in past 12 months
*How does profit margin compare to the range
*Should this be hedged
*Consider Options
Precautions
When tendering or biding for work paid in a foreign country, look at the spread of exchange
rate over a reasonable time, not just at the spot rate at the time. Look
also at the prevailing forward rates. Can try to structure the bid to reduce the risk, by
hedging with a company. Can try to share risk exposure with the trading
partner (e.g. we take the first 2% swing, you take the next etc.
Notes
Long means: I have or will receive foreign currency.
34
Short means I have to deliver foreign currency (I am short of what I need).
The decision to hedge should be made on risk, not on cost. Even if the cost is greater than
potential profit, if the risk of loss from exchnage is greater, they should
hedge.
Two obvious methods for hedging: sell or buy forward. I.e. arrange to sell money in the future
which you don't have today. When payment and receipt of business
takes place it is exchanged at the forward rate which is set. Alternatively can borrow in the
local currency and exchange that at today's spot rate. Repay the local
loan when payment is made. Don't forget interest.
Exchange rates
Spot: Premium and discount
Forward A price todays for a future transaction. Published at 3, 6, 9 months and 1 year.
The difference between spot and forward is either a premium or a discount. If spot - forward
is greater than zero, the dollar is at a premium and the pound is at a
discount. The reverse holds.
Futures Only an academic difference to Forward. Forward normally trades between direct
customers OTC, Futures are also for future delivery but traded on the
exchange in standard units, not direct to customers. There is a margin for futures so that
losses have to be covered by the client and profits are passed back to the
customer where they occur.
In publications, the Pound, and the ECU is quoted direct, all other currencies are usually
quoted indirect: ie $1.48 to [[sterling]]1, but FF5.82 to $1.
Closing mid point is the end of day exchange rate between the buy sell. The spread depends on
the currency and whether it is volatile.
Executive
Good executives create customers: Great ones create markets
Executive Information Systems
Executive information systems (EIS)
Generally differentiated from DSS by being targeted at executives rather than managers.
see MIS, MSS, SIS. Nolan's stage, Anthony's pyramid, Hybrid
information systems.
Rockart and Treacy define as needing:
1. Central purpose: the top executives who personally use computers do so as part of the
planning and control processes in their organisation. The provision of
information to senior management for such purposes is certainly nothing new; the reason for
EIS is to support a more effective use of this information.
2. Information repositories: these are tailored, often idiosyncratic databases containing
detailed past, present, and future data - by business unit - on important
business variables such as from the general ledger, sales reports, and industry statistics.
3. Methods of use: a) for access to the current status and projected trends of the business
and b) for personalised analyses of the available data.
4. Support organisation: a group of consultants, or EIS coaches, who provide ongoing
assistance ot the top executive user team.
Exit barriers
Exit barriers, like very specialised assets or management's loyalty to a particular
business, keep companies competing even though they may be earning
negative ROI
Exit
The point at shich the financier sells his holding in thebuy out company, either through
a trade sale to a larger company, by the management buying out
theother investros to assume complete control, or by a stock market flotation. It is
essential the managers and their financial backers agree from the outset on
the exit strategy.
Expected value
In relation to risk. Expected value is the product of the magnitude of the probability
and the magnitude of the prize. Can be represented graphically with
value (x axis) and probability (y axis). EV is the sum of the individual expected values
for each outcome (there may be more than two possibilities). Can also
be calculated (See Maitel, S. ch. 8)
Expense recognition
Assets provide future benefits tothe firm. Expenses measure the assets consumed in
35
generating revenue. Assets are unexpired costs, and expenses are expired
costs or gone assets. The critical question is "when do asset benefits expire- leaving
the balance sheet- and becoming expenses- entering the income stateent
as reductions in owners equity.
See expenses.
Balance sheet
Income statement
Asset or unexpired cost
Expenses or Expired costs
(which reduce owners'equity on the balance sheet)
Expenses
Are the outflows of cash or other assets attributable to the profit directed activities
of an enterprise. Expenses are a measure of the effort exerted on the part
of the enterprise in its attempt to realise revenues. Revenue and Expense accounts are
not reported on a balance sheet. Expenses are expired costs: Assets
are unexpired costs. See expense recognition.
Expert Database System
Also called a Knowledge Base Management System. A system for developing applications
requiring knowledge-oriented processing of shared information
Merges the capabilities of DBMS and ES
ES to contribute to:
- problem-solving mechanisms (heuristic search algorithms)
- classification of knowledge in strategy
- a rich world of knowledge representation systems (frames, networks and rules).
Expert System
An intelligent computer program that uses knowledge and interfence procedures to solve
problems that require human expertise for their solution. See
Artificial Intelligence.
ExperTax Case
Cooper's & Lybrand developed and implemented a tax accrual and tax planning system which
used expert systems techniques. The tool was developed
centrally and deployed amid much resistance into the practices. The tax experts mainly
used the tool as a way to fill the TAPQ more efficiently rather than
allowing ExperTax to use its knowledge base to assist in the tax accrual and planning
process directly.
Fabozzi Frank J.
Author of the book "Capital Markets: Institutions And Instruments". See Finance.
Facsimile
An electronically transmitted message. Usually simply called fax - every office has one.
The second generation of fax machines became incorporated into
computers (as an add-in card). The third generation are becoming wireless devices or
being integrated into other office equipment, such as a single machine
for faxing, scanning, photocopying and working as an answering machine.
Fame Relay
See Networks.
Familiarity Matrix
Make or buy
Make or buy, knowing what is involved.

Faulkner David
Author of the book "Challenge Of Strategic Management (The)". See Management.
Fax
See Facsimile.
FCF
An acronym for Free Cash Flow. See Cash Flow and Finance.
FDM-Frequency Division Multiplexing
These early multiplexers allocated one set of frequencies to each terminal. Used to
ultiplex numerous voice or data signals onto a single satellite transponder.
Fed
See Federal Reserve Bank.
Federal Reserve Bank
The US Central Bank. Consists, in fact of 12 banks located in 12 American cities with the
head office in Washington. Most power is kept with the chairman
36
of the Federal Reserve but the New York Federal Reserve Bank is responsible for foreign
exchange market regulation. See Central Bank.
Feedback model
Models Feedback
Prove the system is viable; no money for new product development until proved in given time 2
years. At the end of the two years the system is viable but the time
gap to update an ageing product line becomes a part of a closure decision.
Fiber Optic
See Networks.
Fidonet
Is a batch orient, public Email network of PCs, estimated to number 15,000. Bulliten
boards exchange information using modems and batch mail transfer. See
also Internet.
FIFO
First in first out method for valuing inventory. See FIFO
Fifth Generation
See Computing.
Figure of Merit
See Finance.
Finance cycle
"Is a recurring set of management and related data processing tasks directed at securing
a steady flow of capital funds into and through an organisation." Barry
E. Cushing and Marshall B. Romney, Chapter 20, Accounting Information Systems - A
Comprehensive Approach, fifth edition. See Finance.
Financial accounting
The collection of basic (raw) data, as in managment accounting, but treated in a
prescribed and statue enforced format which emphasises the historic,
custodial and stewardship aspects of the business.
Financial Information
There are literally thousands of sources of financial information available today -
ranging from financial newspapers to specialist financial publications. See
individual entries for The Banker, Euromoney, Financial Times, Institutional Investor,
Risk and Wall Street Journal.
Financial leverage
The amount of debt used to finance the assets of a business. A company increases its
financial leverage when it raises the proportionof debt relative to equity
used to finance the business. ROA and financial leverage tend to be inversely related. A
company with low ROA will generally emply more debt financing and
vice cersa.
The most common measure of financial leverage compares the book value of a companies
liabilities tothebook value of its assets or of its shareholders equity. This
produces the debt to assets ratio and the debt to equity ratio
see. Coverage Ratios

Financial Magazines
Country Magazine
Australia
Belgium
Canada
China
Denmark
Germany
France
Hong Kong
India
Business India
Indonesia
Japan
The Netherlands
Russia
Switzerland
Thailand
37
United Kingdom
Euromoney
Banker
Risk
United States
Institutional Investor
American Banker
See Financial Information, Financial Times and Wall Street Jounal, Management Newspapers and
Management Magazines.
Financial Newspapers
Country Newspaper
Australia
The Financial Review
Belgium
Canada
China
Denmark
Germany
France
Hong Kong
India
The Economic Times
Indonesia
Japan
Nikkei Shinbum/Nikkei Weekly
The Netherlands
Het Financial Dagblad
Russia
Switzerland
Thailand
United Kingdom
The Financial Times
United States
The Wall Street Journal
Barrons
See Financial Information, Financial Times and Wall Street Jounal, Management Newspapers and
Management Magazines.
Financial statements
are interesting because:
A) Management is concerned with company profitability and liquidity.
B) Trade creditors will be interested in the ability of the company to pay debts when due.
Therefore they will be interested in liquidity.
C) Load creditors will want to know if the company is likely to remain in business. Therefore
they will want to know about future profitability and cash flow and the
level of risk involved.
D) Investors will be interested in the return on their investment in terms of dividends and
capital growth. The following factors are therefore important Profitability,
Liquidity, Solvency, Future potential. See Ratio analysis .
Financial Times
A UK based daily financial newspaper which contains many discussions of financial
engineering, company and more general finance and banking issues. One
of the two best general international financial newspapers currently available. See Wall
Street Journal. For more detailed general information see the
magazines Institutional Investor, Euromoney and The Banker. For more specialist
international finance information see Risk for detailed articles on
pricing models and deal structures, International Financing Review for detailed articles
on market activities and deal structures.
First Call
See Reuters.
Fishbone diagram
A diagram that relates a product defect to the potential contributing factors so that
customer complaints can be readily traced to the operations involved.
Fisher Effect
38
Links interest rates to inflation.. The interest rate i equals the real rate + expected
inflation. Countries with low inflation have low interest rates and strong
currencies. See Interest rate parity, Purchasing Power Parity PPP.
Five Forces
Porters 5 forces which affect industry: New entrants, existing competitors, substitute
products, buyers and suppliers.
See strategy. The collective strength of these forces determines the ultimate profit potential
of the industry. Whatever their collective strength, the corporate
strategists goal is to find a position in the industry where his or her company can best
defend itself.
Fixed and variable cost businesses
One of the most important management classifications in any business is between high
fixed and high variable cost companies. The differences affect structure
which affects profits, pricing and volumes. Different management policies are required.
The major differences are: 1. break even is reached at a much higher level of output for the
high fixed cost company
2. Its rate of contribution (marginal profit) is very much higher. 3. Its margin of safety
(for volume cut-backs above break even) will be of much lower level of output.
Fixed asset turnover
A control ratio.
This reflects the capital intensity of a business. Changes over time reflect whether or not
management is becoming more or less efficient in is use of fixed assets.
Where net fixed assets are property plant and equipment.

Fixed assets
Resources which the business has acquired withthe intentin toretain them for use in
carrying out its main activities, rather than for re-sale. These may be either
tangible (e.g. plant) or intangible (e.g. trademarks).
Fixed cost.
What would be the zero volume costs of running a factory because even if the plant does
not make anything, you still need to make some payments: licences,
rent, upkeep, maintenance etc. These fixed costs do not vary withthe rate of production.
Dangerous: consider also semi-variable costs. See also variable cost
or Economics
Flichy Patrice
Floating J Curve
A business forecasts two or three years of flat or declining profitability, but then all
of teh numbers would point upward. Tends to be a fantasy. Line tends to
keep moving right without moving up.
Floppy Disk
See Computing.
Flow to equity method (FTE) for valuing companies
Estimates the cash flows due to levered equity, and discounts the cash flows to levered
equity at the cost of equity applicable to a levered firm. Thus there are
three steps.
1. Estimate the cash flows tolevered equity. i.e. the after-tax and after interest payment csh
flows to (i.e. equity [EBIT-Interest]*[1- Tc])
2. Estimate the equity beta by taking into account the D/E ratio of teh firm, on an after-tax
basis:
and compute the cost of equity based on this (often, it may be OK toassume that the debt beta
ßd, is equal tozero and use the simplified version of the formula
above).
3. Compute the PV of equity using the cash flows and discount rates as described.
See WACC, APV, Valuation. Corporate valuation
Foreign currency
In the cash flow statement: if a company holds foreign currency it will show its value at
the start of the year compared to the end with suitable adjustment for
exchange rate variations.
Foreign Exchange Risk
This is a currency risk where a company has a long or short position in a foreign
currency. For example a US company has a contract for
39
[[sterling]]1,000,000 in the UK. This position exposes the company to changes in the home
currency amount (in this case US$) if the exchange rate changes.
This is foreign exchange risk.
Foreign exchange rate
Is the nominal (as opposed to real) price of one nation's money in terms of another. The
spot rate is today's exchange rate. In actuality, this transaction is
formally settled two business days after the date on which the spot transaction is
entered into. The t-period forward rate is theexchange rate available today
for transactions that you may wish to make at time t. That is, you can enter an agreement
today for delivery of money in the future. Forward rates are crucially
important in managing a problem that MNEs face, known as Transaction exposure control.
The forward rate is conceptually similar to the futures rate. Actual forwar rates may differ
slightly from actual futres rates due to institutional features. The spot rate
and the forward rate are different from the Expected future spot rate, which reflects the
expectation the market has about the price of a currency t days from now.
See Effective exchange rate
Forman Ernest
Author of the book "Analytic Approach To Marketing Decisions (The)". See Marketing.
Fortran
FORmula TRANslator progamming language developed principally for mathematical problems.
See Computing.
Forward Rate
The foreign exchange rate of a currency at a price agreed today but with a value date in
the future. See Spot Rate and Exchange Rate.
Forwards
See Hedging
Four Ps, 4Ps
See marketing mix.
Fourth Generation
See Computing.
Fox Steven
Author of the book. "Voice / Data Telecommunications For Business". See Networks.
Fractional Banking
The basis for most western banking systems where the banks are required to hold a portion
of their funds in reserve deposits. This is a major tool in the
regulation of the money supply in the economy. This is because of the multiplier effect
on bank deposits.
Framing
Risks or probabilities can be expressed in two ways; (90 percent chance of sun or 10
percent chance of rain). A tool often used by marketers
Free Address
A Japanese term for Hot-desking.
Free Cash Flow
See Cash Flow and Finance.

French Standards Institute
See AFNOR, BSI, CEN, DIN, ETSI, ISO, ITU, and NIST.
FRI
See Reuters.
Front end processor
Specialised computer which, when attached to a mainframe central processing unit, handles
communications, and administrative tasks for the CPU.
FT1
Cheaper than T1. Allow end users to split uptheir traffic among different paths; for
example using two 24 circuit FT1 instead of one 24 T1. This allows for
reroute backup.
Full absorption system
for profit and loss account:
Full cost
Describes the cost of producing a good, including full allocation of overhead costs and
variable costs.
Full-duplex
Signals in both directions symultaneously.
40
Future value
The future value of a sum of cash is the amount to which that su will grow if it is
invested at a specified interest rate for a specific period of time. This
relationship can be expressed mathematically: F1 = P(1 + r). In which P is the present
sum of money, r = the rate of interest and F1 is the future value 1 year
ahead. For money left for 2 years this becomes:
F2 = P(1+r)[2.]: Again, Fn = P(1 + r)[n].
FX
See Foreign Exchange Risk.
Fxcalc
See Reuters.
GAAP
short for Generally Accepted Accounting Principals
Gains and Losses
Similar but not identical to revenues and expenses. Gains and losses are increases or
decreases in net assets resulting from transactions. e.g. suppose that a
retail store sells office equipment that it used in its own accounting department. The
difference between the selling price and its book value at the time of the
sale would be recorded as a gain or loss.
Gantt chart
A chart that shows the scheduled start date and the progress of each job compared to its
scheduled delivery date.
Garner John T.
Author of the book. "Satellite Operations : Systems Approach To Design And Control". See
Networks.
Gateway
The computer which provides the bridge which links the host with the database (or other
system) user. See Networks.
GDP
By how much did prices rise between 1982 and 1989? Tens of thousands of different goods
and services are produced, and each has its own price increase.
It makes sense to construct an index of those prices, known as the GDP deflator. (because
it is used to deflate the inflated value of GDP. This index is a
weighted average of prices, with the weights determined by the importance of each product
in overall national output.
Betwen 1982 and 1989 prices rose 26.3% in the US. GDP rose 65%. This means that out of the 65%
GDP rise 26.3 percent was due to rising prices. This implies
that Real GDP growth was 31%
The meaning of the Real value of 1989 GDP is this: it is the value of 1989 GDP, if the goods
and services made in that year had been valued at 1982 prices instead
of 1989 prices.
Gearing, leverage.
The ratio of debt to equity in a company's capital structure. Intermediate forms of
capital, such as redeemable preference shares and convertible loans, can
complicate the calculations and mean a variety of different ratios may be applied to the
same company.
See also Solvency.
General ledger
The master file in which a record is maintained for each and every account in the
organisation's accounting system.
General Motors Corporation
See Integrated Factory and Case.
Generation
See Computing.
Generic strategy
According to Porter there are two bais generic strategies: Low cost leadership and
Differentiation (or focus). The two are not necessarily exclusive (eg Wall
Mart) and a corporation, even a company can use both in the business for different
products at the same time (but this will have difficulties, particularly for
structure and culture).
Porter's graph which emphasises that a company should not get stuck between strategies. No
data available to support this. But reflects the Sony decision not to
increase volume when they first entered the US market. This is the balance between investment
41
intensity and volume/turnover.
Geodesic Network Ii (The) 1993 Report On Competition In The Telephone Industry
See Networks.
Geographic Information Systems (GIS)
Use computer power to collate geographic and social data. Computer systems that use
spatial and topographical data as an element, usually in a database.
Sometimes called Graphical Information Science. Used, for example by the EC to map use of
agricultural land in an economic census.
Geographic Positioning Systems (GPS)
Provides local co-ordinates of a position fro satellite readings. A vet or animal health
inspector, for example, might carry a laptop, which can read a specific
co-ordinate for the location of a herd with a disease. Also used in yachting for
navigation systems, and more recently for mobile security and anti-theft devices
on cars.
George K.
Author of the book "Competition Policy In Europe And North America: Economic Issues And
Institutions". See Policy.
Georges Martine
Author of the book. "Perspectives Pour Les Telecommunications". See Networks.
Gille Laurent
Author of the book. "L'industrie Des Telecommunications, options techniques et enjeux
industriels". See Networks.
Globerman Steven
Author of the book. "Convergence Between Communications Technologies". See Networks.
Globex
See Reuters.
Gnomes of Zurich
A disparaging term used in the UK for financial speculators based in the Swiss city. The
term came to prominance in 1964 when Brittain was forced to
adopted harsh economic policies when the pound came under pressure from speculators. The
term reflected the increasing interdependence of western
nations and the tipping of the balance of power away from politicians to stateless
business interests.
Goal (the)
Taken from The Race, by Godratt and Fox.
Goals
Reaching goals involves three elements:
Process
How we produce the product.
Content
What we produce.
People
Who produces the result.
Refer also to Objective Setting.
Going concern concept
It is assumed that the accounts will be drawn up on the basis that the business will be
in existence for the foreseeable future. this implies that the assets of the
company will be valued according to their anticipated use by the business, not at a sell
of or scrap value which might be realised if the business were to be
sold.
Goodwill
When the acquisition price paid for a company is more than the book value of the assets,
the amount above the book value is called goodwill, or purchased
goodwill. Often used to refer to particular intangible assets, like patents, trademarks,
or brands. Goodwill is normally amortised.
GOSIP-Governement open systms interconnection profile
Driving the standardisation of OSI products, is a federal government procurement document for
computer and networking technology specifying OSI international
and draft standards. Could force govt. vendors to supply OSI products and force TCP/IP into
retirement. Gosip is a layered architecture which contains standard
protocols at each of the seven OSI layers: physical, data, network, Transport, session,
presentation and applications (layers 1-7, OSI)
42
Governance
See Corporate Governance.
Governance
The top level control structure, consisting of the decision rights possessed by the board
of directors and the CEO, the procedures for changing them, the size
and membership of the board, and the compensation and equity holdings of managers and the
board.
see Corporate governance
Graphical User Interface
Invented in the early 1970s at Xerox Parc, it was fist popularised by the Macintosh
computers and today by Windows. Also called GUI. These represent
programs and objects in a computer by small graphics (pictures) called icons. You use a
pointing device (usually a mouse or a pen) to perform actions on the
computer.
Green Paul, E.
Author of the book. "Fiber Optic Networks". See Networks.
Gross benefits
A M&A term for the net benefits which an action gives you (for example buying a company).
Gross domestic product (GDP)
GDP equals Gross National Income (every time someone earns a dollar, someone else spends
one)
or: ... . If imports exceed exports the figure for net exports will be negative.
GDP or Gross National Income is disposable income plus Net taxes (gross taxes less transfer
payments)
Gross margin
Total revenue minus direct costs. A very spurious measure because it depends on the
classification of overhead (fixed) and direct (variable) costs.
Gross National Income
see GDP.
Gross profit
Sales value less the direct costs incurred in buying or providing the product sold
Group technology (GT)
A manufacturing technique by which products or parts with similar characteristics are
grouped into families and machines are grouped into cells in such a way
that high levels of repeatability are achieved.
Group work
Two or more people doing too or more tasks
Groupware
See Lotus.
Groupware
Software with is designed to help group work. A popular example is Lotus Notes. See
Lotus.
Growth
From products
may come from a firms decision to lengthen, deepen or widen its product lines.
From functions
May come from integration forwards or backwards or by expansion geographically
GSM
See Networks.
GSM System Mobile For Communications (The)
See Networks.
GUI
See Graphical User Interface.
H.E. Butt Grocery Company
A Case in the Network Services course. A Texas Retail company is faced with the choice of
moving to a satellite based company communications system.
The major issues were:
Half-duplex
Signals in both directions
Hammer
See Technology.
Hand-held Computer
An emerging technology made popular in recent times by the Apple Newton. It is the
43
natural extension of laptop computing as they are the first truely
portable, non-intrusive computers. Many hand-held computers do not have a keyboard but
use devices such as pens and even simply your finger. See
Computing.
Hands on. Hands off.
The degree to which an investor in a buy out becomes involved in its management. a hands
on investor would normally nominate a non-executive director to
the board, and might commit some of its other executives to help out if the company ran
into difficulties. Hands off investors would have very little, or no,
active involvement inthe company.
Handy Charles
Author of the book "The Age Of Unreason". See Education and Learning.
Hard systems thinking
Developed by engineers as a project management system; starting with the project
objective (to make something). Differs from SSM which has no defined
objective and which does not apply only to engineering type projects.
Hardware
See Computing.
hausbank
German for the main bank for a large corporation. See Corporate Governance.
Hedging
Buying one security and selling another in such a way as to produce a riskless portfolio.
In a situation like that of JC Penney, the company raises foreign currency but exchanges it
immediately to dollars (because it wants dollars). It also agrees in advance
with the bank the exchange rate for the interest and principal payments during thelife of the
bond (buying forward).
Heuristic
The application of common sense or domain specific knowledge of the problem at hand.
High Speed Networks
Are anything faster than X.25. See Networks.
High Tec
A High Technology company or industry is:
1.
one which spends 5 - 10% of revenues on R&D.
2.
you need a PhD in the field to understand the terminology.
Horse Latitudes
These were an area in the Atlantic sea where the tradewinds often died, becalming sailing
ships going to the Americas. When becalmed the ship had to lighten
the ship by jettisoning as much as possible- cargo, cannon, etc. The worst becalmings
also needed to abandon the horses - the most valuable cargo.
When the horses were dropped over the side, the ship was light enough for the meager wind to
move te ship slowly on. The horses however were able to swim for
miles before they eventually drowned. Their frightened screeams would haunt the superstitious
sailors for the rest of the journey.
Host
A computer which gives on-line access to its database. Access to database data is
normally granted by a host and is then transmitted via a telecommunications
service. Has two parts: the applications programs and the network interface. The host
computer: lets local users access the network resources as easily as
local, lets remote users access local resources, removes networking details from
application programs.
Hostile Takeovers
Hot-desking
The emerging practice of companes not giving employees their own desk in the office.
Instead there is a pool of desks that you use as required. Termed `free
address' by the Japanese.
House of quality
Stereotype of the European/American approach to marketing. Evaluate the market before
first launch and try to match market informationn with technical
capability.
Huber Peter W.
44
Author of the book. "Geodesic Network Ii (The) 1993 Report On Competition In The
Telephone Industry". See Networks.
Hunt Craig
Author of the book. "Tcp/Ip, Network Administration". See Networks.
Hybrid information systems
Any system which would involve a combination of the defined information systems. see MIS,
SIS, Hybrid information systems, DSS, Nolan's stage,
Anthony's pyramid, EIS, MSS.
Hybrid layout
An arrangement of a facility with some portions designed as a product layout and other
portions designed as a process layout.
Hybrid Switch
Combines Packet switch, Frame relay and Cicuit switch.
Hyper-rational
Too rational, humans are not completely rational (called limited rationality). Assuming
that they are means that you are assuming hyper-rationality.
Hypertext
Electronic information which contains links to related information. See Information and
Computing.
Hypothesis
See Control and Monitoring and Economics.
IBM
International Business Machines, the worlds largest computer company. The corporation
everyone loves to hate - sort of the JR of the computer world.
Icon
See Graphical User Interface.
Imaging
See Visualisation.
Impact Analysis
Implicit rent
See Economics.
Implicit rent
The cost of using owned assets. There are tax benefits from renting ( business expense),
implicit rent is not deductable and the lost benifit should be takeninto
account
Imputed cost
The cost of shareholder capital which is not shown in the accounts by accountants.
Similar to opportunity cost; the amount a company should recognise as
being due to investors,
Income sensitivity of demand
A concept similar to price sensitivity of demand, reflecting how changes in income
affects demand for a particular product. Food would be income insensitive;
restaurant meals would be income sensitive.
Income statement
Profit and Loss statement, operating statement, statement of profit and loss, income and
expense statement. The second part of the financial statement. The
balance sheet shows net assets. The income indicates changes in owners' equity and thus
changes in net assets) over a period of time resulting from the
operations of the business, excluding contributions or withdrawals on the part of the
owners (ie stockholder changes).
The income statement indicates the rate at which the equity of theowners is changing. It
reveals the revenues, the expenses and the resultant income for the period.
See balance sheet, dividends.
Incompatability
The problem where either two computers or computer programs can not either:
1. work at the same time on the same computer.
2. exchange information.
3. work on the same type of computer.
Incremental cost.
See Marginal cost or Economics.
Indirect cost
Costs which are shared and therefore cannot be directly related to a single product or
45
service
Industry analysis
See five forces, competition, strategy, market analysis.
Industry map
Harvard developed map to show the position of companies within industries. For IT &
services the map would chart on coordinates around Services,
Products, Conduit, Content
Inference Engine
A computer program which uses a knowledge base to make a decision. See also Knowledge
Base.
Inference
Inflation adjusting
Amounts reported for investments in assets and the cost of goods sold arebased on
measures of historical cost. As a result expenses are likely to be
understated. On solution alternative would be to measure assets, depreciation and the
cost of goods sold at replacement cost. Not often used except when
comparing performances from a numer of years.
Inflation
Persistently rising prices. It is very important as an investory to know if inflation is
caused by Demand pull inflation or Cost push inflation.
Infobot
A program in a networked computer which can automatically respond to an incoming message.
A standard example is a program on an Internet server which
can automatically send an aknowledgement to a request from another network user. See
Knowbot.
Information Needs
An interesting way of looking at the information needs of organisations begins with
Anthony's pyramid of organisations. Linking this with Simon's type of
information and the types of computer systems results in the following view of
organisations:
See also Computing.
Information Networks And Competitive Advantage, vol. I: issues for government policy and
corporate strategy
See Networks.
Information Revolution, The
The dramatic reduction in the cost of obtaining, processing and transmitting information.
Information Systems
Must be judged upon the revenues they generate and not their cost. If the cost of
generating the information is used as the basis of evaluation then a strategic
misallocation of information resources is likely to result. The usefullness of the
information is the paramount factor to tske into account.
This concept is becoming increasingly popular in corporations. Barclays Bank in the UK has
allocated all information comsumers a budget from which they must pay
for all the information they receive. It was surprising to see what people were willing to pay
for - it caused a strategic change in their information flows and what was
being held and used within the organisation.
Figure :The Four Stages of Growth in Systems Functions.

DSS-Decision-Support systems
An EDP system is oriented towards the automation of transaction processing, record keeping,
and reporting, i.e. mechanical effiency. a DSS system, on the other
hand, has as its goal the improvement of the overall efficiency and effectiveness of
individuals within theorganisation.
Information systems
"The information systems that did not provide the information wanted by management". Now
defined as:
Information systems that have as their primary function the processing of predefined
transactions to produce fixed format reports on schedule. The principal use is to
automate the basic business processes of the organisation (typical function include: payrol,
customer orders, purchase requests etc.). (after Wiseman)
Conventional information systems provide automation of function using information systems as
46
shown below.
See MSS, SIS, DSS, EIS, Nolan's stage methodology.
Information
The meaning of data. Often a loosely interchanged term with data.
Information: cost
Information econommies enable relatively knowledgeable firsm to acquire, produce, store,
ship, or sell products at lower average cost per unit than relatively
ignorant ones. Eg. information about risk allows for lower insurance premiums if the
insurer is intending on behaving oportunistically. Information systems can
reduce the cost of inventory The American Express traavel management system to reduce the
cost of wasted high fares, car hires ets.etc.
Innovation climate index
Matrix used to establish whether or not the company is likely to foster innovation.
Scores the company from minus 5 to plus five on categories such as: leaders
look for innovation: Reward for success, Punishment for failure: Resources available for
innovation: Heirachical structure: Centralised decisions: Formalised
communication: Focused resource application: Tollerance to mavericks: Look for short term
profit.
The matrix has negatives, like look for short term profit on the left hand side (-5) and the
positive on the right hand side, look for long term value (+5).
Different parts of abusiness need to be managed in different ways: the mature 'cash cow' does
not require innovation. But managing the new venture like a cash cow
would not work.
Innovation
Innovation is the whole process from: invention, development, pilot production,
marketing, production. Invention is just invention.
Innovation
Involves the adoption of new products or processes. A product innovation satisfies
customer needs or wants previously unmet. a process innovation improves
teh efficiency or effectiveness of a process associated with a product. (Wiseman).
Innovation may stem from technological, organisational or other sources.
Innovation is the middle stage in a sequence that starts with invention (creation) and
ends with imitation.
Innovation
Is an idea, practice, or object that is perceived as new by an individual or other unit
of adoption. It is only necessary for an idea to seem new to an individual
for it to qualify as an innovation.
Innovation
Open ended situations (requirements) breed innovation. Groups learn and propose
innovation and new strategy when faced with open ended situations. Must
not confuse open ended situations with no direction situations.
Instinet
See Reuters.
Institutional Investor
A US based monthly financial Magazine which contains many discussion of finance and
banking issues. One of the three best general international financial
magazines currently available. See Euromoney and The Banker. For more specialist
international finance information see Risk for detailed articles on
pricing models and deal structures, International Financing Review for detailed articles
on market activities and deal structures.
Intangible asset
Is not a physical asset. Might be a patent or a brand name.
Integrated Factory
A Case on the General Motors Corporation.
Integrated Services Digital Network
ISDN. See Networks.
Integration
The ability of separate computer components to operate together.
Interest cover
This ratio measures the number of times profit before interest covers the interest charge. It
gives an indication of the relative safety of the loan interest.
Interest payable
47
see current liabilies
Interest Rate Parity Theory
If you borrow in one country to invest in another with higher interest rates expecting to
earn money on the differences, the exchange rates, and interest rates
will move to equate the interest. (Ultimately).
If interest rates in the US are higher than rates in the UK fwd > spot. The [[sterling]] is at
a premium. See Fisher effect
Interest rate parity
Between national currencies. Stipulates that the expected rate of change in spot exchange
rates equals the ratio of the prevailing interest rates in the two
currencies. In the case of dollar sterling exchange rate, the interest parity condition
is expresssed as:
where [[Delta]]S is the expected fractional change in the spot exchange rate during the
forecasting period, and R$ and R[[sterling]] are the nominal yields during the
same period on comparable risk dollar and sterling denominated debt, respectively. If parity
holds it follows that the appropriate sterling WACC to use for
discounting purposes is the dollar WACC adjusted for expected exchange rate changes. Thus:
Interest Tax Shield
A financial use of a tax system where certain financial structures benefit from tax
burden reductions. A common example is debt financing over equity
financing. Debt financing will usually have an interest tax shield because the interest
paid on debt is normally at least partially tax exempt. See Finance.
Interface
The pysical connection between two communications devices. Industry standard is EIA-32.
See Networks.
Internal Control Cluster (ICC).
A group of ICPs related to one or more type of error or activity.
Internal Control Procedure (ICP).
A single control measure - such as checking a control total.
Internal Control System (ICS).
A group of ICCs which make up a cycle of controls in an organisation.
Internal Rate of Return
The discount rate at which the net present value of an investment is zero. See Finance.
International Currency Restrictions
A yearly publication of the IMF which details the IMF members currencies.
International Financing Review
people. Risk specialises in the international financial markets and
contains many detailed articles on market activities and deal structures. One of the
three best specialist international financial magazines. See International
Financing Review and Barrons. For more general international financial magazines see
Institutional Investor, The Banker and Euromoney.
International Insider
See Reuters.
International Radiocommunications Consultative Committee
See CCIR, AFNOR, BSI, CEN, DIN, ETSI, ISO, ITU, and NIST.
International Telegraph and Telephone Consultative Committee
See CCITT, AFNOR, BSI, CEN, DIN, ETSI, ISO, ITU, and NIST.
Internet
The worlds largest public access collection of interconnected networks. In 1993 it was
estimated to have:
* 2 million computers
* 20 million users
* 135 countries
* >8000 nets.
Internet and Prodigy
Figure : Email Growth in the USA. From Byte, March 1993.

Internet services include:
* Remote login (telnet)
* Electronic Mail
* Network News (Bulletin boards)
* Archie (Software service)
48
* World Wide Web (WWW -a hypertext publishing system)
* Wide Area Information Service (WAIS -a multimedia publishing system)
See also Relevance Feedback and Networks.
Additional Resources
CONNECTIONS
L. SPROULL AND S. KIESLER
MIT Press, 1991.
THE WHOLE INTERNET
E. KROLL
O'Reilly & Associates, Inc., 1992.
This is a comprehensive guide to the services of the Internet, its history and etiquette.
Highly recommended but the only way to know what is available via the net is
to log on and see.
BUILDING OF INTERNET (THE)
Telecommunications Policy-Magazine
1/01/92
BAR François, HART Jeffrey A., REED Robert R.
The Internet, a system of interconnected computer networks primarily in the USA, can be seen
as an experiment in the development, deployment and use of
high-speed networks, and as such can provide guidance for the shaping of the future national
telecommunications infrastructure. Internet's significance lies not only in
the technologies it helps develop, but more importantly in the new usage dynamics it helps
uncover, the new network management mechanisms it tests and the new
policy strategies it explores. PP 666-689
DNS AND BIND
ALBITZ Paul,CRICKET Liu
O'REILLY & ASSOCIATES
1/01/93
IT.31 037
This book discusses one of the Internet's fundamental building blocks: the distributed host
information database that's responsible for translating names into
addresses, routing mail to its proper destination, and many other services. DNS is one of the
darker, more obscure areas of the network administration. This book
covers all you need to know about DNS and its UNIX implementation.
INTERNET COMPANION (THE)
LAQUEY Tracy,RYER Jeanne C.
ADDISON-WESLEY
1/01/92
IT.31 034
This book is a guide to the intricacies and unique culture of the Internet. In clear,
nontechnical language, it introduces you to the worldwide community on the
Internet, teaching you how to tap into university research databases, online archives, and
vast social networks of up-to-date information.
Internet Europe, Is Commercial Traffic In The Stars?
Datacommunications, August 1992
INTERNET: GETTING STARTED
MARINE April
SRI INTERNATIONAL
1/01/92
IT.31 033
This volume describes how to join the Internet, as well as how to gain access to other
networks that can communicate with the Internet. It will give you an idea of
what the Internet is, it has available, ans how you can take advantage of its resources.
INTERNETWORKING WITH TCP/IP
COMER Douglas E.
PRENTICE-HALL
1/01/91
While this book is specifically about TCP/IP protocol suite, it is a good book for learning
about computer communications protocols in general. The principles of
architecture, layering, multiplexing, encapsulation, addressing and address mapping, routing,
and naming are quite similar in any protocol suite, though, of course,
different in detail... In this book, the author has taken the "bottom up" approach - startingn
with the physical networks and moving up in levels of abstraction to the
49
applications.
WHOLE INTERNET (The)
KROL Ed
O'REILLY & ASSOCIATES
1/01/92
This book will help the reader to unlock the Internet's resources. It is a completer user's
guide to the Internet, covering everything from the basics, like electronic mail
and newsgroups, to the newest developments. A large part of the book tells the reader how to
find the resources he wants. This is the first book to cover the
Internet's new "research librarians": Gopher, WAIS, and the World-Wide Web.
ZEN AND THE ART OF INTERNET
KEHOE Brendan P.
PRENTICE-HALL
1/01/92
IT.31 029
Page after page, this book summarizes how to use the net to its fullest advantage. Topics
covered include:
- Today's networks, including the Internet, UUCP, and Binet.
- Electronic mail
- FTP, the primary method of transferring files over the Internet
- Commercial services.....
Invention
Inventories
Include both items available for sale to customers and raw materials, parts, ans supplies
tobe used in production. They can be reported at the cost incurred to
either purchase or pruduce them. But if the cost of replacing such items has declined,
then the inventories may be "written down" to reflect the decline in value.
Inventory
All the money that the system invests in purchasing things that it intends to sell.
Sometimes inventory must be defined as all the money that the system invests in
things it intends to sell (thus including all labour costs invested during a process
after purchase).
Inventory turnover
A control ratio.
An inventory turnover of 4 means that a company produces and sells 4 complete cycles of
product in a year from the given assets. Alternatively this means that an
item of inventory sits in stock for an average of 3 months. Cost of goods sold is used rather
than sales value because it does not include profit markup which would
distort the figure.
Investment banking
Investment bankers are the grease that keeps financial markets running. They are finance
specialists who assist companies in raising money. Other activities
include stock and bond brokerage, investment counselling, merger and acquisition
analysis, and corporate consulting.
Investment priority screen
Matrix used by GE implement SBU reorganisation.
Investments and other assets.
Includes other assets. Include amounts owed to the company by outsiders that are not due
for at least one year, and amounts that the company has invested in
other copanies. If a company ownes part of another company this would normally be
included among Investments and other assets. Such interests in other
companies may be classified under "Marketable securities" (a current asset), or as
Investments in subsidiaries (an non current asset).
The decision as to how investments should be clasified depends to a large extent on the intent
of the company's management; long term intent => non current asset,
short term intent => current asset.
Investments in subsidiaries
A non current asset (see investments and other assets).
IPO
An acronym for Initial Private Offering. This is the first offer of shares of a company
that is going public. See Finance.
ISDN
See Networks.
50
Islands of Automation
See Standardisation.
IST-Interswitch trunks
The comms circuits that link the packet switches. Most common are landline circuits based
on telephone technology. New high capacity fiber technology
becoming more available. Other technologies are available, eg. radio circuits, to fill
special needs. Also Satellite. IST is inherently an analogue system. Pulses
on a wire or radiosignals are analogue and require processing to support data
transmission. For this reason IST's all have a modem at each end for analog
transmission links or a digital interface unit (DSU) for digital or fiber transmission.
I_CASE
See CASE.
J Curve
See Floating J Curve.
J Form
See Corporate Governance.
J.,Neumann Russel W.
Author of the book. "The Telecommunications Revolution". See Networks.
Jazz
1. Value for money.
2. An integrated program launched by Apple in the mid 1980s. It failed and disappeared from
the market.
Jiji Press
See Reuters.
Jobs, Steve
See Apple and NeXTStep.
Jockeying for position
One of Porter's five forces. Rivalry among existing competitors. Tactics include:price,
new product introduction, advertising. Intense rivalry is related to a
number of factors:
1. competitors are numerous and roughly equal in size and power.
2. Industry growth is slow, precipitating fights for market share.
3. Product or service lacks differentiation or switching costs, which lock buyers and protect
one combatant from raids on its customers by another.
4. Fixed costs are high or the product is perishable, creating strong temptation to cut
prices.
5. Capacity is normally augmented in large increments. This leads to oversupply and price
cutting.
6. Exit barriers are high. Exit barriers, like very specialised assets or management's loyalty
to a particular business, keep companies competing even though they may
be earning negative ROI.
Johnson Gerry
Author of the book "Challenge Of Strategic Management (The)". See Management.
Joint venture
Usually formed between larger and smaller companis where the larger company seeks
technology and the smaller company seeks market share.
Disadvantages include reluctance to share proprietary information.
Need a new management between the partners. Often the venture is not so significant to the
larger partner and acquiring full attention is difficult.
Should (must) negociate the terms of exit at the same time as entry) Forty percent last less
than 4 years and end acrimoneosly. Of all ideas for joint ventures less than
2% are long term successes. One third of ideas are thrown out, of the two thirds that lead to
letters of intent, 70% do not progress.
Reasons for failures.

There is an absolute need for a win-win situation. Negociations between partners should not
be, or seem to be, negociations for best position.
Jones Malcom
Author of the book. "Satellite Operations : Systems Approach To Design And Control". See
Networks.
Jouet Josiane
Junior debt
51
Unsecured loans which rank after secured or senior debt for repayment in the event of a
default.
Junk Bonds
See Bonds
Just in Time systems (JIT)
Production and inventory control systems designed to produce small lots and to produce
the right items in the quantities needed by subsequent production
processes at the right time.
In the mid 1908s firms which successfully introduced JIT had the following characteristics:
* Uniform assembly schedules. The use of JIT in repetitive manufacturing requires a stable
assembly schedule. A uniform, continuous need for parts and components
is essential.
* Group technology. Utilising group technology cells takes advantage of high volume
production, even when the specific demand for parts produced at the cells is
low per unit of time.
* Flexible work force. The ability to use workers at a variety of operations helps to
alleviate bottleneck operations and maintain a uniform flow of products.
* Short set-up times. Permit small lot production, which is essential for low inventory
investment
* Low rates of machine failure which disrupts the production process in a JIT system because
of the low levels of inventory used to decouple the operations.
* Low rates of yield loss or rework. Both disrupt the uniform flow of materials through the
manufacturing process. See Kanban.
Managerial considerations (according to Krajewski & Ritzman)
Advantages
* reduced space requirements
* reduced inventory investment in purchased parts, raw materials, work in process, and
finished goods
* reduce manufacturing lead times
* increase productivity of direct labour employees, indirect support employees, and clerical
staff
* increase equipment utilisation
* reduce paperwork and require only simple planning systems
* set valid priorities for production scheduling
* encourage the participation of the work force
* increase product quality.
Disadvantages (most of which are advantages)
* requires workers and supervisors to take responsibility for shop floor production control
and productivity improvements
* requires an atmosphere of close co-operation and mutual trust between the work force and
management.
* requires actual daily production to approximate the daily schedule (closely)
* Cannot respond rapidly to changes in product design, product mix, or large demand volumes
(debatable)
* requires a large number of set-ups and frequent shipments of purchased items from suppliers
* requires parts to be produced and moved in the smallest containers possible
* not well suited for irregularly used parts or specially ordered products (see Time based
competition, a development on JIT)
* the layout of the factory may have to change to a cell based or product based system, rather
than a process based system.
* JIT by definition takes safety out of the process by reducing buffer stock, this causes
stress on operators which can be extreme. Kaizen
The Japanese term meaning continuous improvement. Tends to be associated with Time Based
competition. Concentrates on elimination of waste.
There are two roads to improvement: Kaizen, principally involves incremental change,
Innovation involves drastic improvement; both are important. Read Imai.
The significance of Kaizen to the operation can be summarised in the figure below: from Omai.
Example of no Kaizen (Corning Glass Case); successful Kaizen, (Soft Optics Case). Kaizen not
enough (Soft Optics Case).
Kanban
See JIT. A ticket-to-produce, or card, used in Just in Time production, originally by
Toyata. The idea being to produce to order, not to capacity. Although
52
there are many types of card, two main types used by Toyota are the Withdrawl Kanban and
the Produciton Ordering Kanban.
The Withdrawl Kanban specifies the item and the quantity the subsequent process should
withdraw from the preceding process and the stocking locations for each
process.
The Production Ordering Kanban specifies the item and the production quantiy the preceding
process ust produce, the materials required and where to find them,
and where to store the finished item.
Kay, Alan
One of the founders of hypertext.
See also Bush, Engelbart and Nelson.
Kehoe Brendan P.
Author of the book "Zen And The Art Of Internet". See Internet.
Kellogg Michael K.
King Peter J.B.
Author of the book "Computer And Communication Systems Performance Modelling". See
Networks.
Kling Rob
Author of the book "Computerization And Controversy, value conflicts and social choices".
See Computing.
Knowbot
A program which searches networks for information and programs and carries desired
information back to a user. See Internet.
Knowledge Base
The data, knowledge and rules used by experts to solve problems.
Refer also to Inference Engine.
Knowledge base management system
The software that manages the knowledge base. See Artificial Intelligence and
Information.
Knowledge base
The data, knowledge, rules-of-thumb, and decision rules used by experts to solve a
particular type of problem. See Artificial Intelligence and Information.
Knowledge organisation
see Learning organisation
Knowledge
Tacit knowledge is the exclusive property of the individual (like the ability to bake
very good bread - it requires indefinable experience and feel). Formal or
defined knowledge can be represented by a formula and can be the property of all. Moving
from tacit to formal knowledge is very difficult and valuable. See
Artificial Intelligence and Information.
Knowledge
Where is the wisdom we have lost in knowledge?
Where is the knowledge we have lost in information?
from "The Rock" by T.S. Eliot
See Artificial Intelligence and Information.
Knowledge workers
Are the new employees, supervisors and junior managers. They know more about their work
than their employers and are versatile; being able to do more
than one task and being able to repair stoppages and to improvise. Having knowledge
workers creates tensions because they knows more about their
employers. They will tend to be proud and independent. They may not always work well with
others (Easy to live with can sometimes be inversely related to
talent).
Management of knowledge workers is difficult; they must be motivated and attracted. The
knowledge worker cannot work without the company, however, both
need each other. The manager becomes a facilitator; creating an environment in which the
knowledge worker can perform, taking away distractions, creating space,
guiding not ordering.
See Artificial Intelligence and Information.
KROL Ed
Author of the book "Whole Internet (The)". See Internet.
53
L'industrie Des Telecommunications, options techniques et enjeux industriels
See Networks.
LAN
Local Area Network. See Networks.
Languages
Machine-level Languages. Binary code (strings of 0s and 1s) which can be directly
interpreted by the internal circuitry of a computer.
Symbolic or Assembler Languages. Machine-level instructions are made more English-like by
being represented by symbols which relate to the instruction being
used.
High-level Languages. Instructions which are translated into multiple machine-level
instructions. Examples are COBOL and C.
Fourth-level Languages. Languages which are easy to use (such as very English-like syntax).
Examples are Database Query Languages, Report Generators,
Program Generators and Statistical and Problem Solving applications.
See Computing.
Laquey Tracy
Author of the book "Internet Companion (The)". See Internet.
Laser
A word which was in fact originally an acronym for Light Amplification by Stimulated
Emission of Radiation.
Laurel Brenda
Author of the book "Computers As Theatre". See Education and Learning.
Lazonick William
Author of the book "Business Organization And The Myth Of The Market Economy". See
Policy.
Lead investor
Venture capitalist or other deal maker with the largest share in the syndicated
invnestment. He usually initiates the deal, and takes a hands on role on behalf of
the other players.
Leadership
According to Andrews must include 3 components: organisational leadership, personal
leadership and architech of organisational purpose.
Learning
Individual learning and group learning. Individual learning can be selective rather than
objective. Group learning is essentially political; progress and decisions
or outcomes will depend on power playing in the group. Particularly in open ended
situations.
Learning models
Model 1. Act on error to correct it.
Model 2. Each act to improve only affects one symptom or one cause. There may be many causes
(the idea of incremental progress would be an example).
Learning organisation
Learns from mistakes, encourages enterprise and responsibility and therefore allows
mistakes. A company is not a learning organisation unless it does things
differently; to do things differently it must see things differently. This is very hard
for older managers who have grown up in the old economy. There will be
tension and war with younger managers. Because of this need to see things differently
there is no correlation between investment and productivity for IT
investments.
Learning Organisation, The
Lease
Is a contract whereby an owner (lessor) grants the use of property to a second party
(lessee) in exchange for rental payments. Two major kinds of lease:
Capital leases (financing leases), transfer substantially all the risks and benefits of
ownership. They are equivalent to instalment sale and purchase
transactions. The asset must be recorded essentially as having been sold by the lessor
and having been purchased by the lessee. Operating leases, e.g.
telephones are rented by the month and rooms by the day etc.. operating leases are
accounted for as ordinary rent expenses; no balance sheet accounts are
affected by operating leases.
Leased lines
54
Line leased from the public network carriers that enable both voice and data
communication.
Lefcoe G.
Author of the book. "Teleports In The Information Age". See Networks.
Lemons
Bad deals and good. Bad investments usually go wrong before the goods one produce a
profit. The lemons ripen before the pums.
Letch Robert A.
Leveraged buy out
Similar to a management buy out though usually applied to US deals where the transaction
will have been initiated by a financial group rather than the
management. The name refers to the high level of borrowing which the company takes on,
using the assets being purchased as leverage. When British buy outs
seemed to going the way of their US counterparts, with large, highly speculative deals
being put together by city financiers, the term started to be applied to
UK buy outs. Nowadays, th eidea of high levels of leverage is a distant memory.
Levered Beta
Also called the Equity Beta. See Beta and Finance.
Levy Raymond
Author of the book "Les Alliances Strategiques / Teaming Up For The 90s". See Strategy.
Liabilities
The resources owed to others. Often referred to as creditor equities.
LIFO
Last in first out method for valuing inventory; allows inventory to be costed at
replacement cost which is prefereably to FIFO
Limited Rationality
See Hyper-rational.
Linear Programming
Liquidity
This ratio indicates the extent to which short term assets are adequate to settle short term
liabilities. However a current ratio below 1.0 does not necessarily mean
that a company has liquidity problems, nor the reverse. This is because liquidity is primarily
concerned with future cash flows whereas the current ratio considers the
position at a point in time. A high ratio may indicate poor investment policy. See acid test
(quick ratio)
Liquidity
The ability to assets into cash. Assets can be current or non current (see current asset,
current liability, non current asset)
Lists, List processing
See
Living dead
Companies which are just about trading profitably but are unlikely to do really well. A
slightly dated term used about investments the deal maers prefer to
forget.
Local Area Network
See Networks.
Local Loop
or Subscribers Loop, the circuit with connects the subscriber into the subnet. See
Networks.
Lock out agreement
An agreement to give the buy out team time to negotiate the purchase of their company
free of pressure from other bidders.
Logistics
In functional departments used in cross functional (project) processes, concentrate on
the individuals at the cross points, not the functional heads.
Logistics
The movement and storage of goods together with associated information flows from the
beginning tothe end of the supply chain. For a manufacturing firm, the
supply chain extended from procurement of raw materials and components through all
production processes to the final distribution of finished goods to either
55
end users or retail intermediaries.
Long wave (Kondratieff cycle)
the term used to describe the cycle of major capital goods expansions which takes place
every 60 years with booms and depressions. Explained and
accepted by J Forrester, using systems dynamic models.
Lotus
Lotus Development Corporation is a leading software developer founded in April 1982 by
Mitch Kapor. Lotus' first product was 1-2-3 for the newly
launched IBM PC. Since then Lotus has puchased additional technology and become a major
force in personal Computer. Lotus now includes
wordprocessing (Ami Pro), groupware (Notes) and database (Approach) in its product line.
LU-Logical unit
represents an end user to an IBM network. An end user can be an operator at a terminal or
an application program.
M&A
Macintosh
See Apple.
MacKinnon Dennis
Author of the book "An Introduction To OSI". See Open Systems.
Maftoul Marcela
Author of the book. "Teleports Et Zones De Telecommunications Avancees". See Networks.
Mainframe
See Computing.
Maintenance
Areas of potential loss or gain for businesses with maintenance issues:
Product design, Risk of failure (waranty), service support, Repair Triggers (usage ie. number
of miles, number of copies), Prevention Triggers (dental reminders),
Enhancement Triggers (software update reminders), Inputs (personnel, who did the work; Parts,
which ones fail), Symptoms (running temperature, vibration), parts
distribution, Tools distribution, Service personnel distribution.
MAN
Metropolitan Area Network. See Networks.
Management accounting
The identification, measurement, accumulation, analysis, preparation, interpretation and
communication of information and in a format that assists relevant
internal personnel in fulfilling organisational objectives
Management buy in
An offshoot of the management buy out industry. The purchase of a business by one or more
outside managers withthe help of a group of financial backers.
The term was applied indiscriminately in the late 1980's to any bid involving a well nown
city figure, on the grounds that a buy in sounded more constructive
than the hostile takeovers they usually were. Buy ins are now seen as being considerably
riskier that buy outs, because they involve an outside management
team which does not know the copany as well. Many deals are neither pure buy ins or buy
outs buy binbos
Management Information System
See Control and Monitoring and Artificial Intelligence.
Management inormation systems (MIS)
See Information Systems or Strategic Information Systems.
Management Magazines
Country Magazine
Australia
The Bullitin
Belgium
Canada
China
Denmark
Germany
France
Hong Kong
India
Indonesia
56
Japan
The Netherlands
Russia
Switzerland
Thailand
United Kingdom
United States
See Financial Information, Financial Times and Wall Street Jounal, Financial Newspapers and
Financial Magazines.
Management Newspapers
Country Newspaper
Australia
Belgium
Canada
China
Denmark
Germany
France
Hong Kong
India
Indonesia
Japan
The Netherlands
Russia
Switzerland
Thailand
United Kingdom
United States
See Financial Information, Financial Times and Wall Street Jounal, Financial Newspapers and
Financial Magazines.
Management support systems (MSS)
A primary function of MSS systems is to provide end users with query and analysis
capabilities. The principal use of MSS is to satisfy the information needs of
managers and professionals, needs often closely related to decision making. Typical query
and analysis fuctions include searching a data base for an item of
information, generating what if scenarios to test implications of planning models, and so
on. (after Wiseman). Target managers and professionals rather than
operatives and clerical staff. See MIS, SIS, Hybrid information systems, DSS, Nolan's
stage, Anthony's pyramid, EIS.
Management value added
Business value added - shareholder value added - direct operational and management costs.
Allows the calculation of What are managers worth, average
50%. For Toshiba, for every dollar spent on managers two thirds of a dollar was added.
Managing people
Entrepreneurs must:
* Lead and exert authority
* Set high standards that embody their vision
* Secure & sustain commitment totheir idea
* Establish new working relationships
* Weld theteam together
* Learn to delegate without losing control
* Address conflict head on (do not put it off toresurface later)
* Cut losses early
Therefore
be prepared to spend time on people issues and make people decisions. People issues tend to
get put off in favour of 'more important 'things: bad idea
Manufacturers Hanover Bank
See World-wide Network and Case.
MAPI-Messaging API
Like VPI, a program for assisting E-Mail, allows mail access to any program.
Marginal cost
The answer to the following question: how much will it cost me to produce one additional
unit of my product, or tosupply one more unit of my service. The
57
situation in which fixed costs have already been absorbed elsewhere and the need to make
profit only demands that direct costs are exceeded (ie raw
materials). See Economics.
Marginal costing
see marginal pricing.
Marginal pricing
Is a deliberate policy, whereby one agrees to sell at a price in excess of the marginal
or variable cost buy which is below the total or full cost figure. Similar to
marginal costing but the two should be kept separate because marginal pricing (as with
other pricing) is primarily dependent on market forces rather than
cost structures. Inevitably high fixed cost companies with spare capacity are tempted to
use marginal pricing as a means of using the spare capacity.
Dangerous, particularly if used long term.
Marginal Revenue
Is the change in total revenue resulting from a change in sales volume. MC=MR.
Maria Ramirez
See Reuters.
Marine April
Author of the book "Internet: Getting Started". See Internet.
Market analysis
Analytical techniques include: SWOT, Product life cycle, Business portfolio concept,
PIMS.
Market forces
Whenever the market fails (Japanese car case) it become necessary for intervention
(government intervention). Introducing laws for control. The market fails
because of disparagement in information (Ciborra).
Market growth rate
Relates to long term underlying growth rates. High implies a young market, low implies a
mature market. A product with a high share of a growth market is a
Star, one with low share of a growth market is Hopeful, a large share of a mature market
is a Cash cow, a small share of a mature market is a Dog. A
company should examine its products and have a good mix (not including dogs, although
they too can be profitable). The Boston Consultancy Group model
for porfolio analysis places products in a 4 square matrix with each of these categories.
The major objective is to have stars and hopefuls coming through. Can
use the matrix on countries and customers. See Market share
Market positioning
Involves two sets of factors: controllable and uncontrollable, and how they affect and
influence customer perceptions.
Controllable: Product specification, Advertising, Packaging, Price, Distribution, Service
aftersale.
Uncontrollable, Word of mouth, Distribution, Competitors, Way of use (which may be other than
intended), Use with complementary products, Economic
conditions, Regulations, Politics, The environment.
Positional analysis takes in 5 steps: 1, Given a target customer (whose perceptions are you
going to represent?), 2. Given a set of relevant alternatives, 3.
Hypothesise a set of relevant benefits, 4. Obtain positions, 5. Interpret results.
Market research
The worst way to learn about the customer.
Market share
A measure of absolute market share and also of relative market share (relative to major
competitors). To determine market share use the PIMS model - a
market is determined by customers perceptions of substitutability. This means that a
product which dominates a clear niche should be rated as having a high
market share if the niche is distinct from the main market. See market growth rate.
Market Signals
Information which is passively passed between participants in markets. For example a
company which anounces that it is issuing new equity is also sending
signals to the market that it needs new financing and that it prefers equity financing
over, for example, debt financing. This may signal to other market
participants that there are reasons why the company is not using debt financing. For
example it may reflect internal managements expectations of future
earnings.
58
A nice analogy to market signals is body language in individuals - you may be broadcasting
more than you think. See Finance.
Market value
see book value.
Marketable securities
A current asset (see investments and other assets).
Marketable securities
Shares of stock, bonds, treasury bills and commercial paper held as short term
investments. Stated in the balance sheet at original costs. If less that purchase
value this must be stated.
Marketfeed 2000
See Reuters.
Master Production Schedule (MPS)
An expression of the operational plan of production by period, indicating the timing and
size of end item quantities (used in MRP).
MPS receipt row: the row in a master production schedule that shows the quantities of an end
item scheduled for completion by specific dates.
MPS start row: the row in a master product schedule that shows the dates production is to
begin for the quantities of end items specified..
Materials Resrource Planning (MRP II)
Mathematics
MATIF
Marchè à Terme des Instruments Financiers, the french options exchange. See Reuters.
Matrix organisation
Organisational structure that co-ordinates accross product, function and geography in an
organisation.
Maturity Matching
The concept of a company matching the maturity of its assets with its debts. The
objective is to minimise risk by matching cash flow sources and uses. See
Finance.
McClure Carma
Author of the book "CASE Is Software Automation". See CASE.
McCrum William
Measurement
See Balanced Scorecard.
Merger
An ecomonic transaction that forms one entity fromtwo or more previous ones; ther is
typically an acquirer and an acquired firm. It can be vertical, horizontal,
or conglomoerate.
Mergers & Acquisitions
An area of banking which deals with the financing of company mergers and acquisitions. In
a successful M&A the shareholder of the target company (on
average) gains 20 to 25%. The benefit to the bidding company shareholder is 0% to -4%.
These results come from US studies in the 1980s.
A hostile takeover is one where the target company actively resists its takeover.
Cross border means M&A activities across national boundaries.
In Japan most M&A activity involves either only Japanese companies or Japanese companies
taking over foreign companies. 10-15% of Japanese M&A has the
taker as a foreign firm, and most of these are foreign companies buying-out the Japanese
partners in a subsidiary operation.
Mergerstat Review
An American publican which now covers Europe and Japan which reports details of all
public corporate acquisitions.
Message Switching
See Networks.
Metal Bulletin
See Reuters.
Mezzanine finance
Loans, usually unsecured, which rank after secured or senior debt buy before equity in
the event of the company failing. To compensate for the greater risk,
they typically carry one to three percentage points above secured loans, and often carry
59
an equity "kicker" to give the lender a stake in theequity.
Microcomputer
See PC, SUN UNIX, or Computing.
Microsoft
The dominant force in personal computing today. Founded in the late 1970s by William
Gates III who demonstrated a keen business instinct and a talent for
software development unparalleled in the industry. Microsoft started off by making the
DOS operating system for the IBM PC an now produces a wide range
of software lines including Wordprocessing (Word), spreadsheets (Excel), databases
(Access and Fox Pro) and their core business of operating systems
(DOS and the Windows shell, Windows NT).
See Lotus.
Microworld
Comprises maps of knowledge, words, diagrams, and computer models. Play and learn takes
place in the interaction of maps and mental models. Used in
computer systems analysis.
Microsoft
The dominant force in PC and Mac-based computing operating systems and software.
Miller Jeffrey G.
Miller, George A.
A Harvard psychologist who wrote an important article in the 1950's called `The magical
number seven, plus or minus two,' which was about short term
memory. It discovered that most people can only remember numbers up to about seven
digits. Most telephone numbers and area code systems are based on
this work.
MIME
Approach to E-Mail providing a platform for groupware. Virtually an Internet standard for
multimedia. Shareware. Friendly interface to X400. Provides one
direction for groupware.
Minicomputer
See Computing.
MIPS
An acronym for Million Instructions Per Second. It is a measurement of how fast a
computer can work. See Computing.
MIS
See Control and Monitoring and Artificial Intelligence.
Mobile Users Handbook
See Networks
Models
Modem
Modulator-demodulator. A device that accepts a serial stream of bits as input and
produces a modulated carrier as output (or vice versa) . Is inserted
between the digital computer and the analog telephone system. See Computing and Networks.
Modigliani Franco
Author of the book "Capital Markets: Institutions And Instruments". See Finance.
Modigliani-Miller Hypothesis
States that in an efficient capital market (ignoring tax differences) the relative
portion of debt and equity in a company's capitalisation does not affect the
market value of the firm.
Monetary asset
Has a fixed exchange rate to cash. examples would include accounts receivable or payable.
see nonmonetary asset
Money (US)
The task of defining money involves deciding where to place a separating market on the
continuum (by picking a minimum level of liquidity, so that any asset
less liquid than this is defined as non-money, Assets to the left of it are money, to the
right they are not. Such a marker is somewhat arbitrary.
M1, includes currency, travellers cheques, demand deposits, and NOW (Negociable Orders of
Withdrawal accounts, which bear interest and are fully checkable)
M2, is M1 plus: a number of savings instruments including savings deposits, money market
60
deposit accounts, some money market mutual funds and small time
deposits. Also includes certain liabilities such as repurchase agreements and Eurodollar
deposits held by US residents, issued by banking institutions on an overnight
basis.
M3, comprises M2, plus shares in money market mutual funds that are available only to
institutions, time deposits with balances of at least $100,000, and
repurchase agreements and Eurodollar deposits with terms longer than one day.
Money Market Services (MMS)
See Reuters.
Money supply
See Money, Open Market Operations, Discount rate.
Monitor
See Computing.
Monte Carlo analysis
A sophisticated form of mathematical analysis that lets you come up with a range of
possibilities or outcomes of possible actions. Whereas analysts most often
predict results for the total project based on isolated changes in particular variables,
MC analysis predicts results based on simultaneous changes in numerous
variables. MC analysis is ideal for very uncertain situations; like the acquisition of a
company where future cash flows and synergies are not certain. See
Research planning model
Mouly Michel
Author of the book. "GSM System Mobile For Communications (The)". See Networks.
Mouse
See Computing.
MRP favourable environments
Some environments favour MRP. Most useful in lumpy demand situations for demand dependent
items. The majority of MRP users are in fabricated metals,
machinery, and electric/electronic industries. The relative superiority of MRP increases
with more levels of manufacture (number of components in a
parent)and larger lot sizes. Only 12 percent of MRP users in 1987 used continuous process
production techniques (eg paper mills).
MRP implementation issues
Average cost of implementation was calculated at $700,000 in 1981, when 65 percent of
manufacturing firms questioned had installed MRP rather than other
systems. Some miraculous success stories, many nightmares.
prerequisites for success include:
* Computer support
* Accurate and realistic data input
* Management support
* User knowledge and acceptance.
Each week the average firm computes the time phased records for 13,000 items, which each
record having more than 38 time periods in its horizon. This massive
data manipulation requires precise handling and powerful computing. All decision support
systems like MRP succeed only if data inputs are accurate.
Inputs are: the master production schedule, bills of material (BOMs) and inventory records.
Inventory records require the current on hand inventory balance, lead
time estimates, and lot sizing rules. When MRP fails it is usually the inputs data which is
wrong.
MS-DOS
An operating system for IBM or compatible personal computers.
Multi-point circuit
In communications: where several terminals share a single dedicated circuit (old system
for gaining efficiency)
Multinational company
A company with separate unconnected operations in many lands.
Multiplexing
To share circuit bandwidth a small fraction is given to each terminal. The multiplexer
handles the mixing of traffic and provides as many physical interfaces as
there are terminals on the circuit. See frequency division multiplexing (FDM), Time
division multiplexing (TDM), Protocols
Multiprocessor Computers
Computers with more than one CPU.
61
My word is my bond
Since 1801 the motto of the London Stock Exchange (in Latin `dictum meum pactum') where
bargains are madewith no exchange of documents and no
written pledges being given.
Nakane Jinichiro
National Product
Keynes. For the fiscal year April 1-March 31 1938 Keynes produced a calculation:
Private & Government consumption
apart from making good wastage & depreciation
4140
Making good wastage & depreciation
420
New investment
4850
Negroponte
MIT character who believes that transmission problems can be solved in communications by
changing the current use habits. What uses wires (voice) will
move to theair; what currently uses the air (chiefly viewo) will move to wires. The phone
will become wireless, as mobile as a watch; computer video will use
fiber optic in a switched digital system as convenient as the telephone today.
Nelson, Ted
One of the founders of hypertext and the inventor of the Dynabook concept.
See also Bush, Engelbart and Kay.
Net income
Company net income consists of the profit contributions of the various revenue segments
(divisions) less the total of the indirect fixed costs. In a group of
companies it is necessary to derive some means for apportioning fixed costs (eg EDP,
Information systems management etc).
Network driver
There are great differences between the details of X.25, Ethernet or Token Bus networks;
the network driver must cope with and isolate these details from
the applications. The protocol software implements the standards needed for effective end
to end or host to host communications
Network interface
is usually implemented by separate programs within the operating system of the host
computer of a network. Applications programs using the network can
access networking software via idealised software interfaces. Within network software
there is usually a network driver, which deals with the network and the
protocol software which deals with the remote host. The network driver incorporates
specialised programs needed to operated theinterface hardware.
Network marketplace
Examples of approaches taken, stimulated by the need for control and the perception of
required control.:
* Pharmaceuticals: McKesson has control by one large supplier, proprietary standards and
private network. French Minitel for pharmacies establishes a cooperative
marektplace.
* Textiles: Industry wide EDI standards. A concerted approach and mutual assistance joint
among partners.
* Auto components: imposed systems by large manufacturers, non standard solutions, little help
for small firms.
Network technology deployment is not neutral to the marketplace.
Policy will affect:
* one or many network marketplaces ?
* who controls the marketplace
* who has access to the marketplace
* who can learn from participating in the marketplace
* does the marketplace favour large or small firms.
Concepts compared: PTTs use ISDN. favouring open and fair market, universal but generic
coordinatin, much experimentation by individual organisations, assist
shared learning (depth limited)
USA, ONA: favouring closed market places, customised and framgmented coordination, a few
optimised schemes (less generic) less learning but more depth.
62
(Beware!! sweeping generalisatoins in progess).
Where to go depends on the control layer.
New economy
In the old economy there was an equation In the new economy
Instead of working fast, companies must learn fast as well. Companies must focus on developing
solutions not processes.
New entrants
One of Porter's five forces.
Newco
The buy out is usually carried out through a newly created company reffered to as Newco
News Bytes
A news service that reports on technology related issues.
NFS
An acronym for Network Filing System. See SUN.
NII
See Super Internet.
Nikkei
See Reuters.
Noam Eli. M.
Author of the books. "Telecommunications In Europe" And "Telecommunications Revolution
(The)". See Networks.
Nolan
Nolan's stage hypothesis, predicts the change of investment and costing of information
systems in companies. Cosequences of the application gap and the
move towards outsourcing.
Nolan's stage methodology
Nolan claims that organisations pass through various stages in their use of IT.
* Initiation (computer acquisition)
* Contagion (intense systems developent)
* Control (proliferation of controls)
* Integration (user/service orientation)
In assessing the needs of an organisation, Nolan would map out the organisation by function or
department in three layers (strategic planning, management control,
operation control - see Anthony's pyramid). He would then score each cell in the matrix
according to potential computer (information system need) and availability.
He would then prescribe a means for supplying. Concentrates on the use of computers and IT for
automating. see SIS, CSF
Nominal interest rate
The stated annual percentage divided by the number of compounding periods occurring each
year.. See Effective interest rate.
Non current assets
Resources that cannot be expected to be sold or consumed within the normal operating
cycle of teh business. Normally considered to be long lived. E.g Plant
assets. Property, plant and equipment are recorded on teh balance sheet at original cost.
Deducted from each of teh assets, except land, is accumulated
depreciation an allowance to reflect wear and tear and obsolescence.
Nonassets and nonliabilities
Contracts may stipulate payment over a period of time (eg a service contract or interest
on a loan; although these are real assets or liabilities they are not
recorded at the start, only as payment is earned. A loan, for example will become a
liability, its interest will not.
Noncurrent liabilities
Includes all items owen, not included in current liabilities, such as long term Notes and
Bonds. Amounts paid to the company in advance for goods or
services are liabilities and can be current or noncurrent.
Nonliabilities
See nonassets
Nonmonetary asset
Has no fixed exchange value to cash. Value depends on economic conditions. examples would
include inventory and plant and equpment.
Noothoven Van Goor J.M.
Author of the book. "Teleports In The Information Age". See Networks.
Notes
63
Documents of value. Loans requiring payment. The equivalent of the contract with a lender
stating when and how much money will be paid back. Can refer to
either a current or a non current liability or both at the same time (portion due in one
year being current, portion due in subsequent year being non current)
Notes payable
Notes
See Lotus.
ntegrated Broadband Networks, the public policies issues
See Networks.
O'Dell Peter
Author of the book "Computer Networking Book (The)". See Networks[[ogonek]]
Object Oriented Computing
The complete name of this technology is Object Oriented Programming Systems, or OOPS for
short. It is a new way to make software. Everything in
programs are now objects and the programming task becomes the combination of objects.
Each object carries out specific tasks and the information passed
between objects is in a standardised way. Looked at in this way OOPS are an extension of
the structured programming techniques which are now almost
universally used.
This sounds like an inconsequential development but it is a very powerful method. Most OOPS
are icon based and run under a GUI interface. The net result is a
development environment in which most information is presented graphically, making it easy to
develop in. The objects themselfs make it possible to speed up
development and deliver systems which can be very complex but easy to debug and maintain.
This technology is spreading from the PC world into mainframe applications and across into
many types of applications - from OOPS based multimedia applications
like Authorware to databases such as Ontos.
Objective
Management by Objectives
Invites subordinates to set their own specific objectives against which they will be
measured and rewarded n the period of time to come
Objective Setting
A useful technique for evaluating business objectives is the so-called SMART+ method. Are
the objectives:
S
Specific. Objectives should be a specific as possible. If you can visualise in your mind
a detailed image of what you want then the objective is probably
specific enough.
M
Measurable. How will you know that the objective has been reached?
A
Achievable. Is the objective do-able? Is it worth spending your time and energy?
R
Relevant. Do you really want to do this.
T
Time-based. When do you want to achieve the objective? What are the milestones and when
will they be reached?
+
Positive. Can you think of the objective in purely positive terms? Negatively visualised
objectives will often result in you moving towards the negative image
rather than where you really want to be.
Refer also to Goals.
Occupancy costs
The cost of occupying space, offices, warehouses and factories (often the second larges
business cost). If the copany rents its space, those costs appear
explicitly in cost statements. They should be charged even if the company owns its
buildings. See Economics.
OCR
Optical Character Recognition. Software that can interpret text stored as images and
convert it into machine readable text.
Refer also to PC.
Ohmae Kenichi
64
Author of the book "Beyond National Borders, reflections on Japan and the world". See
Policy.
Okimoto Daniel I.
Author of the book "Competitive Edge, the semiconductor industry in the US and Japan".
See Policy.
OLTP
See On line transaction processing
OMR
See Reuters.
On line transaction processing (OLTP)
In databases, a technique for managing incomplete transactions that is most commonly used
in reservation systems and point of purchase applications. Not all
applications demand OLTP capbility
On-line Processing
A computer task which is perfromed by the computer at the time the request is made.
Examples include many application systems such as ATM banking
transactions. See Batch Processing.
ONA
An acronym for Open Network Architecture. A U.S. term for the splitting of telephony into
Basic Service Elements (BSE) to encourage competition. The
idea is now dead but competition in U.S. telecommunications lives on. The same concept is
called ONP in Europe and ONC in Japan.
Open collaborative Environment (OLE)
Apple program compettor of MAPI, a program for assiting E-Mail.
Open Market Operations
The Federal reserve (Fed) controls the supply of money by controlling bank reserves
through the purchase and sale of bonds. Selling bonds reduces the
money supply by soaking up M2 (see Money), buying bonds increases money supply. The more
money is available, the lower become interest rates
(eventually), and the lower the value of the currency (ultimately).
The Federal Reserve Open Market Committee influences the money supply by ordering "open market
operations", the purchase or sale of bonds from or to the
commercial banks. In order to increase H (high powered money in reserve) an order is given to
the New York bond trading room to buy bonds. This causes the
commercial banks reserves "H" to increase, enabling them to expand their lending, in in turn
causes an increase in the demand deposits held in the banking system.
By law banks must hold reserves proportional to their lending (20% for example).
Open Systems Handbook
See Networks.
Open Systems
See Open Systems.
Operating cycle
Operating profit
see Trading profit
Operating System
A complex set of programs which operate between the hardware of a computer system and the
application programs. This is true of all computer systems
from PC's to the most powerful mainframes:
The operating system acts as an insulator between hardware and applications. To applications
it can present a standard environment for the programs to run in. So
the application doesn't have to be changed for every manufacturers hardware version or
upgrade. The same is true for hardware which only has to interpret
instructions from one source - the operating system.
Operating Systems
Batch processing of single programs was used witha single CPU and one program at a time;
very wasteful on processor time. This led to development of
memory partitioning and multiprogramming, in which several programs are brought into the
main memory they are cycled until the process is completed
(Multiprogram of Batch Sequences). Time Sharing Multiprogramming allows users to connect
through terminals and to converse as though the system was
their own. Time Sharing: the slow speeds of theterminals allowed a large number of users
to be served by one computer. Time Sharing Multiprocessing is an
advancement using more than one processor. Virtual Systems, the latest development allow
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programs to be segmented to pages or sectors. They arebrought
into memory regions for processing while other pages or segments remain in their disc
location (expensive and cumbersome). See Microsoft.
Operational research
See Systems analysis, hard systems thinking and SSM
Operations
A good operation is one through which goods, customers, or information flow without
stopping or unnecessary transportation. A competitive operation is one
which achieves the performance of a good operation with fewer resources.
The focus of the operation must shift from the process to the product. Work groups should
complete the product or task they handle. (de Treville personal opinion)
Operations costs
includes payrolls and depreciations, the cost of "everything that is essential for
getting today's goods and services produced and delivered to today's
customers", together with management costs -- payments to managers, including bonuses and
fringe payments. See Economics.
Opportunity cost
Logic that assigns an opportunity cost to money also puts a cost on space. If a dozen
square yards of floor spacein a factory can produce an item that
generates $100 in profit, that profit becomes a hidden cost (or a foregone opportunity)
if the space is used for another purpose. See Economics.
OPT managerial considerations
Advantages:
* differentiates and identifies critical and non critical resources
* specifies a schedule for each resource
* simultaneously determines order releases and planned lead times
* allows for transfer batches that are not equal to process batches
* allows for varying process batches
* enables management to fine tune schedules
* can be used to analyse "what if" questions
Disadvantages
* software is proprietary, users must rely heavily on suppliers. It is a "black box".
* assumes that the manufacturing process can be accurately modelled.
* requires changes in typical manufacturing philosophy
* potential for system nervousness (plans are unstable and in a constant state of flux)
* does not specifically address cost.
Whether or not all of these listed disadvantages are really disadvantages is highly debatable.
Optical Character Recognition
See OCR.
Optical character recognition (OCR)
Software that can interpret text stored as images and convert it into machine readable
text.
Optical Fibre
See Networks.
Optimisation
Optimised production technology (OPT)
Data inputs for OPT are similar to those for MRP. Bills of materials, item routings, inventory
status and demand requirements are all used. These files can be
continually updated to reflect changes.
* The Buildnet module converts input data into a product process network. The network is a
mathematical model of the manufacturing process, which describes
how the product is made, the competition for resources, and the interrelationship between
parts going into an assembled product.
* Serve computes the average utilisation of each resource, using the demand requirements for
each product. It then sorts them by rank order from the most heavily
loaded to the lightest. Serve is essentially a modified MRP system.
* The Split module divides the network into two parts: those resources affected by the output
of the bottleneck operations, and those that are unaffected.
* The Brain module is the heart of the OPT system. It is a non interactive algorithm that
solves the scheduling problem within some defined range short of the
optimum. It determines process batch sizes, production sequences, and buffer stocks for the
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critical resources, based on their capacity limitations, to maximise
throughput. The output of Brain is used by Serve to develop schedules for non critical
resources. Driven by schedules for critical resources, Serve tends to schedule
non critical production in small batch sizes.
see OPT managerial resources
Optimised production technology (OPT)
A technique for production scheduling and inventory control that recognises capacity
constraints (which MRP does not). The goal of OPT is to simultaneously
increase throughput and decrease inventory and operating expenses. The approach differs
from MRP and reorder point systems, which develop their
schedules sequentially, first identifying the timing and size of order releases and then
making adjustments to account for capacity constraints. The basic
concepts of OPT approach fall into two major categories: capacity and inventory.
* Capacity:
OPT recognises two types of resources in a manner similar to the method used in capacity
requirements planning (CRP) with MRP systems. A critical resource is
one for which the requirements are equal to or exceed its capacity over a specified period of
time. A non critical resource is one for which the requirements are less
than capacity. A resource is any element, such as people, machines, or space, needed to
produce a product.
Lead time effects
MRP determines the lead time for an item, it simply computes the longest time path through the
bill of materials. It cannot recognise that two or more components
may need the same production process at the same time. OPT attempts to simultaneously
determine the release dates for orders and the sequencing of their
components, recognising the capacity constraints of the resources.
* Inventory
MRP recognises only one lot size for an item. OPT recognises two basic types of lot sizes. A
transfer batch is a quantity of an item that moves from station to
station. A station will not start work until it has enough work to complete a transfer batch.
Parts will be released only in transfer batch sizes. Transfer batches can
vary through the production system from resource to resource.
The other lot size recognised by OPT is the process batch, which is the total number of units
of an item processed at one time at a particular station. The process
batch consists of an integral number of transfer batches.
The advantage in using the concept of process batches and transfer batches is that as a
transfer batch is completed it will move to the next station, not waiting for the
whole lot. The process batches at the critical work stations can be chosen to minimise set-up
times, thus increasing throughput at bottlenecks.
Option analysis
Similar to that used to value stock options. It provides a flexible aproach to valuing
research investments because it allows the valuation of investments at
successive stages of a project. Used properly it allows uncertainty into the analysis.
Used by Merck in joint ventures with small Co.s (like biotech) where an
initial payment is no guarantee of continued support.
Option generator
Wiseman tool for analysing targets for strategic thrusts (initiatives)
Options
Relevant to currency.
Buy a choice, or sell a choice. The option can be exercised or not when the time comes. A
Call option allows you to buy, An option to sell is a Put option.
The price you pay to buy is the Strike Price. If we sell an option the Premium is what we
receive.
When bidding for a contract (before winning it) can buy an option, a Put. If you decide to buy
an option but do not exercise it you pay the premium, there is no
obligation to exercise. The Premium is in effect an insurance payment.
The higher the interest rates the more valuable the option. This because, instead of putting
all the money into the stock or currency the payment of the premium
allows you to invest the balance and earn interest.
European option cannot be exercised except at the expiration date
US options can be exercised at any time between taking it and the expiration date.
The option allows you to guarantee a level of profit slightly less than the hedge but it
allows profit increase if the exchange rate moves favourably. The price you have
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to pay for the option means that you cannot make as much money as in the risk rich unhedged
situation.
Options would be exercised if the option price is greater than the spot rate. They would be
allowed to lapse if the spot price is greater than the option price.
Options
These are financial contracts for the hedging of risk relating to a company's future
activities. Options are most common is two economic areas: commodities
and currencies. Options began in the early 1970s at the Chicago Mercantile Exchange.
Commodity options involve goods such as pork bellies and wheat
where future production and price are uncertain. It is beneficial to both the producer
and buyer of these commodities to hedge against future price
uncertainties. The same is true when converting money between currencies.
A call option is an option to buy. A put option is an option to sell. The price at the
exercise time is the strike price and the premium is the cost of purchasing the
option.
American Options can be exercised at any time prior to or on the expiration date.
European Options can only be exercised at the specified expiration date.
European and American options have nothing to do with geography they are purely historical
labels and both are traded world-wide.
Organisational models
Model 1. Have all information for a given decision.
Model 2. Decision making model. When new information comes, act on it immediately
Model 3. People act opportunistically, it is not a perfect system (honest). People will hold
back part or only give selected information so that they can have an
advantage.
Model 4. Although people get new information they don't or cannot act on it.
Organisational structure
Galbraith, J., suggests that organisation depends on the complexity of the role, or the
level uncertainty.
Increased communication channels can be vertical or horizontal. Vertical would be a Management
information system to reduce the load on managers by
automation. Horizontal communication can be Liaison between people who don't want to have to
talk to boss first, by formation of task forces, by formation of
teams or ultimately by introduction of matrix management organisation (for research type
groups at high levels of uncertainty).
Decreased need for communication can be seen in divisionalisation of the organisation (e.g.
GM) or by introduction of Slack (allowing late production or excessive
inventory). Slack can be a conscious decision (you don't need a high level of sophistication)
or it can develop because a choice has not been made on a suitable
structure model.
The assumption used by computer salesmen is that the computer will improve decision making by
improved communication. The treatise described is that this is not
the whole story. The story described does not include the role of the market (that is
introduced in Model three).
OS/2
The GUI of IBM. It is in competition with Windows from Microsoft, the Apple Macintosh and
Unix X-Windows. OS/2 has not been a great success and is
not expected to be a dominant platform in the future.
OSI
Open System Initiative. See Networks.
OSI-Open Systems Interconnection
Reference model for data communications which consists of a 7 layer hierachy that defines
the electrical characteristics, communications standards, and
software applications for computer systems
Other assets
See Investments
OTISLINE Case
Otis Elevator of North America develops and implements a computerised service system to
improve their service and thus differentiate themselves from the
competition.
The case concentrates on top management's viewpoint and neglects other important factors:
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Refer also to Case.
Outsourcing
The contracting of an external company of a product or service which was previously
supplied from within the organisation. Popular examples are the
outsourcing of data processing and telecommunications services. Benefits of outsourcing
include:
Reduced costs
Increased/Broadened services
Over the counter markets. (OTC)
Much less formal than the stock exchange. Any stock brokerage house anywhere in the
country (US) can create an OTC market for a security by quoting a
bid price at which it will buy the security and a higher asked price at which it will
sell the security. The spread between the two prices is the brokers revenue.
Owners equity
The residual difference between a firms Assets and its Liabilities. The stockholders'
equity section of the corporate balance sheet is typically divided into
two main parts. 1. Capital contributed by shareholders (either at the time of formation
of the company, or when additional shares of stock were issued).
Companies may issue different types of stock: Common stock or Preferred stock. Often both
have an arbitrary value (stated value) e.g. [[sterling]]1. The
value has legal but not economic significance. Amounts that the company receives above
the par values of the shares are categorised as additional paid in
capital, or capital in excess of par, and those below as a discount on the shares issued.
2. Retained earnings, indicates the accumulated earnings of the
busines. P/E ratio (price/earnings ratio)
This ratio gives an indication of the market's view of the company's growth potential,
business risks involved and dividend policy. In general, the higher the P/E ratio,
the more highly rated is the company by the market.
Package
See Software.
Packet Switching
See Networks.
PAM-Pulse Amplitude Modulatio
The first step to digitalise standard analoguevoicesignals. Once converted into a series
of PAM pulses the next step is to digitalise using PCM
Panopticon
A universal observation machine hypothesised by John Bentham, an English philosopher.
Par Value
The nominal value of stock (shares) issued by a company. Has not significant meaning
except that it helps to tell the number of issued shares. See Owners
Equity.
Paradigm Shift
Is a fundamental change in our understanding of how something works. The concept was
first discussed in the 1962 book "The Structure of Scientific
Revolutions" by the philosopher Thomas Kuhn. The application of this idea to the area of
information technology has most recently been discussed by Don
Tapscott and Art Caston "Paradigm Shift - The New Promise of Information Technology",
McGraw-Hill 1993.
An example of a pradigm shift which we are currently experiencing is the inversion of wire
over wireless technologies:
TV: broadcast is changing to cable
Telephone: wire is changing to wireless.
Parallel development (simultaneous engineering)
Design and production engineers at a company and at its suppliers work jointly from
beginning to end, not in a sequential manner.
Parameter
For example, take the following equation: y=ax, à` is a parameter. See also Variable.
Parent
In manufacturing: an item that has one or more components.
Parkinson's Law
States that work expands so as to fill the time available for its completion. From
Professor C. Northcote Parkinson, 1955 in The Economist.
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Partner conflicts
Questions that arise inclde whether parties
* Share the same vision and sense of purpose (why are we doing this)
* Are they bearing equal load
* Do they compliment each other's skills
* Are they growing withthe business (do they want to work in a big company with its
concomittent order
* Retain investor confidence and support
* Feel isolated and misunderstood
Thus communicate all the time
Partnership
Alternative to forming a company. has advantages and disadvantages
+ Can be easily disolved
+ Tax advantages for individuals who can offset losses against personal tax.
+ Easily disolved
+ Easy to add new partners
- Hard to value
- Liability, joint and several. Individuals, notably the most wealthy, can be personnally
liable to creditors.
- Who owns what.
See Company
Partnership
If a firm is not a corporation it is partnership if it is owned by two or ore parties.
Owners equity for sole proprietorship or a parnership is shown in the
balance sheet in a different way.
Patent
A right granted by governments giving the patent holder the exclusive rights to make and
market a product.
Pautet Marie Bernadette
Author of the book. "GSM System Mobile For Communications (The)". See Networks.
Payables period
A control ratio.
This reflects the success of a company in witholding payment to suppliers
Payback method
In capital investment appraisal the payback method is used to analyse the decision based
on How long does the asset take to pay for the original outlay.
Ignores many of the factors that should be considered in Capital investment appraisal.
See also return on investment method, time value for money, net
present value, discount yield.
See Finance.
Payback Period
See Finance.
PBX-Private Branch Exchange
Unlike the LAN PBX is the central control for a network. If there is a problem the entire
network can be affected. Has protocol converters.Once used to
switchtelephone lines, PBX's no support both voice and data traffic.
PC
Hardware:
For an overview of how computers work, refer to "How Computers Work", PC/Computing, February
1993.
The best place to buy PC and related equipment is Fry's Electronics in California:
Refer also to Software.
PC-NFS
See SUN.
PCM-Pulse code modulation
Recieves PAM pulse stream and concerts to a set of bits. ADPCM a new development to
modulate anologue signals at a twotoone compression ratio.
Persistent Data
Normally all data which is stored in a database - even if the data remains in the
database only for a short time. There are no hard and fast rules to distinguish
persistent from ephemeral data.
Personal Computer
See PC.
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Personnel Management
Can't we talk about something interesting?
Perspectives Pour Les Telecommunications
See Networks.
Persuasion (as in persuading people to adopt new ideas)
The shortcommings of persuasion (as a means of Diffusion of innovation) are:
* Persuasion is seen as linear communication. An active source constructs messages in order to
influence the attitudes and/or behaviors of passsive receivers.
* Generally considered a one to many communication activity. More modern academics now think
that persuasion is not something one person does to another but
something he or she does with another.
* Tends to be action centred and issue centred communication. such as selling products,
actions or policies. Largely ignored is the fact that an important part of
persuasion is selling oneself and, perhaps other persons. It must be realised that one
objective should be to enhance one's personal credibility in the eyes of others.
* Persuasion tends to centre on changing attitudes rather than overt behaviour. Persuaders
(people to have to persuade others) tend to concentrate on achieving
adoption (getting a decison to use and implement a new idea) rather than implementation.
Peter Principle
States that in a hierarchy every employee tends to rise to his level of incompetence.
From Dr Laurence J. Peter and R Hull's 1969 book `The Peter Principle -
Why Things Go Wrong'.
Petroleum Argus
See Reuters.
Pfeiffer Günter
Author of the book. "Telecommunications In Germany". See Networks.
PIMS
Profit Impact of Market Strategy; a programme of empiracle research focused on those
structural and operating characteristics of business that determine long
term performance. Very useful approach to business planning.
Planned order releases (POR)
The dates on which orders for specified quantities of an item are planned for issue to
the shop or a supplier.
Planning
the process ofexecuting business practices to mminise the bite of taxes
Platform
Is a common base of technology upon which a range of information systems are based. It
has a wider definition than architecture as it concentrates not just on
standard interfaces (as architectures tend to do) but also on the sorts of facilities the
technology is to deliver to an organisation.
Plums
Good investement, as opposed to bad. see lemons.
Pocketwatch
See Reuters.
Poison Pill
Defence measures installed by companies to prevent hostile takeover
Pommes, Carlos de
Author of the book "AMADEUS, global alliances in CRS industry". See Strategy.
Portfolio analysis
See Market growth rate
Portfolio Management
Portfolio planning recognises that diversified compnies are a collection of businesses,
each of which makes a distinct contribution to the overall corporate
performance and which should be managed accordingly. Putting the portfolio planning
philosophy into place takes three steps as the typical company:
1. redefines businesses for strategic planning purposes as strategic business units (SBUs),
which may or may not differ from operating units.
2. Classifies these SBUs on a porfolio grid according to the competitive position and
attractiveness of the particular product or market.
3. Uses this framework to assign each a 'strategic mission' with respect to its growth and
financial objectives and allocates resources accordingly. Allows for number
analysis. Used by PIMS
Tends to be used by multidivisional companies rather than by conglomerates (see SBU).
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Benefits:.
1. Companies gain a better understanding of each of their businesses. This allows them to make
appropriate strategic decisions.
2. Allows verbal analysis of the business as opposed to purely financial and thereby aids
business understanding.
3. Improves allocation of resources
4. Improves operations because it encourages focus, objectivity and committment.
Problems
1. Allocation of resources tends to focus on investment rather than other resources like
people, research etc.
2. Tends to overlook long term issues in favour of todays performance.
3. Tends to inhibit diversification.
see Generic strategy, SBU.
Portfolio Planning Matrix
A management planning technique developed by the Boston Consulting Group which involves
management plotting each of the businesses on a simple chart.
These are then rated as `stars', `dogs' or `cash cows' and invested in, divested out of
or took profits accordingly. See also Education, Learning and
Change.
POS
An acronym for Point Of Sale. These are computing equipment which are placed where a sale
is made. The reason for this is to offer computer support for
the sale itself and to capture information about the sale at the moment of the sale. The
sales information enables OLTP and the very quick compilation and
distribution of information in an organisation. A variant of this technology is EFTPOS.
PostScript
See Adobe.
POTS
An acronym for Plain Old Telephone System.
Potts William F.
Author of the book. "Data Communications Dictionary". See Networks.
Preemptive right
Common stockholder's right to anything of value distributed by the company
Preferred ordinary shares
Refers to the ordinary shares taken up by outside investors in a buy out. The rank ahead
of the plain ordinary shares owned by the management in terms of
dividiends and teh pay out in theevent of a winding up.
Preferred shareholders
See Preferred stock.
Preferred stock.
Have priority over common shareholders as to dividend payments. Virtually all preferred
stocks are cumulative. If a firm passes a preferred dividend, the
arrearage accumulates and must be paid in full before the company can resure common
dividend payments.Control by preferred shareholders varies from
none to the same as common.
Preferred stock is not widely used. Sometimes it is seen as cheap equity. It gives management
much of the flexibility regarding dividend payments and maturity dates
that common equity provides. But because preferred shareholders have no right to participate
in future growth, they see preferred stock as less expensive than
equity. Most people see preferred stock as debt with a tax advantage. Generally the option not
to issue a dividend is not taken and because payments are not tax
deductable they present no advantage.
Premises
Property
Finding suitable premeses for a new company is difficult
* It always takes longer than planned to find suitable space
* Companies rarely have enough space to grow (be prepared to pay more for a short lease)
* Space can cost more than planned
* It ties up valuable cash
* If buying, chech planning restrictions for change of use (if you have to liquidate)
* Check for location dependent development grants.
Premium
When the difference between the spot rate and the forward rate is positive
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(spot-forward>0) then the currency is trading at a discount. If the rate is for $ to
[[sterling]], then the $ is trading at a premium and the [[sterling]] is trading at a
discount. See Discount and Foreign Exchange Risk.
Prepaid expenses
Are services or rights to services purchased but not yet consumed. As they are consumed
they will be "charged off" as actural expenses.
Present value
The present value of a future sum of cash is the amount that must be invested now at the
specified rate of compound interest to grow to an amount equal to
the future sum at the specified future date. Present value and future value are two ends
of the same relationship. n is the number of years.
P is the initial amount, r is the rate of interest, F is the value.
Price
Is the economic method for the distribution of of goods and services in a market economy.
See also Elasticity.
Prism
See Reuters.
Pritchard Wendy
Author of the book "Changing The Essence". See Education, Learning and Change.
Private placement
Companies raise money in two broad ways: through private negociations with banks,
insurance companies, pension funds, or other financial institutions, or by
selling securities to the public. The former is known as a private placement, the latter
is a public issue
Pro Forma Statements
A financial forcasting tool where forcasts are tabulated into the form of the standard
financial statements for companies (Balance Sheet and Income
Statement). See Finance.
Process Control
Concerned with error reduction. Increases the speed of set up times in production and
manufacturing. See Process management system (PMS)
Process Management Systems (PMS)
One stage further than Process control in that it is designed to anticipate faults to
reduce down time.
Process mapping
A GE technique: Managers, employees, suppliers and customers must work on a map together
to make sure that what the company thinks happens, does.
Similar to critical path analysis or Hazard analysis, or critical control point analysis.
Once steps are identified, weak points can be worked on for improvement.
See Best practise.
Process
See Business Process.
Product
1. At whom is it aimed
2. What need does it satisfy
3. How does it satisfy this need
Product churn
See Churning.
Product costing
Different systems determine the extent to and base fro which the various production cost
categories are absorbed by the product output. All production output
primarily enters stock. Major systems include: Full Absorption, with a) actual, b)
normal, c) standard. and Variable absorption with a) actual, b) normal, c)
standard.
Product life cycle
The life of a product from introduction, growth, maturity and decline.
Product Platforms
The hardware. IBM product platforms include PS/2, AS/400, System/390, System/370.
Profit and Loss statement
See Income statement
Profit before interest and tax (PBIT)
see Trading profit
Profit centre
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Is intended to function much like an independent business. It has 4 main characteristics:
1, a defined profit objective. 2, its management has authority to ake
decisions affecting the major determinants of profit. 3, its management is expected to
use profit oriented decision rules. 4, its management is accountable to
higher management for the amount of profit generated. A profit centre should: have
freedom to choose its customers; freedom to choose sources of supply for
most of the aterials and other goods and services it buys; authority to decide how many
people to use in pursuing its profit goals. This is often not the case in
reality.
Profit standards
Are used for managerial evaluation or for economic evaluation. They must be attainable
and realistic; different companies making the same things should have
allowances made for age of equipment, differences in labour availability etc. Magagerial
evaluation judges whether or not managers are doing a good job;
economic evaluation takes no consideration of the managers but judges whether a plant
should operate at all.
Programming
The art of making a set of computer understandable instructions. See Object Oriented
Programming and Computing.
Project planning
Project planning is a question of creating a balance. Every project is a compromise
between costs, duration and quality. Often the project group finds itself so
tht it can only regulate on product quality; cost and duration are prespecified by
others.
The plan should always be in writing and it should contain evaluation criteria and procedures.
The plan should document the expectations of the project so that it is
possible to document expectations and check that they are in balance (not conflicting).
A baseline is a coordinated project state to which everyone participating in the project can
refer. When a project has reached a baseline, intermediate products are
in well defined states. Checkpoints are those points in time when it has been decided toassess
whether a baseline has been reached. A phase is those set of actvities
that take place between checkpoints
Projects should be transparent. A project is more or less transparent to a person or a group
depending on how easy it is for the person to understand relevant
problems and possible actions. Transparency should be maintained throughout the project.
Projects
See Project Planning.
Property
Accounting in the cash flow statement see Cash flow statement direct method.
Prophesy
See Reuters.
Protocol converters
Not all data communications devices speak thesame language. pcs and/or emulators can be
hardware based, software based, or a combination of both which
have the capacity to handle conversions.
Protocol
Procedure by which a bandwidth is shared by controlling terminals to transmit one at a
time.
Protocol software
implements the standards needed for effective end to end or host to host communications
Prototyping
A technique to prove the concept of a computer application of piece of hardware by
constructing something which will feel and act like the planned system but
which is not complete - and so costs less to make.
Proxy contest
An outside group seeks to obtain representation or control over a target company's board
of directors. Usually, not considered friendly.
Prudence concept
Ensures that accounts are prepared on the basis that anticipated income is only
recognised when it is in the form of an asset which is readily realisable into
cash. Thus unsold stock is carried in the Balance sheet at its cost value, not at any
future sales value. However, once sold and converted to a debtor, this may
be held at the sales value so long as there is a high likelihood of the debtor settling
74
in full
Prycker Martin De
Author of the book "Asynchronous Transfer Mode, solution for Broadband ISDN". See
Networks.
Public Data Network
See Networks.
Public Good
Any good whose utility does not change for other people when you consume it. For example
- information is often a public good as one person can `consume'
it and this will not effect its utility for another person.
Public issue
see private placement.
Purchasing power parity theory (PPP)
This theory enables us to understand the distinction between nominal and real exchange
rates. See Foreigh exchange rate. Effective exchange rate, Exchange
rate.
Perhaps one of the most influenctial ideas in economics, establishes a formal link between a
country's price level or inflation rates (relative to another country's) and
the prevailing exchange rate between the two countries. Two well known versions. the Absolute
and the Relative versions.
The absolute PPP relationship says that: P=eP[*]
Where P is the domestic price level, P[*] is the foreign price level, and e is the exchange
rate (direct quote)
Relative PPP (or RPPP) expresses this arbitrage relationship in terms of price levels and
exchange rates today (time 0) relative to our expectation for some future
point in time (time 1).
PPP allows the definition of Real exchange rates, in terms of either absolute or relative PPP.
The definition using absolute PPP is
Where s is the real exchange rate, e is the nominal exchange rate, and P, P[*] are as defined
above.
A similar definition, using relative PPP is
where [[Delta]]s refers to the percentage change in the real exchange rate.
There is also an Effective exchange rate, which is a multilateral rate that measures the
overall nominal value of the currency in the foreign exchange market.
Purchasing
The process for acquiring materials. Usually broken down into a chain of specialist
functions, like accounts payable. A department requests purchasing to
order who send information to accounts payable etc. Instead there could be a company-wide
database of acceptable suppliers and the departments can order
for themselves, registering the order on the database. Corporate staff can monitor the
orders to negociate discounts which would normally be negociated by
the purchasing department. Hewlett Packard claim 150% improvement in on-time delieveries,
50% reduction in lead times, significantly lower costs.
Put Options
See Options.
Put
See Option
Quality
From Buzzell and Gale
Definition of quality in the context of Business performance.
* Superior perceived quality is achieved by developing a set of product specifications and
service standards that more closely meet customer needs than
competitors.
* Superior conformance quality is achieved by being more effective than competitors at
conforming to appropriate product specifications and service standards (no
point in investing in quality if the customer wont pay for it).
* the most important single factor affecting a business unit's performance is the quality of
its products and services (relative to those of its competitors). In the short
run, superior quality yields increased profits via prices which should be 5-6% higher than
relative competitors (find out competitor prices)
In the longer term quality leads to both market expansion and increased market share. The rise
in volume (in key products) leads to scale advantage and cost
improvement. Selling price is a key issue.
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* Companies with high rates of return are those with long term value enhancement programs.
Quality improvement shold be an ongoing process.
Quality hostile factors
* We're smarter than our customers. We know what they really need
* Our primary and overriding purpose is to make money, to produce near term shareholder return
* Our key audience is the financial market, in particular, the analysists
* The primary way to influence corporate performance is through portfolio managment and
creative accounting
* Managers are paid to mae decisions. Workers are paid to do, not think
* the job of senior management is strategy, no operations or implementation
* If it is'nt broken don't fix it. (after D Nadler)
Quango
Originally a US term now more associated with the UK, Australia and New Zealand. It
stands for QUsi, Autonomous, Non-Government Organization.
Quantitative Techniques
Quantity theory of money
Money times income velocity = price index times Real GNP.

Velocity is the number of times money changes hands.
Money times transactions = price index times velocity transactions.
In hyerinflation, as velocity increases prices increase. This happens when inflation is
expected to rise, so people spend money when they get it before it devalues.
Calculate velosity of transactions by taking a sum of total debits in MI accounts during a
month, divided by the average monthly balance in the account, multiplied by
12 (for an annual basis).
Quick ratio
This ratio is similar to the current ratio. However, in this case the stock figure is excluded
from the funds available to meet current liabilities on the grounds that stock
may take several months to turn into cash.
Quotron
See Reuters.
RAM
Random Access Memory. The main internal memory of a computer system where the CPU can
directly read and write information.
Range of Earnings Chart
A technique used in Finance to evaluate different financing methods. The method compares
different financing methods against their expected impact on both
EPS and EBIT. See Finance.
Raster
Graphics formats suited to different sorts of graphical information. Raster information
is easily scanned and expressed as dots or pixels on the screen. Raster
deals well with solid blocks of colour but needs high volume storage. see Vector.
Ratchet
An incentive arrangement whereby the managers get a bigger share of the equity if
theventure performs well. Sometimes managers forfeit shares if they do
particularly badly. See earn out.
Ratio analysis
Ratio analysis is the single most important technique of financial analysis. However, a
ratio is unlikely to provide any useful information in isolation. They should
be used as a means of comparison (trends over time, vs figures from other companies).
There are 3 main groups of ratios: 1. Performance ratios, Return on
Capital Employed (ROCE), Profit margin on sales, and Asset turnover. 2. Financial status
ratios, Current ratio, Acid test (quick) ratio, Debt/equity, Interest
cover. 3. Stock market ratios, Earnings per share (EPS), Price Earnings ratio (P/E
ratio), Dividend yield, Dividend cover.
RBOT
See Baby Bell.
RDBMS
See Relational Database.
Real GDP
See GDP.
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Real value
see GDP.
Realised income
Accountants measure realised income not economic income (increase in paper value)
Recession
Defined as a decline in real GDP that persists for at least two quarters.
Recover
See Backup.
Redundancy
Data redundancy is data which is repeated (duplicated) in a database. Much work in data
modelling is spent removing such redundanies. This ensures that
data is stored uniquely in one place in the database. In earlier times this was important
because of physical storage limitations but it is still important for
keeping data consistent. Redundancy is often re-introduced into a database in order to
improve the performance of a database - redundancy can reduce the
amount of work which a database system must do when requested to transmit data.
Reengineering
Relational data base
All data elements within the data base are logically viewed as being stored in the form
of two-dimentional tables called relations. Each column or row can be
extracted and combined with similare tables or rows from other files providing that there
are relations beteween the tables. It is therefore a collection of tables
in whch the relationships among data have been reduced to their simplest form, The tables
serve as the building blocks from wich more compled relationships
can be created. A DBMS is used to select or combine data elements fromone or more tables.
Relevance Feedback
A function of an information retrieval system (such as WAIS on the Internet) which lets
you tell the computer - `you have found me a piece of information,
now go and find other information which is similar to this'.
Reliability analysis
A proposed technique to measurein probabilistic terms, the reliability of internal
control systems in processing a particular transaction or set of transactions. Of
importance particularly in large companies using decentralised data storage systems.
Renaud Jean-Luc
Author of the book. "Convergence Between Communications Technologies". See Networks.
Reorder point systems
An inventory control system in which an item's inventory status is checked each time a
withdrawal is made from inventory, and an order for a predetermined
quantity is placed if the inventory position has reached a certain minimum level. Also
called Continuous review system.
Repeaters
in LAN Internetworking, repeaters provide for signal regeneration
Repetitive Manufacturing
The high volume production of standard, discrete products in relatively small lot sizes.
Required return (on the market portfolio)
See Cost of capital, Discounted cash flow approach.
Using the formulae from discounted cash flow approach and dividing by earnings per share
solving for k (shareholders required return, or cost of equity capital to the
corporation).
Where payout1 = D1/EPS1 is the payout rate expected during the first year and PE1 is the
prospective PE multiple. This can be applied to a diversified portfolio
such as the S&P500 because the growth of dividends and earnings are close to each other (in
the US, both are equal to 2.7%. This is, of course, an average
applicable to portfolios; individual companies will always show variances.
Research planning model
Linked to Monte Carlo Analysis. Marries science and Finance at Merck. Takes all of the
risks in the company and shows how they are deployed accross the
entire portfloio of research projects. There is an estimate of a projects scintific
viability then marketing an maunfacture are factored in. Then economic
constraints such as pricing, inflation and cost. The model is used by senior managers for
resource allocation. It shows gaps in competency where increased
resources should be targeted and where projects should be shut down.
Reserves
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Amounts reflecing the growth in the value of shareholders interest in a business, either
through retained profits or through changes inthe value of the business'
long term assets such as property.
Residual income
A variant of return on investment, defined as divisional net income less an investment
carrying charge, determined by multiplying divisional investment by an
interest rate based on the costs of capital. Main advantage over ROI is that it places
budget versus actual diferences (variances) on equivalent scales.
Response analysis
In relation to buyer decisions. Consider Need arousal in the customer, Awareness,
Information search, perceptions; Evaluations, perceptions. Purchase,
choices' Post purchase behaviour consumption.
Response Time
Usually means the time a computer application or system takes to respond to a users
action. A common benchmark for large corporate systems run on
mainframes is that 90% ot the time, the response time should, on average, be less than
1.5 seconds.
Retained earnings
The second part of the stockholders equity section of a corporate balance sheet.
Indicates the accumulated earnings of the business - profits that are retained
in the company rather than distributed to shareholders. See Economics.
Retained profit
Earinings retained in the business after dividends to shareholders have been deducted
Return on assets (ROA)
Shows the effects of profit margins and inventory turns.This is a basic measure of the
efficiency withwhich a company allocates and manages its resources. It
differs from ROE in that ROA measures prfit as a percent of total assets as opposed to
profit as a percent of shareholders equity only.
ROA = profit margin * Asset turnover.
Return on Capital Employed (ROCE)
The relationship between ROCE, margin and asset turnover:
Thus a change in return on capital employed can be analysed into a change in margin and or a
change in asset turnover.
Return on Equity (ROE)
The most popular yardshick of financial performance.
ROE is used as a measure of the efficiency with which the firm employs owners' capital, or
alternatively, the percentage return to owners on their investment in
thefirm.
Three determinants:
ROE = Profit margin * Asset turnover * financial leverage
Improve profit margin, improve asset turnover, change the amount of debt used to finance the
assets (financial leverage)
Note that the three factors correspond to the main financial statements. profit margin
summarises income statement performance, asset turnover and financial
leverage do thesame for the left and right sides of the balance sheet.
Is ROE a reliable financial yardshick
Three problems: 1. Timing, 2. Risk, 3. Value.
1. Timing.
A company that has heavily invested in new products or processes with view for long term
progress will have a point in time low (depressed) ROE.
2. Risk
ROE says nothing about risk. High ROE may look good but be representative of a high risk
strategy which may fail. see RONA
3. ROE also represents return compared to book value, not market value. A high ROE may not
signify a good return for investors. Replacing book value with
market value in the equation gives us earnings yield.
Earnings yield suffers from a major problem. Timing. Share price represents expectations for
future yields and may have little to do with present performance.
Turning this around produces the P/E ratio
P/E measures the amount of money investors are willing to invest for one dollar of current
earnngs, and this is used to standardise stock prices to facilitate
78
comparison among companies withdifferent earnings.
See return on investment (ROI)
Return on invested capital (ROIC)
Helps to overcome the weakness of using ROE as a major measure of company performance.
Although accounts payable represents a source of finance it is excluded because it carries not
cost to the company. In essence RONA is the rate of return earned on
th etotal capitaal invested in the firm without regard to whether that capital is called debt
or equity.
Two identical companies might have different leverage and therefor produce very different
pictures using ROE or ROA. This problem is solved in this picture.
Return on Investment (ROI)
The most widely used measure of divisional profit performance. Is intended to be used in two
ways: to direct top management's attention to segments that
persistently earn less than thetarget return on investment. To show how viable thesegment is
likely to be on a continuing basis.
It can be a very poor tool because high margin divisons can be managed very badly and still
achieve targets for ROI. A typical misconception.is that 'profitable
company must be well managed' . Also poor ROI in one division might be the result of poor
performance in another (more profitable?) division (I.e. responsible for
sales in a particular area). Numbers and ratios like ROI should not be used out of context.
Return on investment method
Different capital investment proposals are put together and assessed for profitability
and life. Priorities returns are evaluated and decisions taken. Ignores
time rate of return criteria which judges investment based on net present value
Return on net assets (RONA)
Reuter Business Report
See Reuters.
Reuter News Graphics Service
See Reuters.
Reuter News Pictures Service
See Reuters.
Reuter Technical Analysis
See Reuters.
Reuter Terminal Graphics
See Reuters.
Reuter Terminal
See Reuters.
Reuter World Service
See Reuters.
Reuterlink
See Reuters.
Reuters Newmedia Inc.
A daughter company of Reuters to exploit the market for financial information outside of
Reuters traditional financial industry market. See Reuters.
Reuters Television
See Reuters.
Reuters
The world's premier supplier of on-line financial information. They collect information
from about 180 exchanges and over-the-counter markets in the form of
4000 customers who supply information and its own staff of 1,200 journalists.
Reuters has a number of services which include:
Service
Description
Money 2000
foreign exchange rates, metal prices, treasury debt, and short term financial instrument
prices are shown in the system. The product is aimed at foreign
exchange dealers, deposit and derivative dealers.
Debt 2000
money market and treasury debt instruments, sovereign, mortgage-backed and asset-backed
debt, corporate debt, and equity linked securities. The product
is aimed at fixed income dealers and portfolio managers.
Treasury 2000
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A combined service of Money 2000 and Debt 2000.
Securities 2000
Equities, equity-linked securities, mutual funds and unit trusts, and corporate debt.
Five years of history on 28,000 equities listed on 25 markets. Also has data
on company earnings and balance sheets.
Energy 2000
Energy and energy-related instruments. The product is aimed at all participants in the
worlds energy markets.
Commodities 2000
Cash, futures and options prices from commodities markets worldwide. The product is aimed
at all participants in the worlds commodity markets.
Futures 2000
Futures and options prices for commodities and financials. The product is aimed at all
followers of the worlds futures markets.
Markets 2000
A combined service of Commodities 2000, Debt 2000, Energy 2000, Money 2000, Securities
2000, Treasury 2000, and Futures 2000.
Shipping 2000
Shipping reports aimed at participants in the shipping industry.
Third Party Products
Reuters uses information from Capital Management, Consolidated Physical Commodities, FRI,
International Insider, Maria Ramirez, Money Market Services
(MMS), OMR, Petroleum Argus, Strandard & Poor's, Toyo Keizai, Trendsetter, Jiji Press,
Nikkei, Metal Bulletin, First Call, CDA Spectrum and Prophesy.
News 2000
Text information from all major world markets which can be taylored to the users interest
so that you only get the news which interests you. Also offered as
REUTERSCOOP (Japanese-language).
REUTERSCOOP
The Japanese-language (kanji script) version of News 2000.
Reuters On Demand
Periodic information on market events. Ihe product is aimed at people who do not need
on-line real-time market information. It can be taylored to the users
interest so that you only get the news which interests you.
Reuter Business Briefing
Textual information on financial news including historical information. The product is
aimed at the corporate executive.
Reuter Insurance Briefing
Reuter East European Briefing
Reuter European Community Report
Reuter Textline
Reuter historical information distributed to third party information suppliers such as
Data-Star, Mead Data Central, Dialog Information Services, FT Profile
and M.A.I.D.
Reuter Terminal
A microsoft windows PC which is the basic platform for the delivery of Reuters
information services.
Triarch 2000
A digital information distribution system for trading operations. Triarch is an acronym
for Trading Information Architecture. It can be linked to Prism.
Prism
A colour switching system for smaller trading operations needing video based information.
It can be linked to Triarch 200.
Datafeeds
Include Reuter Terminal, Triarch 2000, Prism, Marketfeed 2000, and Selectfeed.
Reuterlink
Closing and historical pricing information on 200,000 financial instruments from Reuters
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and third party suppliers. Reuterlink can be used in conjunction with
Trendlink.
Pocketwatch
A hand-held device service operating in a number of metropolitan areas which carries up
to date financial information.
Excel Real-time Spreadsheet
A customised version of Excel which takes an information feed and is used for live
portfolio management.
Fxcalc
A real-time financial calculator.
Reuter Terminal Graphics
A Microsoft Windows-based charting and technical analysis package for displaying
real-time and historical data.
Reuter Technical Analysis
An analysis and charting tool for sophisticated technical analysis of the international
commodity and currency markets. Uses third party analytics from CBOT
Market Profile, Stochastics and Bollinger.
Decision 2000
A multi-currency quantitative and fundamental analysis tools which has a large database
of three million fixed income instruments.
Time and Sales
A database of equity market trades with a 10 day history. The product is aimed at brokers
and fund managers to reconcile for clearing and settlement of
trades.
Trendlink
An analytic tool for analysing historical financial and energy pricing data.
Deal Manager
A transactions database which holds deal information to offer position keeping nd credit
controls for customers. Links to the Dealing 2000 service to capture
deal data and links to Reuter Terminal and Triarch 2000.
Dealing 2000
A high speed communications network and an automated matching system for foreign exchange
deals. Links to Deal Manager.
Globex
A global after hours electronic trading system for futures and options. Jointly operated
with the Chicago Mercantile Exchange (CME), the Chicago Board of
Trade (CBOT) and the french options exchange MATIF.
Instinet
Screen-based brokerage service for equity investments. It runs an electronic matching
service with an analytic capability.
Reuters Television
The worlds largest television news agency.
Reuter World Service
General news service.
Reuter News Pictures Service
Photo news service.
Reuter News Graphics Service
Makes graphics for news stories.
Reuter Business Report
Business news service.
Revenue Cycle
Is a recurring set of business activities and related data processing operations
associated with providing products and services to customers in exchange for
revenue.
Revenues
Are the inflows of cash or other assets attributable to the goods or services provided by
the enterprise. More commonly revenues are derived from the goods
or services sold by the company. Revenue and Expense accounts are not reported on a
balance sheet.
RISC
Reduced instruction computing - chips that run powerful workstations. The basic principle
of such systems as IBMs RS6000 is to place more of the operating
system in the software of the computer rather than in the hardware. The latest generation
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of RISC computers offer a significantly improved price/performance
ratio over other PC technologies. The reason for this superior performance is because the
reduced number of instructions sent to the hardware can be more
quickly performed. See Unix, PowerPC and Computing.
Risk
people. Risk specialises in the international financial markets and
contains many detailed articles on pricing models and deal structures. One of the three
best specialist international financial magazines. See International
Financing Review and Barrons. For more general international financial magazines see
Institutional Investor, The Banker and Euromoney.
Risk
Exposure to change. In finance it is usually taken as the chance of losing money. See
Finance.
Risk Premium
The additional return required on an investment necessary to compensate an investor for
the risk that the investment will not be returned.
Risk premium
The difference between the certainty equivalent sum and the expected value is the risk
premium.
Roche Edward
Author of the book. "Telecommunications And Business Strategy". See Networks.
Romney Marshall B.
Ryer Jeanne C.
Author of the book "Internet Companion (The)". See Internet.
SAA-System application architecture
IBM's most ambitions architectural undertaking, because it attemps to organise many types
of compatibility and then implement full compliance in six leading
operating environments (inc. VM/CMS, OS/400 and OS/2 EE). Defines specific
characteristics and international standards to be used for SAA elements
such as high -level language compliers, their supporting service programs and databases;
supporting comms network and data flows; devp and testing tools;
end user interface formats and all kinds of management systems, production cycles,
program development cycles and networking.
Sales order processing system
1, receiving customer orders. 2, checking creditworthiness. 3, checking product
availability, and arranging for delivery to customers. 4, billing and mainting
records of amounts due from customers.
Sapolsky Harvey M.
Author of the book. "Telecommunications Revolution (The)". See Networks.
Satellite Operations : Systems Approach To Design And Control
See Networks.
Satellite
See Networks.
Savage Charles M.
Author of the book "5TH Generation Management". See Management.
Scanner
See Visualisation and Multimedia.
Scenarios
Are alternative views of the future. See also Education, Learning and Change.
Schatt Stan
Author of the books "Understanding Local Area Networks" and "Voice / Data
Telecommunications For Business". See Networks.
Schema
A logical description of a database.
Schindler Max
Author of the book "Computer-Aided Software Design, build quality software with CASE".
See CASE.
Scientific chaos
Is concerned with turbulent phenomena in systems - abrupt changes in weather, phase
transitions, complex reactions, irregular movements.
1. Order generates disorder. Such a system is like an attractions towards a number of
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predictable states, the borders between which are disorderly and chaotic, far
fro equilibrium. 2. There is order within disorder. 3. Order is bon from disorder. 4. The new
order of innovation, consensus and commitment will be short lived after
a change; periodic and difficult to maintain in continuously innovating systems. 5. Periodic
new order emerges at critical points in an unpredictable way through a
process of spontaneous self organisation.
Second round financing
Sometimes needed to help buy outs which have run short of funds. Or it may be a sign that
the business has done well and is raising new one for further
investments.
Secured creditors
Are a form of senior credit in which the loan is collateralised by a specific company
asset or group of assets. In liquidation, proceeds from the sale of this asset
go only to thesecured creditor. If the cash from the sale exceeds the debt to the secured
creditor, the excess cash goes into th epot for distribution to general
creditors. If too little, the lender becomes a general creditor for the remaining
liability.
Selectfeed
See Reuters.
Self-Designing Organisation
See Reengineering.
Self-healing
The ability of a network to automatically re-establish communications links when they are
broken.
Senior debt
Secured debt which ranks first in terms of repayments in the event of a default. See
junior debt.
Sensitivity analysis
A method whereby critical parameters in a model are systematically modified to determine
the effects on the solution.
Service
All actions and reactions that customers perceive they have purchased (Federal Express
definition)
Service centres
Many organised units in decentralised companies are classified as service centres. A
service centre is a unit providing services or support to other units in the
organisation. The relationships between service centres and profit centres is shown in
the figure.
Managers of service centres are managed on the basis of cost, quality and effectiveness, not
on profit.
Service routing transparent (SRT)
Service routing transparent (SRT) protocols are available to overcome problems with
bridges on expanded on Token ring networks.
SGML
An acronym for Standardised General Markup Language. This is a standard for the
exchanging of sophisticated information (in the form of documents)
between applications and platforms. See Hypertext and Multimedia.
Shareholder equity
Is the value of the company to those who own the stock which is eaqual to what the
company owes (liabilities or debts), and what it owns (its assets); ie.
what would be left if the company sold all its assets and used the money to pay of any
oustanding debts
Shareholder value (SVA)
Forecasts future cash flows and discounts them back to a rough estimate of current value,
it is an attempt to make financial analysis more forward looking.
Based on cash flows rather than on the activities that drive cash flows; this should be
remembered. See value based planning
Shareholder value added
is the interest that shareholders could earn on their oney in an alternative investment
that has equal risk. See Economics.
Shareholder value
total value of shareholder capital (Shareholder equity) X going interest rate cost of
capital See Economics.
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Shareholders funds
Share capital and accumulated reserves of the business
Shell
Programme for making applications. See Artificial Intelligence.
Sheppard Donald
Simlex
carries information in one direction only
Simon
See Information Needs.
Simon's type
Like Anthony's pyramid, but relating to computer needs in an organistion. Unstructured
systems at the top (EIS, executive information systems), Decision
support systems in the middle (DSS) structured at the bottom (data processing).
Simulation
A technique used in many fields to imitate real life systems . The objective is to create
a simplified model, usually in a computer, and then to play `what if'
analyses to observe what happens to the system under different conditions. A popular use
of simulations is in the analysis of financial forcasts. PC
spreadsheets are built to find the probability of a future outcome and the sensitivity of
this outcome to changes in the models variables.
The main drawback with simulations is that they are always simplifications of real world
situations and are only as good as the specification of the model. It is also
true that the main benefits of planning are often the action of planning rather than the
results of the plnning itself. Simulations let the computer do most of the work
and so users of simulations may not gain as much real insight to the real system. See Finance.
Single threaded
Comms system in which a single connection to a destination will monopolize that systems
access link (eg normal telephon).
Sinking fund
Refers to money set aside to meet future obligations. Now refers most to direct payment
to creditors to reduce the debt principal. Depending on the
indebenture agreement, there are several ways a firm can meet its sinking fund
obligation. It can repurchase a number of bonds in security markets, or it can
retire a certain number of bonds by paying the holders par value. When given the choice
the company will repurchase bonds if the market price of the bonds
is below par value, someting that occurs whenever interest rates rise after the bond is
issued.
SIS
See Strategic Information System.
Sixth Generation
See Computing.
Slippage
This is what happens when the buy out company starts to eat up more cash than expected,
because development costs exceed budget or sales gorw too
slowly.
Sloan, A.
Moved from Dupont to GM and introduced the idea of divisions into industry, rather than a
single hierarchy. (Sloan school of Management).
Smart Modem
Modems with compression algorithms to squeeze out data redundancy toreduce the number of
bits transmitted. Performance not predicatable.
SMDS
See Networks.
Smith Terry
Author of the book "Accounting For Growth". See Control and Monitoring.
SNA-Systems Network Architecture
SNA is IBM's master plan for communications among IBM computers, terminals and office
systems.
Sociotechnical analysis & Variances
Each job can be modelled in
Disturbances analysed using a Variance control table
Identify the variable: Who found the disturbance: What action: ...etc.
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eg.
Lack of materials The operator 1. buy more
2. Take from
elsewhere
Analyse the feedback loops and use this to design the new system. Can have other components in
the table, eg. who intervenes as a decision maker, what cost each
alternative (time, money, effect on other products).
Second tool, the Variance Interdependence Matrix. List how each variable impacts each other. A
mechanism for modelling bottlenecks and critical success
factors (critical control points) in a flow chart. This scheme does not recommend on
structure.
Does not take into account opportunistic (model 3) factors. The report of variance has a
hidden motive, or information on the variance is withheld or manipulated.
Assumes candid information.
Soft System Methodology (SSM)
Is taking purposeful action in human situations regarded as problematical. It is an
organised process of inquiry based on systems models, which leads to
choice of purposeful action. Crossland, P. (1985). It is a 'Singerrian inquirer, one
which accepts tht inquiry is neverending and is intent, in 'an heroic mood', on
both attacking and defending the status quo.
The study should start by thinking in terms of solutions. The method is to record, preferably
pictorially, the elements of structure in the situation (static elements such
as organisation and locations) the elements of process (the things continually happening
through or in spite of structure) and the relation between the two, the climate
of the situation. Examination of structure and process reveals the crucial roles in the
stituation, the behaviour expected in the roles and the values by which
performance is judged. An impression of power is acquired, exercised, retained and passed on
will emerge.
First step, to produce a "Rich picture" of the environment and its players. Second, to
determine Root definitions, third to build conceptual models etc.
See Hard systems thinking, systems analysis, opertional research.
Software
Programs which run computer systems.
Layer 1
Operating system
Layer 2
Application language
Layer 3
Application code
Layer 4
Database management system
Layer 5
Data from DBMS
Layer 6
Data from the network
Software-Hardware Gap, The
The gap between the information produced and the ability to use the information.
Sole proprietorship
If a firm is not a corporation it is a sole proprietorship if it owned by a single
individual. Owners equity for sole proprietorship or a partnership is shown in
the balance sheet in a different way .
Solvency
A company with a low debt-equity ratio is described as having low gearing, whearas a highly
geared company is one which relies on borrowing for a significant
proportion of its capital. An alternative is the Gearing ratio
SONET-Synchronous Optical Network
To be used with DCS (digital cross connect systems) and T3 multiplexers. Coincident with
the growth of DCS and SONET has been the decline in D4 chanel
banks, manual cross-connects (DSX's), and 45Mbps multiplexers.
Sources and uses
Source and application of funds. The poor mans cash flow statement. Generated from two
simple steps. 1. place two company balance sheets for different
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dates side by side and note all changes occurring. 2. Segregate the changes into those
that generated cash and those that consumed cash. The result is a
sources and uses statement.
To decide which balance sheet are sources of cash:
A company generates cash in two ways: by reducing an asset or by increasing a liability. The
sale of used equipment, the liquidation of inventories, and the reduction
of accounts receivable are all reductions in asset accounts and are all sources of cash to the
company. On the liabilities side of the balance sheet, an increase in a
bank loan or theslae of common stock are increases in liabilities, which again generate cash.
A company uses cash in to ways: to increase an asset account or to reduce a liability account.
Adding to inventories or accounts receivable or building a new plant
all increase assets and all use cash. Conversely, the repayment of a bank loan, the reduction
of accounts payable, and an operating loss all reduce liabilities and all
use cash.
Total uses of cash over an accounting period must equal total sources; otherwise, the company
would be spending money it didn't have.
SPARK, S*P*A*R*K
Sotware designed to take a company through the process of identifying SIS opportunities.
In its modes it allows the user to chose from three different
methodologies including Porter's value chain and Wiseman's option generator.. The
software has a database of examples to stimulate ideas.
Spin offValuation: cross border valuation
Following a merger or acquisition. A spin-off creates a new legal entity whereby shares
of the spun off entity are distributed to the existing shareholders of the
parent company on a pro-rata basis.
Split off
A portion of the existing shareholders receive shares in a subsidiary in exchange for the
parent company's stock. Thus, the new shareholders own the
subsidiary, and not the parent.
Spot Rate
The foreign exchange rate of a currency at the current exchange rate. See Exchange Rate
and Forward Rate.
Spreadsheet
A specialised computer application whose primary purpose is the manipulation of numeric
data.
SQL-Structured Query Language
Is the most popular high level language for manipulating data stored in databases. See
Databases.
SSCP-System services control point
Resides in the comms access method of an IBM mainfram or in the system control program of
a small IBM computer. It contains the network's address
tables, name to address translation tables, routing tables and instructions for those
tables. It establishes connections between nodes in the network and selects
routes for comms between those nodes. It also controls the flow of information to ensure
the network operates efficiently. It effectively controls the network.
Uses virtual routes.
Stallings William
Author of the book "Business Data Communications". See Networks.
Standard Direct Variable system
Standardisation
The major world body for standard setting in industry is the International Standards
Organisation (ISO).
The effects of standardisation in corporations is the connection of islands of automation (via
networks) has resulted in incremental (and increasing) standardisation of
these islands as standards have been developed:
Start up
Entrepreneurs constantly underestimate
* the speed of market acceptance for new products
* the time it takes to do simple things
* the time it takes to recruit good people
* the way large companies make life easy and the diference between life in a big company (with
support) and small companies
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* the competing demands on time.
Because of this, spend extra time on the business plan and identify one or two key measures to
follow once the business starts and time becomes too short. But
remember
* forecasts are rarely accurate
* sales fall below target (gaining market credibility is difficult) (plan the promotion
strategy carefully for cost effectiveness) (brochures are expensive) (there arelikely
to be false starts, stay listening and flexible)
* costs are higher than expected
* learning benefits are achieved slowly. Who to supply you best etc.
* initial prices are set too low
* margins get squeezed (try to start with 75%)
Because of this most new ventures soo experience cash flow problems. Make sure accounts
payable are very well controlled
Building turnover doesn't always solve the problem
* Entrepreneurs respond to problems by chasing turnover because:-
* Our cost structure is fixed
* We must grow tocover our overheads
* Our problems will be solvedonce sales increase
but:
* Sales often increase at the expense of margin
* Financial disciplines are often relaxed
* The business can lose focus
Never forget the 80/20 rule for profit andtrade, or that 80% of problems come from 20 percent
of customers. Do not lose sight of objective by chasing customers
who don't fit
Managing people is the biggest chanllence
Start-up
See Venture Capital.
Statement of changes in retained earnings
Reports changes in a firm's capital structure.
Stochastics
See Reuters.
Stock turnover
This gives the amount of debtors (in days) oustanding at the year end. If the figure is too
high, the company will be bearing interest charges which could be avoided
by better credit control. If the figure is too low, the company may lose sales by not being
prepared to offer favourable credit terms to its customers.
Stock Warrant Off-Balance-Sheet (SWORD)
A financing arrangement known as stock warrant off-balance-sheet research and development
(SWORD) has been used in the biotechnology industry to
finance innovation. Biotech firms are so small that they often cannot diversify
innovation risk internally across projects, and conventional internal financing of
innovation is generally not possible. Since a SWORD is offered to the investment public,
the innovation risk can be diversified across many investors and their
portfolios. It is shown that a SWORD can promote innovation in a manner not possible when
more conventional financial management techniques are used
because a SWORD structures the innovation as a real option. SWORD financing is likely to
be successful in other situations, such as when product
developement is technical in nature or obtaining financing is difficult because of the
large risk of the product development or because of firm size.
Strandard & Poor's
See Reuters.
Strassmann Paul A.
Author of the book "Business Value Of Computers (The)". See Computers.
Strategic alliances
Intra or interfirm combinations designed to support or shape the competitive strategy of
one or more allies. Include: acquisition, joint venture, agreement.
Strategic business unit (SBU)
Original large companies became divided into function groups then into multidivisional
organisations as they came to address the complex management issues.
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Functions, like manufacturing etc. Problems with diversification, the difficulty of managing
the manufacturing, personnel etc of different products in the same
organisational structure. This lead to company organisation by division. Like products
together.
Multidivisional companies then became too large and suffered from the same problems as the
functional predecessor. To solve this the SBU concept was formed.
The SBU or business unit (things that serve the common market area). Chracteristics of SBUs
can differ from marketing similarities, manufacturing similarities etc,
even collections of new products (no market or manufacturing similarities). Allows
diversification and flexibility because they can be changed and new ones formed.
They can cross divisions. Business units can be clustered accross division. The concept allows
for business benchmarking and analysis. GE started PIMS to find out
why parts of business units did well in one place and not in another. In PIMS the SBU is the
unit of analysis.
Position SBUs on the matrix grid to identify good business and where to divest or invest. The
axis can change depending on preferences. Has limitations, there are
many successful business opportunities that do not fit in this picture and would not attract
investment on this basis.
At the point in time X the portfolio analysis would show two products at different stages of
their life cycles: one attractive, the other not. Looking to the future the
second is the more attractive but would not receive investment.
The concept of Core competencies should not be overlooked. See Portfolio Management.
Strategic group map
Map competitiors using self defined criteria rather than a specific set of criteria.
Examples: for computers virtical integration vs product line, can look at
alliances, competences etc as well. A good way to get individuals from inside and outside
the company to dig deep into their business analysis. From Porter.
Strategic Information System
Use of information technology that supports or shapes the competitive strategy of the
organisation.
Strategic information systems (SIS)
Are information systems in which the primary function of the system is either to process
predefined transactions and produce fixed format reports on
scheduule or to provide query and analysis capabilities. The primary use of SIS is to
support or shape the competitive strategy of the enterprise, its plan for
gaining or maintaining competitive advantage or reducing the advantage of rivals.
(Wiseman, C., 1988)
Strategic marketing
Should be very closely associated to Strategic planning of the business. The task should
be: 1. define corporate mission, 2. search for ways to secure
permanent competitive advantage through target marketing and clear positioning. 3.
Generation and evaluation of long term strategic marketing orientated
programmes. 4. Design early warning systems to identify important and relevant turing
points in the environment. 5. Encourage a perceptive workforce,
managers, sales team, engineers, technicians etc. 6. Integrate all research and data
bases in order to forecast more effectively future consumer needs and likely
competitive responses. 7. Develop short term corrective marketing efforts consistent with
longer term coals and future options. Evaluation is as important as
planning.
Strategic planning
Identify the differences between strategic thinking and strategic planning.
Strategic thinking is about synthesis. It involves intuition and creativity. The outcome of
strategic thinking is an integrated perspective of the enterprise, a not too
precisely articulated vision of direction.
Strategic Planning by its nature is very analytical in nature, ha been and always will be
dependent on the preservation and rearrangement of established categories -
the existing levels of strategy (corporate, business, functional),the established types of
products (identified as SBUs) overlaid on the current structure (divisions,
departments etc). Real strategic change requires more than rearrageing existing things.
Planners lack managers' authority to make commitments and managers'
access to soft information critical to strategy making. They do, however have time to analyse
and are therefore critical to the process. Planning cannot generate
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strategy but given a strategy it can program it.
Vision is unavailable to those who cannot see with their own eyes. Real strategists get their
hands dirty digging for ideas, and real strategies are built from the nuggets
unnearthed. They are not people who abstract themselves from detail they are people who are
intimate with details but who can abstract thestrategic messages from
them. See Strategy.
Strategy
The essence of strategy formulation is coping with competition. (Porter, M. 1979).
Competiion isn't beating the competition; it's serving the customer's real
needs. (Ohmae, 1988)(lens shutter cameras, microwave/conventional ovens, pianos, coffee
makers). See competition, five forces, New entrants, supplier
power, buyer power. Substitutes, jockeying for positoin.
Having analysed the industry and the five forces: identify companies strengths and weaknesses.
Where does the company stand relative to other companies in the
industry. Plan of action might include:
1. Positioning the company
2. Improve the company position in the market by reacting vs the forces.
3. Anticipate changes in the balance of the forces..
Structure
Organisational structure
Defined as: the design of organisation through which the enterprise is administered. This
design, whether formally or informally defined, has two aspects. It
includes, first, thelines of authority and communication between thedifferent
administrative offices and officers and, second, the information and data that flows
through these lines of communication and authority. (Chandler, A). See Strategy
Such lines and such data are essential to assure the effective co-ordination, appraisal, and
planning so necessary in carrying out the basic goals and policies and in
knitting together the total resources of the enterprise.
Structure follows strategy and that the most complex type of structure is the result of the
concatenation of several basic strategies.
Structure
Decentralised vs. Centralised.
Decentralised allows to be focused, familiar to markets, flexible to need but excessive
overhead, loss of synergy between products, resistant to long term investment
and development. Danger of lost corporate identity, people and companies work for themselves.
The weaknesses of decentralistion are 'overcome' in Johnson & Johnson by the presence of an
"Executive Committe" whose purpose it is to overcome disputes
between companies and to resolve issues of resource competition.
Structured Query Language
See SQL.
Subsidiary ledgers
Include specif categories of accounts: accounts receivable; inventory, including raw
materials, work in progress and finished goods; accounts payable;
manufacturing overhead; selling expenses; and general and administrative expense.
Substitutes
One of Porter's five forces. Substitute products place a ceiling on the prices that an
industry can charge and thus limit the potential of that industry. Substitutes
that deserve most attention strategically are:
1. those subject to trends improving their price-performance trade-off with the industry's
product.
2. are produced by industries earning high profits.
Success
Unsuccessful products
Analyse failures and learn. Asssess new product failure on the basis of criteria: did you
understand user needs; did it fit with strategy; competitive analysis; was
it positioned properly; technical risk assessment; was it a priority; did it comply with
regulations; were the right distribution channels used; did the company
have ongoing committment to the market segment; was the project endorsed by top
management; did it receive organisational suport.
Sugano Takuo
See Policy.
Sun
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Sun Microsystems, a large American manufacturer of PC Workstations and UNIX software.
Their computers are based on the idea of open systems nad they
have a profitable business selling their Network Filing System, better known as NFS, a
powerfull networking software package for connecting computers.
Sunk cost
The business equivalent of guilt. The equivalent to a membership fee which is lost if it
cannot be used. They represent the money invested in a project which is
already spent. Decisions should be based on the value of future investments and not on
how much has been spent. See Economics.
Super Computers
Computers with very high processing capacities. They are unsuitable for database
applications because their data representation is vector based as opposed
to bytes in òrdinary' PC, mini and mainframe computers.
Super Internet
Visionary project for expanded Internet. A Super highway for information envisioned in
the US administrations National Information Infostructure (NII).
Supplier power
One of Porter's five forces. A supplier group is powerful if it is dominated by a few
companies and if it is more concentrated that the industry it sells to. If its
product is unique or at least differentiated, or if it has built up switching costs.
Switching costs are fixed costs buyers face in changing suppliers. There arise
because, among other things, a buyers product spec. ties it to particular suppliers, it
has invested heavily in specialist ancillary equipment, or its production
lines are connected to te suppliers manufacturing facilities.
Suppliers
Supplier relationships are demanding
Identifying suppliers takes time
Establishing your credit worthiness is dificult
negociating reasonable payment terms is though, securing favourable terms comes only witht
ime.
Maintaining reliability and quality of suppliers requires diligent oversignt
ensuring that our needs aretakenseriously (as a very small company) can be difficult
Swap
A contract to exchange a stream of periodic payments with a counterprty. Swaps are
available in and between all active financial markets.
Swaption
An option to enter into a swap contract.
Switched multi-megabit data service (SMDS)
Practical alternative to T1, but only in the states currently. A switched megabit data service
providing connectionless packet switching. Light control functions to save
overhead. T1 and T3 rates 1.5 to 40 Mb/s. Used for MAN; attractive to multiple LAN users.
Switching costs
Switching costs are fixed costs buyers face in changing suppliers. There arise because,
among other things, a buyers product spec. ties it to particular
suppliers, it has invested heavily in specialist ancillary equipment, or its production
lines are connected to te suppliers manufacturing facilities.
Switching
See Networks.
SWOT
Strengths, weaknesses, opportunities, threats; analysis used in market and business
planning. A tool, not a reporting style.
Synchronised manufacturing
Any systematic way that attempts to move material quickly through the various resources
of the plant in concert with market demand.
Synchronous Protocol
e.g. HDLC (high level data link control), also knows as SDLC (IBM) or LAP-B (CCITT). HDLC
improves on transmission efficincy by allowing several
blocks (called frames) to be transmitted before the first one is acknowledged. Allows
synchronous transmitting in both ways.
Syndicated investment
An investment which is too large and resky to be handled by one investor and whch needs
to be shared among several partners. Fewer deals are syndicated
in present market conditions; while syndicates also nvolve fewer participants, This is
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partly because the smaller deals do not require so many players. buy it
also means that, if trouble arises, fewer people have to be consulted to sort out the
mess.
Synergy
1+1>2. The concept is based upon some sort of economies of scale or scope yielding
benefits from combining activities. Frequently claimed in M&A
activities.
System Dynamics
A modelling technique first developed in the 1960s by Mr Jay Forrester (the inventor of
core memory in computers) of MIT. The technique involved rules and
functions developed from control and feedback engineering (one of the most important
theories for electrical and electronic devices) and were designed for
playing `what if' games by manipulating the variables. See also Education, Learning and
Change and Decision Analysis.
Systems analysis
Developed by the RAND corporation. Brings together ideas fro engineering and ideas from
economics and seeks to help a real world decision maker faced
with carrying out a major project. assumes an objective. The process of analysis
organisations, use of resources, information flows etc. in order to remodel it
into a more efficient or more effective shape. Now called operational research. Uses hard
systems thinking
Systems software
The foundation on which the application program is developed. Interprets the application
program and tells the computer how to act. Includes operating
systems.
Systems thinking
The first step towards systems dynamics (a sensitise to the process), does nothing except
introduces the concept to the uninitiated.
T Account
Method for recording credits and debits
T-Carrier, T1
Copper based digital facilities that carry 24 simultaneous voice or data streams at
64Kbps each. Many are based on fiber transmission rather than copper.
T1 multiplexers
Accept information from multiple data, voice, or videochannels and combine it for
transmission over a single T1 communications (or composite) link.
T3
Provide theequivalent of 28 T1 cicuits. Can be used by private and public networks.
Asynchronous: can use fiber, microwave and coaxial paths.
Tacit knowledge
Tacit knowledge, experience, common sense, the mental model; is not written down: as
opposed to measured, objective knowledge which is specific and
written down.
Takeovers
Tangible asset
A tangible asset has physical existence (e.g. buildings and equipment). see Intangible
asset.
Tautology
An expression which is true by definition. An example is the accounting equation OE=A-L.
Tax compliance
the process of filing forms and calculating taxes and required payments
Tax in the company
In the income statement goes a provision for taxes which represents money which will have
to be paid. In the balance sheet are representations of how this tax
will be paid: deferred taxes, which will be paid in the long term (long term liabilities)
and Accrued taxes which will have to be paid in the short term and tax
benefits (allowances which reduce the total tax liability.
Because some taxes are postpones not eliminated, they appear as an increase in liabilities in
the balance sheet. Effectively, tax deferral is an interest free loan from the
government because although the money has been shown as an expense in the profit and loss, it
has not been paid; the company can use it.
Taxes payable
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Taylorism
Frederick Taylor
TCP/IP
The term designates a set of network protocols designed for thedefence advanced research
project agency (DARPA) in USA. These protocols are tailored
for heterogeneous local networks and have been embedded in UNIX systems; particularly
useful for interconnection between LANs involving multivendor
equipement (IP made for this). TCP has never been considered as an industrial standard.
Although competitive and different there is not intrinsic antagonism
between OSI and TCP/IP in lower levels. A layered approach to networking. Where OSI uses
virtual connections TCP/IP is based on Datagram which is the
opposite. (see datagram and virtual connections). Although referred to by a single
acronym, TCP/IP is actually twoseparate protocols each occupying a
different layer of theOSI reference model: TCP is an OSI level 4 transport layer: IP is a
layer 3, or network layer. See Networks.
TDM-Time division multiplexing
With introduction of integrated circuits it became possible to apportion the bandwidth on
a time basis, by assigning each terminal a fixed time slot. Possible to
allocate time slots according to terminal charcteristics.
Teams
Correct construction of teams is important. Cross functional teams should not have
individual members measured by their functional boss. Composition is key
to success. The amount of time as a proportion of total work time is important; teams
whose members work for less than 50% of their time tend not to be
successful (Davenport, T) (surely an exageration). Team leadership and management are
key. Teams will not function without a defined and capable leader.
Technology development patterns.
Research Management
Three approaches to research and technology development that describe the process
1. Linear: Science discovers, Industry exploits, Men adapt. Not a real viability any more, a
luxury to think this way.
2. The Social Constructivist Approach (Scot). Wiebe Bijker, Trevor Pinch: where the market
cannot or will not accept a development even if it is technically
superior but rather, chooses another (eg light bulb example, that emphasises the need to
involve marketing, production etc in the research process)
3. The Network Approach: Bruno Latour: Where different actors. (e.g. the government as
finance, the engneer as research, the market as seller) combine 'and
confuser' the design or research process.Confusion when different networked inputs are not
well coordinated or managed with clear decisions that are not
compromises that please no party.
4. The Uses and Users Approach: Michel de Certeau Discrepency between the intended users (to
whom the designers target) and those who use it in reality.
Emphasises the need for developers, whoever they are, to try and understand possible
alternative uses of technology (as core competences that can be extended to
other products and processes).
Technology strategy
Three typical approaches (de Treville).
1, cost based: how many people can we eliminate.
2, strategy of flow based: at the point where parts or customers wait, can we apply technology
to improve the flow?. can we use our technological skills to produce
a capability (Wall Mart cross docking, Sisu auto robots, Honda, service and distribution).
3. latest technology.
Technology
The application of science to the needs of humanity. The OECD difines it more narrowly as
`the first application of sciencein a new way ... with commercial
sucess', OECD 1971.
For business it is important that technology is not neutral in an organisation. While problems
are usually organisational in nature the solutions are increasingly provided
in the form of technology.
The learning curve of technology is in fact a series of seperate curves linked by periods of
saturation and bursts into new periods of growth:
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"When you've got a new hammer - everything looks like a nail", so watch out for techies with
new equipment and software. It may not be solving a problem for
which it was designed and for which it is not suitable!
Telecommunications And Business Strategy
See Networks.
Telecommunications In Europe
See Networks.
Telecommunications In Germany
See Networks.
Telecommunications Revolution (The)
See Networks.
Telecomputer
The multimedia machine; offering computer, video, and data transfer etc. E.g. Fox, a kind
of supersmart TV that will play CD-ROMs, delete television
advertisements, program the VCR, search databases for selected news items and answer the
telephone. Use is impaired by bandwidth.
Telecomputing
A term coined by Professor Jack Nilles (of USC) in the early 1970's for people who work
from home and use technology to electronically communicate with
their companies office.
Telecoms, La Fin Des Privileges
See Networks.
Teleports Et Zones De Telecommunications Avancees
See Networks.
Teleports In The Information Age
See Networks.
Telework
Here office bureaucracy is dismantiled in favour of people working at home, often through
a different employment contract: market constraints re;lace a
hierarchy. If the workers communicate with each other through the network this is an
instance of electronic teamwork.
Teller Machine
See ATM.
Terminals
take analogue continuous wave input and transform it into a digital stream. E.g. channel
banks and transcoders.
Termination equipment
Provide digital connectivity. Equipment includes three general categories: terminals,
Digital cross connect systems (DCS's) and multiplexers
The statement of changes in financial position
Random list of pluses and minuses which is now called the Cash flow statement.
The U curve.
Shape of costs graph in manufacuring planning when costs fall with volume but then
increase as volume increases. Caused by the investments needed to
increase beyond a certain point.
The weighted average cost of capital (WACC) to company valuation
Estimates the cash flows due to unlevered equity (as with the APV calculation) and
discounts these cash flows to unlevered equity at the weighted average
cost of capital of the firm (considering the after tax cost of debt if interest payments
are tax-deductible), where
Where E is the market value of equity, D is the market value of debt, re is the cost of
levered equity (i.e. based on the equity beta, rd is the cost of debt, and tc is the
corporate tax rate
APV, FTE, Valuation. Corporate valuation
Thorne John
Throughput
The rate at which an organisation generates money through sales (not production).
Time and Sales
See Reuters.
Time rate of return
Used for evaluating capital investment, either by net present value or Discount yield
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methods.
Time Sharing
The technique of allowing several users to use a computer at once. This is possible
because computers are very fast relative to users operating computer
terminals. Techniques such as multiplexing and time-slicing are typically involved.
Token passing
Is the protocol used in the IBM Token Ring LAN. It works by passing a short message, the
token, from one device to another along the communication
channel. If the device wants to communicate it must wait until it has received the token.
Token Ring
See Networks.
Toyo Keizai
See Reuters.
Trade accounts
Current liabilities to be paid usually over one year owed to suppliers for service,
supplies and raw materials. See current liabilies
Trading profit
Sales value less all the costs both direct and indirect relating tothe ordinary trading
activities of the business.
Trains
See Networks.
Transaction cost
A method of operation valuation which directs attention to the resources consumed in the
execution of a transaction.
Phases: search, contract, control/monitoring/modification, maintenance (social component). All
phases need information (better information, better transaction, but
information can be unbalanced with either the seller or the buyer out of step. This can lead
to windfall gains, e.g. Microsoft gaining control of DOS from IBM)
Costs of search (how long and extensive, may find a partner but cannot trust him): cost of
contract depends on the complexity of the deal (cost of defence contract
compared to cost of buying soap): control cost (who responsible for making sure the contract
kept, bad social relationships can be a source of high transaction
costs.
Most of these costs are information costs. More physical equipment (e.g. IT) will not solve or
improve a situation if trust is not present between partners (e.g.
development of JIT with suppliers).
Organisations as networks of transactions. Is the market an organisation, is the heirachy a
network of transactions.
Clans and Teams are also networks of transactions in an organisation. These will be opaque
organisations based largely on trust. Entering organisations and markets
is easier or harder depending on its organisation; a Clan, for example might be hard to enter
and hard to leave.
IT can change the pattern
The same matrix can be used to position the type of IT service in an information market. In
this situation the degree of individual service is the top axes, the delivery
channel (moving from non to electronic) is on the side axes. Again, being off the diagonal is
to be in the wrong place (individual treatment for a non specialised
product (top right).
Where there are conflicts and/or transaction costs are too high the decision to make it
yourself or buy becomes active. It may be necessary to move from a
hierarchical or price control mechanism to one of greater trust.
Information systems designed to help the different forms need to be appropriate; it is always
easier to automate the market that the process.
MIS is just a tool for automating simple tasks, more often successful when applied to markets
than processes. Strategic information systems are just ways of
automating Tayloristic processes. Groupware can be appropriate to assist team relationships.
Transaction costing
Considers economic organisations as networks of exchanges. This allows: 1. the analysis
of the economic efficiency of the matching of information technology
and organisational structures. 2. The network of transactions between individuals and
organisational units is a useful concept for analysing and designing
telematic, office automation and EDI applications and new systems to support groups. 3.
It allows the contractual nature of the use of information in an
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organisation where there is only a partial congurence of goals and interests among
members. (Ciborra, 1993).
Transcoders
Accepts two DSI rate input PCM channels and to code translate thetwo streams using
compression techniques into a single DS1 standard. Properly called
ADPCM transcoder. Equipment that takes 48 analogue voice calls, digitises them, and packs
them onto a single DS1 facility is also thought of as part of the
transcoder family, though this is really a channel back (exactly called ADPCM channel
bank)
Transfer payments
in macro economics. Government dips into national income by imposing taxes; at the same
time it augments incomes by paying out social security,
unemployment insurance, and other forms of "transfer payments". see GDP.
Transfer price
Prices for interdivisional transactions. Should encourage motivation from both sides.
Should be fair. Can be set at full cost or marginal cost providing
motivation is not affected. Should take into consideration market price for equivalent
goods or services (motivation again).
Transient.
See ephemeral.
Transmission groups
Parallel SDLC links between two SNA nodes can be arranged logically into transmission
groups, which comprose one or more parallel links withthe same
transmission characteristics, such as data rate, delay, security, and likelihood of
error.
Transnational company
A company with operations integrated accross all countries (as apposed to a multinational
Transparency
A transparent system is able to transmit data exactly as presented by the user (ie no
added control instructions). Non transparent systems can be harder to
use.
Transponders
Receive, amplify, convert and retransmit the signals that antennas collect and redirect
these signals to specific parts of the earth throughthe appropriate satallite
antenna. Frequencies sent from earth are lowered before being returned.
Treasurer
Treasury stock
Stock in a company purchased back from the market and held in treasury
Trendlink
See Reuters.
Trendsetter
See Reuters.
Triarch 2000
See Reuters.
Trillion
See Billion.
Trunk circuit
The trunk circuit: manages dataflow into and out of the subnet in a packet switch system,
corrects interswitch data errors and coordinates net management and
trouble shooting.
Turing, Alan
One of the founders of computing whose work enabled the first computers to be constructed. His
work during WWII concentrated on code cracking (breaking the
German encryption systems) although he is now best remembered for the Turing Intelligence Test
for computers.
Tuttlebee Wally H.W.
Author of the book. "Cordless Telecommunications In Europe". See Networks. Ubiquitous
Computing
A term used by Xerox PARC researchers for the dissapearance of computers into the fabric
of our everyday life. They are refering to the embedding of
computers in objects as diverse as light switches, automobiles and household appliances:
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Unbiased Estimate
One that on average is equal to its true value.
Understanding Local Area Networks
See Networks.
UNIX
An advanced operating system developed in the 1970s by AT&T's Bell Laboratories. It comes
in many versions and runs on many platforms of computer
hardware. It is very good at multitasking, communications and can manipulate data
efficiently. Unix is an open system and although gaining in popularity has
yet to become a mainstraem technology in most corporations.
Unlevered Beta
Also called the Asset Beta. See Beta and Finance.
User Friendly
A term to describe the ease with which a computer system or application can be used.
User interface
The program that allows the user to communicate with the machine.
Utilities
Software to carry out commonly required organisation and data management tasks. Typically
many features of utilities are quickly included into the operating
software when subsequent versions of the OS are launched.
Utility packages
Include: program debugging aids, text editors, sort-merge programs, etc.
VALLEE Alain
Author of the book. "Perspectives Pour Les Telecommunications". See Networks.
Valu e chain
Process during which value is added. Raw materials + labour + etc. See Competitive
Advantage.
Valuation.
Corporate valuation
The value of a company is: the base case net present value + the net present value of
synergies.
Corporte valuation is no different from valuation of any other asset. We want to find 1. the
correct set of cash flows, 2. correct cost of capital ie. discount rate, 3.
The NPV, where our decision will be to go ahead with the transaction if and only if the NPV is
greater than zero.
Qestions to ask:
1. does the market over or undervalue the company
2. What is the value of synergies that come from the acquisition
Commonly used corporate valuation approaches
1. Premiums paid analysis for valuation
Looks at the percentage excess price paid toacquire a target firm's stock in transactions of a
similar type in similar industries. Has advantages but is crude and
subjective. Information in the US from the Mergerstat Review (may become available for Europe
and Japan).
2. Valuation based on relevant share price multiples
Looks at a few typical ratios: the price earnings ration (P/E), the price cash flow ratio
(P/CF), and or the market to book ratio (M/B). The idea is to look at relevant
multiple for other firms in the industry (or other similar acquisitions), and use some kind of
average. Good back of the envelope method.
For example: suppose the average P/CF ratio (CF = net income + depreciation, or earnings per
share + depreciation, or free cash flow ) in the global food and
beverage industry is 20 in 1991, and you are considering acquiring Perrier, which had 1991
cash flow of FF70 per share. Given this cash flow, according to the
global food and beverages industry P/CF multiple, you would value Perrier at FF 1400 per
share. If Perrier sells for FF1200 (as it was then) one can conclude that it
is imdervalued. If you, as the acquirer, belie ed that the stock could do at least as well as
the rest oftheindustry, then you have a floor for your valuation. This method
is also crude. Earnings can be manipulated and distorted by accounting rules. Earnings can be
affected by debt equity ratios.
3. Valuation based on replacement/breakup value of assets
Means you sit down and try to work out themarket price of every single asset in the balance
sheet. Add them up and subtract the value of debts. Divide the
remaining value (net asset value) by the number of shares outstanding. Useful method if you
96
think the firm has a number of undervalued assets
4. valuation based on discounted cash flow (DCF) techniques
While methods 1-3 are useful a DCF should always be done. There are three DCF methods in
common use.
* The adjusted present value method (APV)
* The flow to equity method (FTE)
* The weighted average cost of capital (WACC)
Short methods of corporate valuations Dividends Growth Method
This is basically the perpetual growth equation.
Valuation: cross border valuation
Key considerations specific to cross border valuation:
* the choice of currency, foreign (local) or domestic (home), in which to execute the analysis
* whether or not to discount foreign cash flows at the time theyare earned or at the time they
are remmitted home to the parent
* whether or not to use foreign or domestic tax rates
* the proper calculation of the cost of capital used to discount the cash flows.
*the appropriate treatment of special risks unique to cross border investments such as foreign
exchange risk, political risk, and so on.
The most commonly practiced valuation technique is the discounting of expected free cash flows
(FCF) by a Weighted average cost of capital. The rate at which
expected free cash flows shouldbe depreciated is the Opportunity cost of investing capital in
the assets in question.
Value added networks (VANs)
Provide special communication and network management services over leased lines from the
common carriers (public networks). Tymnet and Telenet are
examples of companes providing the value added network services. The enhanced services
include usually: 1, more efficient data transmission through the use
of data packets with improved routing, error control and efficiency. 2, capability for
interconnecting computers and terminal with dissimilar transmission
protocols and speed of transmission and 3, network management and maintenance services.
Many companis chose VANs for long distance communications because of thecomplexitiy and cost
of attempting to manage their own long distance
communications.
Value based planning
At the level of a business unit within a company, defining an appropriate measure of
"value creation" is difficult. Business units do not pay dividends, nor do
they issue common stock. Value based planning is the business unit equivalent of
Shareholder Value.
Value based planning means is that the effects of a proposed strategy should be measured in
terms of two components:
* The cash flows that it is expected to generate over a period of time. Because these cash
flows occur over a period of several years, they must be discounted at
appropriate rates.
* The change in the business unit's market value betweenn beginning and the end of the
planning period. since there is no actual market value for a business unit's
equity, an imputed value must be estimated, using a valuation model derived from an analysis
of the factors that appear toaffect the company's stock price.
Where: DCF is discounted cash flow, DFMV is discounted future market value.
Value chain
The value chain disaggregates a firm into its strategically relevant activities in order
to understand the behaviour of costs and the existing and potential sources
of differentiation. A firm gains competitive advantage by performing these strategically
important activities more cheaply or better than competitors.
A value chain is embedded in a larger stream of activities called a value system. Gaining and
sustaining competitive advantage depends on understanding not only a
firm's value chain but how it fits into the overall value system.
The activities are divided into primary and support activities
Key points made by Porter include: technology and development are not restricted to the R&D
department but is a company wide responsibility, as are HRD,
Procurement and the infrastructure. Procurement is a key issue concerning whether to buy or
build and which alliances to establish.
Value creation
97
Chapter 1. & cultures of capitalism.
1. Making Rules and Discovering Exceptions. Organisations need rules, particularly for safety
and employee practice. Exceptions must be identified where they
reveal weaknesses and limitations.
2. Constructing and Deconstructing. Examine all processes, deconstruct and reanalyse them.
3. Making Communities of Individuals: Foster the needs of the individual and the community.
4. Internalising the Outside World: Be receptive to ideas generated in the outside world
(don't fall into the not invented here syndrome) but remain receptive to the
inside generation of ideas.
5. Synchronising Fast Processes: Parallel development of processes is essential for quick
response time in projects. Easy for slow processes, difficult for fast ones.
6. Choosing Among Achievers: Reward contributions. Set sensible and measureable goals, measure
by people who are not in competition with judged.
7. Sponsoring Equal Opportunities to Excel: Encourage and allow idea generation. Fair judges
for ideas.
Understanding the way cultures prioritise these 7 is important. There are tensions between the
way priorities are set; the importance of the individual vs the
importance of the community etc.
Value pricing
Means providing buyers with cars that already have a full package of options, at
attractive prices, eliniating haggling with dealers and reducing the need for
costly rebates.
Variable cost
Subtract known fixed costs from total costs you get total variable costs or direct
manufacturing costs. Dangerous because there are also semi-variable costs
and definitions can be hard to make (see fixed costs). See Economics.
Variable
For example, take the following equation: y=ax, `x` is a variable. See also Parameter.
Variance Interdependence Matrix
see Sociotechnical analysis & Variances.
VASARHELYI Miklos A.
Author of the book "Artificial Intelligence In Accounting And Auditing". See Control and
Monitoring.
Vector
Is graphics data expressed as lines or vectors. Every piece of data in a vector picture
is a line. This is suited to maps, drawings, building layouts, technical
drawings. The conversion of Raster to vector is an extremely expensive process because of
the intelligence needed to recognise shapes - for example a
circle.
Vendor finance
Finance provided by teh vendor in the form of either a deferred payment or a retained
minority stake in the bought out company, usually in theform of loan
notes. It allows thevendor to share in theprofits of tehcompany if it does well, and can
also be used to boost thesale price, thereby impressing the vendor's
shareholders
Venture Capital
See Business Angel.
Venture capitalist
Deal maker who provides funds and advice to entrepreneurs, either starting a business
from scratch or staging a management buy out.
Vertical integration
The move into new functions by a business. (see Diversification)
Videofax
A new generation of facsimile (fax) machines which incorporate large LCD screens which
can display incoming faxes without printing them out. Future
enhancements are expected to include the ability to annotate faxes with pen computing
equipment.
Videotext
An interactive information service operated often by a telephone or television company.
Virtual channel
Cells belonging to particular service are said to constitute a virtual channel (VC). Many
VCs may share a single link. VCs are in turn bundled into virtual paths
VPs. A particular link will comprise one or more VPs.
98
Virtual circuit
Can provide a virtual circuit interface. A virtual circuit provides a chanel between a
pair of hosts over which they may exchange information nearly
transparently. In a connection path with many possible connection routes the virtual path
could be any one of those possible; if one connection fails, others are
available. Used in OSI systems. The opposite approach is used in TCP/IP Unix type systems
which operate a Datagram approach (see Datagram
Virtual paths
Cells belonging to particular service are said to constitute a virtual channel (VC). Many
VCs may share a single link. VCs are in turn bundled into virtual paths
VPs. A particular link will comprise one or more VPs. VPs exist for network management
reasons. They may collect all VCs belonging to particular customer
wishing to use the public network to link parts of a private company network.
Virtual Systems
Computers which split programs into segments (called pages or sectors) and place these
into memory for processing. This means that less memory is needed
to process programs, thus saving memory which has been historically scarce.
Virus
A computer program which is designed to destroy information on other peoples computers.
VISP-Voice Information Services Platform
A multi-application voice processing platform.
Voice / Data Telecommunications For Business
See Networks.
Voice Compression
Process of reducing the number of bits per second required to reproduce a voice channel,
thereby reducing the transmission bandwidth for that channel.
Voice Mail
A telephone system which can record and store human voice traffic and play the recording
back to the intended person on command.
Voice Recognition
Computer software (and often hardware) which is capable of interpreting the spoken word.
Capabilities vary but the technology is becoming commonplace in
telephone and similar applications.
vorstand
German for management board. See Corporate Governance.
VPI-Vendor-Independent Messaging
Like MAPI, a program for assisting E-Mail, allows mail access to any program.
VSAT
Very Small Aperture Satellite. See Networks.
WACC
An acronym for the Weighted Average Cost of Capital.
where:
re = cost of levered equity
E = market value of equity
D = market value of debt
tc = corporate tax rate
rd = cost of debt.
See Finance.
WAIS
Wide Area Information System. See Internet.
Wall Street Journal
A US based daily financial newspaper which contains many discussions of financial
engineering, company and more general finance and banking issues. One
of the two best general international financial newspapers currently available. See
Financial Times. For more detailed general information see the magazines
Institutional Investor, Euromoney and The Banker. For more specialist international
finance information see Risk for detailed articles on pricing models
and deal structures, International Financing Review for detailed articles on market
activities and deal structures.
WAN
Wide Area Network. See Networks.
Weighted Average Cost of Capital
See WACC and Finance.
99
Weighted average of prices
see GDP.
Weintein Franklin
See Policy.
Wheeler Tom
Author of the book. "Open Systems Handbook". See Networks.
Whole Internet (The)
See Internet.
Wide Area Information Servers (WAIS)
Is an electonic publishing software set which allows search and retrieval of multimedia
information from distributed databases. Information can be drawn from
data stored on the end user desktop, from computers distributed throughout an
organisation on a local area network or from information sources on public
networks. From the company Thinking Machines. See dynabase.
Wieland Bernhard
Author of the book. "Telecommunications In Germany". See Networks.
Windows
See Microsoft.
Word
See Microsoft.
Work flow automation
in E-mail context. Advanced E-Mail that can be used for puchase order and invoice
processing, vacation and leave requests, creation of sales proposals, etc.
Is a subset of Groupware, which also includes shared information systems such as Lotus
Notes. The difference is that Lotus Notes is a passive system that
makes no effort to track who gets what information or what they do with it, whearas work
flow systems play an active role in disseminating data to the people
who need it.
Work out
A technique used at GE. The practical objective is to get rid of thousands of bad habits
accumulated since the creation of GE. The intellectual objective is to
put leaders of each business in from of 100 or so of their people, eight to ten times a
year, to let them hear what their people think about the ocmpany, what
they like and dont like about their work, and about how they are evalauated. The idea is
to redefine the relationship between boss and subordinate.
Includes sessions without the boss to identify needs and problems. After the sessions, often 2
days, the boss comes in and faces teh recommendations. He has to say
yes, no, or more information by.... Often his boss is watching, but out of eye contact range.
Working capital cycle
Taken from Analysis for Financial Management by R C Hughes
A = Changes in equity
B = Changes in liabilities
C = Taxes
D = Interest
E = Dividends
The simple model above summarises the operating cycle but does not include accounts payable
etc which make the picture much more complex.
Working capital
Resources which are either cash or are intended to be converted into cash by the normal
trading activity of the business, less any amounts which the business
owes in the short term.
Workstation
See RISC.
World-wide Network
A Case from the Introduction to Information Systems Management. Manufacturers Hanover
Bank was in the process of implementing a telecommunications
network called GEONET.
Wozniak, Steve
See Apple.
WYSIWYG
What You See Is What You Get. A term used for GUI applications which display information
exactly as it will appear when you print it.
100
X-inefficiency
The absence of tradeoffs. Resouces are wasted when more of something can be produced
without makeing less of anything else.
X.21
Is a protocol used to guide the design of a circuit switched network. Like X.25, it has
been accepted as the international standard.
X.25
Is a protocol used to guide thedesign of packet switching networks. It specifies the
rules for connecting devices to a communication channel and for
developing and transmitting packets, along with a number of other important features and
functions of a packet switching network. Widely accepted as an
international standard
X.75
Is a protocol for connecting X.25 networks. It specifies guidelines for exchanging
packets between different X.25 networks so that the two networks appear
to be a single networlk to users.
X25
See Networks.
X400
See Networks.
X500
Is a standard which specifies network directory structures. The objective is to make it
possible for networks to automatically locate each other across the
world. See Networks.
Zen And The Art Of Internet
See Internet.
Zero rated Bonds
Bonds sold to raise capital which don't pay interest. A firm would issue bonds to be
cashed after a fixed period of time for a sum (eg $1 million), it only sells
them for 500,000. The buyer pays 500,000 and receives no interest during the term but
resells to the issuer for $1 million at the end of the term
101

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See Beta and Finance.

See also Engelbart, Kay and Nelson.

In appraising competitive position consider the following table

Considering these questons leads to Market position.

Make or buy, knowing what is involved.

see. Coverage Ratios

Where net fixed assets are property plant and equipment.

See Cash Flow and Finance.

Figure :The Four Stages of Growth in Systems Functions.

Conventional information systems provide automation of function using information systems as

Figure : Email Growth in the USA. From Byte, March 1993.

Reasons for failures.

Money times income velocity = price index times Real GNP.

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