CIMA E2 - independent subject foundations key terms

A framework classifying growth options by existing or new products and markets. It supports comparison of strategic changes, but the actual risk depends on capabilities, commitment and the particular situation.

The long-term plan of action a firm adopts to achieve its objectives and gain advantage over rivals, given its resources and environment. It involves choices about markets, products and methods of competing.

A review of a firm's internal strengths and weaknesses and external opportunities and threats. It informs strategy by matching capabilities to the environment, though it can become a static list if not updated.

An examination of political, economic, social and technological influences on a business. It helps anticipate external change and shape strategy, but it is descriptive and does not by itself prescribe action.

Acquiring control of another business by buying enough of its shares, often as a faster route to growth than internal expansion. It brings immediate capacity but risks overpaying and clashing cultures.

The joining of two businesses into a single organisation, usually presented as a partnership of equals. It can create synergies and market power, but integration problems often erode the expected benefits.

The number of employees reporting directly to one manager. Its width can affect workload, communication and supervision, but does not alone determine every layer or the degree of delegation.

An organisational design with several layers of management and a clear chain of command from senior to junior staff. It offers clear authority and promotion paths but can slow communication and raise costs.

Removing one or more levels of management from an organisation's hierarchy to cut costs and shorten communication channels. It widens spans of control and may reduce promotion opportunities, affecting morale.

Passing authority to a subordinate to carry out a task while the manager keeps overall accountability. It develops staff and frees managers' time but risks poor decisions if training and control are inadequate.

The process of identifying a vacancy and attracting suitable applicants, through internal promotion or external methods such as advertising and agencies. The chosen method affects cost, speed and the quality of candidates.

A document stating the duties, responsibilities and reporting relationships of a post. It is used to advertise a vacancy and to set expectations, and it supports later appraisal and training decisions.

A profile of the qualifications, skills, experience and personal qualities required for a job. It helps shortlist applicants objectively and reduces bias, though poorly written criteria can exclude suitable candidates.

Choosing the best applicant for a vacancy using tools such as interviews, tests, references and assessment centres. Reliable selection reduces costly staff turnover but methods vary in validity and expense.

Introductory training given to new employees covering the organisation, its rules, health and safety and their role. It helps newcomers settle quickly and reduces early resignation, but takes time away from work.

Teaching skills while the employee performs real tasks at the workplace, often under supervision. It is relatively cheap and job-relevant but can pass on poor habits and disrupt normal output.

Falls in long-run average cost as the scale of the enterprise expands, potentially through specialization, purchasing or technical advantages. This differs from merely spreading fixed cost by raising utilization of an unchanged plant.

Rises in average cost per unit as output grows beyond an optimal level, caused by communication problems, poor coordination and lower staff motivation. They limit the benefits of very large-scale operations.

Actual output expressed as a percentage of maximum possible output. High utilisation spreads fixed costs but leaves little slack for unexpected orders; low utilisation wastes resources.

Controlling the amount of raw materials, work in progress and finished goods held. Too much stock ties up cash and risks obsolescence; too little risks stockouts and lost sales.

A stock system in which materials arrive shortly before they are needed and finished goods are made to order, minimising stock held. It cuts storage costs but leaves little protection against supply disruption.