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continue. (Buildings, land, plant and machinery.) A temptation to asset
strippers if the company is failing to make effective use of them especially
as property prices continue to rise.

Fixed costs Costs that have to be borne regardless of levels of produc-
tion. (Rents, local taxes, administration costs.)

Four “Ps” of marketing Price, Place, Product and Promotion. To which
some add a vital fifth, People. The people in a business deliver customer
delight which is why Reichheld’s research that shows that the relationship
between loyal staff, loyal customers and loyal investors leads to massively
increased profit potential is so important.

Fragmented market A market in which there are many competitors of
whom none has a dominant share.

G

Gearing The relationship between investment capital provided by the
owners of the business and long-term loans.

Globalization Where customer tastes, expectations and desires are suf-
ficiently similar world wide to be satisfied by a global product or service.

Having a global strategy in terms of costs, resources, people and produc-
tion facilities to minimize costs and, in theory at least, maximize customer
satisfaction.

H

Hawthorne effect The tendency for results to improve for no better
reason than that they are being researched. A sort of placebo effect for
business scientists. Where change has been introduced into an organiza-
tion the managers responsible for that change frequently over-estimate
the benefits while those not directly involved tend to underestimate them.
Only asking the right questions of all the right people will lead to a proper
evaluation of what has been achieved and what remains to be done.

Headhunter A consultant who finds usually senior people for a business
for a considerable fee that is usually a multiple of the first-year salary
package.

Holding company A company that owns at least 50 per cent of a sub-
sidiary company or which controls the composition of the subsidiary’s
board of directors or, more usually, both.

Hub and spoke system A distribution system where a central facility
supplies a number of smaller warehouses that in turn supply customers or
distributors.

Glossary (and soapbox) 237