Business Dictionary – O

Object and Task Technique

    A method of budgeting that involves assessing a project’s objectives, determining the tasks required for their accomplishment, and then estimating the cost of each task.

Objective

    An end toward which effort is directed and on which resources are focused, usually to achieve an organization’s strategy. There is considerable discussion on whether objective, goal, target, and aim are the same. In general usage, the terms are often interchangeable, so it is important that, if an organization has a particular meaning for one of these terms, it must define it in its documentation. Sometimes an objective is seen as the desired final end result, while a goal is a smaller step on the road to it.

Obligation

    A binding legal agreement, by which somebody is bound to do something, especially to pay an amount of money.

Objects Clause

    A section in a company’s Memorandum Of Association which sets out the objectives of the company.

Obsolescence

    The state of becoming obsolete or out of date. Old-fashioned.

Occam’s Razor/Ockham’s Razor

    A guiding principle or maxim for theorists, writers, communicators, etc., which asserts that the most effective (and arguably most reliable) explanations and theories employ minimal assumptions. In other words, in choosing between competing theories or explanations for uncertain things, the most reliable theory will be that which entails the least use of assumptions and other unknowns.

    More generally the term is used in reminding/guiding us of a need for prudence, economy and simplicity in describing, justifying, or explaining ideas and concepts, etc. The ‘razor’ term seems first named and recorded by Sir William Hamilton in 1852, after the 14th-century English logician and Franciscan friar Father William of Ockham (c.1285-1349), who was a notable early advocate of the principle.

    Philosophers and scientists throughout history (including Einstein, Russell, Newton) have described similar and basically supportive versions of the Occam’s Razor principle, moreover many great thinkers have also demonstrably put the principle into practice in their own work, from which we can derive a reasonable degree of confidence in the validity of the concept itself. It’s a very memorable and teachable idea – the theme itself, its Ockham derivation, and the metaphorical allusion to ‘shaving’ away unnecessary or unsubstantiated aspects of a written or spoken theory or explanation.

Occupational Hazard

    Aspects of a job which can be dangerous or pose a high risk of injury.

Occupational Psychology

Also called Organisational Psychology. The study of peoples behaviour at work, covering personal relations, mental health, employee selection and training, safety, etc.

Ochlocracy

    Mob rule. Also known as Mobocracy. Ocholocratic groups are typically prone to extreme actions and not very clever decisions, which may be a reflection of vengeful motivation, weak intelligence, lack of organization, or any/all of these. An ochlocracy is usually an example of ineffective democracy, and of the so called ‘wisdom of crowds’ not working very well.

    Often mob rule results from a reaction against oppressive leadership. A popular metaphor which criticizes mob rule is: ‘the lunatics have taken over the asylum’. Ochlocracy derives from the Greek word okhlos meaning mob. An ochlocrat is one who advocates or participates in mob rule. See the word mob, which is interesting in its own right..

OEM

    Original Equipment Manufacturer: a company that assembles components from other suppliers or subcontractors to produce a complete product such as a car or aircraft.

Off-Balance Sheet

    (OBS) Refers to items such as assets or a debts which are not recorded on a company’s balance sheet.

Offer By Prospectus

    A description of a company, for example financial structure, prospects, aims, etc., used when new shares are offered to the public, or when the company is for sale.

Offer Document

    A document which a prospective buyer of a company sends to the company’s shareholders giving details of the offer in the hope of persuading them to sell their shares.

Official Strike

    A work stoppage by employees that has the backing and approval of a union.

Offline

    Refers to a computer which is not connected to the Internet.

Off-Market

    Refers to the buying and selling of shares outside the Stock Market.

Off-Peak

    A time period when a service, e.g. phone network, travel, electricity, gas, etc., is being used less frequently by consumers, therefore prices and rates are cheaper at this time.

Offshore

    Refers to accounts, investments, banks, etc., which are in countries where there are lower taxes and/or little government control.

Offshore Company

    A company that is registered in a country other than the one in which it conducts most of its business, usually for tax purposes. For example, many captive insurance companies are registered in the Cayman Islands.

Offshore Production

    The manufacture of goods abroad for import to the home market.

Off-the-Charts

    Something way below or way above normal expectations.

Off-the-Books

    A payment which is not officially recorded, usually to avoid tax.

Off-the-Grid

    A person who does not wish to be in ‘the system’ (for example has no bank account, employment or tax identification, no fixed address, etc). May instead refer to a person who lives self-suffiently in terms of gas, electric, water, sewerage services, etc. Or someone not connected to the internet.

Off-the-Peg

    Known in the US as Off-the-Rack. Describes merchandise, usually clothing, which is made in standard designs and sizes, rather than made-to-measure, and is available in stock at retail outlets.

Off-the-Shelf Company

    A company for which all the legal formalities, except the appointment of directors, have been completed so that a purchaser can transform it into a customized new company with relative ease and low cost.

Oligarchy

    A small, elite group of usually wealthy people or families who control a government or organisation, and who are unwilling to share their power.

Oligopoly

    A market in which a small number of companies control the supply of certain goods and services.

Ombudsman

    A government official who investigates complaints from the general public about companies, government officials, the media, etc.

Omnishambles

    Severe chaos, typically in several areas of organizational responsibility, and typically where a person or organization is expected to be well-organized (see omnishambles in the cliches origins page).

One-Stop

    Describes a retail establishment which provides an extensive range of goods and services, so the customer can purchase everything they need without having to go elsewhere.

One-Way Trade

    An economic situation in which one country sells to another, but does not buy anything in return.

Online

    Refers to a service or product which is available to use or buy on the Internet. A computer which is connected to the Internet.

Onshore Accounts

    Bank accounts or investments held in countries which have normal rates of tax and strict government control.

Open Account

    An arrangement between a vendor and buyer in which the vendor allows the buyer to pay at a later date for goods received.

Open-Book Management

    A management technique in a company whereby all the employees are involved in the running of the company by training them in, and giving them access to, financial and operational details.

Open Border

    A border which allows the flow of unrestricted goods and people between countries.

Open Cheque

    Also known as an Uncrossed Cheque. A cheque which does not have to be paid into an account, and can be cashed at the bank of the person who wrote it. Also means a cheque which has been signed but no amount has been filled in.

Open Communication

    In business, a situation in which employees have full information about the organisation, and are encouraged to exchange ideas and objectives with management.

Open Door Policy

    Management practice whereby all employees have direct access to the senior executives without going through several gatekeepers or layers of bureaucracy.

Open Economy

    An economy that places few restrictions on the movement of capital, labor, foreign trade, and payments into and out of the country.

Open-Ended Investment Companies

    (OEIC) Limited investment companies which manage mutual investment funds. An OEIC can issue more shares if there is a demand from investors. The fund reduces if investors sell their shares back to the company.

Open Loop System

    A management control system that includes no provision for corrective action to be applied to the sequence of activities.

Open Market

    A market which operates without restrictions, in which anyone can buy and sell.

Open Offer

    Also known as Entitlement Issue. An offer to existing share holders of a company, which entitles them to purchase new shares at a fixed price, usually lower than the current market price, in order to raise money for the company.

Open Shop

    A business or factory which does not require employees to be members of a trade union.

Open Source

    Describes computer software for which the original source code is freely accessible to everyone, so that anyone can modify or copy the program without paying a fee.

Operating Income

    The gross earnings of a company minus operating costs, excluding taxes and interest.

Operating Lease

    An arrangement in which a business leases equipment, cars, buildings, etc., for a period of time which is less than the expected useful life of the asset.

Operation Process Chart

    Used in manufacturing, a chart which shows each stage of a production process, including when materials are needed, how much time is to be allocated for each job, how many people are required to carry out the work, etc.

Operational Disciplines

    The activities and systems within an organization that ensure that the daily operations required to produce goods and services are running smoothly.

Operational Research

    The application of scientific methods to the solution of managerial and administrative problems, involving complex systems or processes. Operational research strives to find the optimum plan for the control and operation of a system or process. It was originally used during World War II as a means of solving logistical problems. It has since developed into a planning, scheduling, and problem solving technique applied across the industrial, commercial, and public sectors.

Operations Audit

    A structured review of the systems and procedures of an organization in order to evaluate whether they are being conducted efficiently and effectively. An operations audit involves establishing performance objectives, agreeing the standards and criteria for assessment, and evaluating actual performance against targeted performance.

Opinion Leader

    A high-profile, influential public figure, such as a celebrity or business person, whose opinions and tastes are respected and/or copied by the general public.

Opportunism

    The practice of exploiting and taking advantage of opportunities which present themselves, with no regard for other people or eventual consequences.

Opportunity Cost

    Term which refers to the value or benefit of something which will be lost in order to achieve or pursue something else.

Optimise

    To get the most out of something. To use something in the best possible way.

Order Book

    A record of the outstanding orders that an organization has received. An order book may be physical, with the specifications and delivery times of orders recorded in it, or the term may be used generally to describe the health of a company. A full order book implies a successful company, while an empty order book can indicate an organization at risk of business failure.

Order Picking

    Selecting and withdrawing goods or components from a store or warehouse to meet production requirements or to satisfy customer orders.

Order Point

    The quantity of an item that is on hand when more units of the item are to be ordered.

Ordinary Resolution

    A resolution accepted and passed by a company’s shareholders by a simple majority, i.e., more than 50%, at a shareholders meeting or by a signed postal resolution which has been sent to the shareholders.

Ordinary Resolution

    A resolution put before an annual meeting, usually referring to some general procedural matter, that requires a simple majority of votes to be accepted

Organic Growth

    Describes when a company develops and expands by increasing output and/or sales through its own activities, rather than by a merger or acquisitions (buying other companies).

Organigram

    Also called Organisation Chart. A diagram which shows the structure of a business or organisation, showing connections between departments, jobs, etc.

Organised Labour

    Employees who are members of a Trade Union.

Organization Chart

    See Organigram.

Organizational Structure

    The typically hierarchical arrangement of lines of authority, communications, rights and duties of an organization. organizational structure determines how the roles, power and responsibilities are assigned, controlled, and coordinated, and how information flows between the different levels of management.

Original Equipment Manufacturer (OEM)

    See OEM

Orphaned Technology

    A term which refers to computer products, programs, etc., which have been abandoned or not marketed by their developers.

Orphan Product

    In medicine, a test, device, drug, etc., which may be useful for certain rare diseases or disorders but is not financially viable, so is therefore not developed for commercial use.

Outbid

    To offer more money than a rival for something, especially at an auction.

Outbound Telemarketing

    When a company calls prospective customers on the phone in order to sell them goods or services, compared to Inbound Telemarketing where the customer calls a company for assistance or to purchase goods.

Outdoor Advertising

    Also known as Out-Of-Home Advertising. Advertising which consumers can see while they are outside, e.g. billboards, newsstands, skywriting, advertising blimps, etc.

Outlay

    The total amount of money which has to be spent to acquire an asset or start a project, including costs, taxes, delivery charges, etc.

Outplacement

    A service provided by a former employer which helps a terminated employee find a new job.

Output

    Anything that a company produces, usually referring to physical products but also to services.

Output Gap

    The difference between the amount of activity that is sustainable in an economy and the amount of activity actually taking place.

Outside Shareholder

    A shareholder who doesn’t own more than 50% of a company’s shares.

Outsourcing

    An arrangement in which a company produces goods or provides services for another company, usually in the same country.

Outward Investment

    Investments which are made abroad.

Overage

    A company’s surplus, such as money or goods, which is available but exceeds the amount needed or required.

Overcapitalised

    Refers to a business which has been provided with more money than it needs. To overestimate the capital value of a business.

Overheads

    In business, regular costs which are incurred, such as wages, rent, insurance, utilities, etc.

Overmanned

    A situation in which there are more workers than are needed for a job.

Overproduction

    To produce more goods than are needed or wanted, an excess of supply over demand.

Overriding Commission

    A commission paid to an agency office manager based on business created by agents who work at that office.

Overtime

    Time worked in addition to normal working hours. The pay received, usually charged at a higher rate, for working outside regular working hours.

Overtrading

    A situation which occurs when a company expands its business too quickly and does not have enough capital to pay expenses, such as debts, wages, etc., which often results in liquidation.

Own Brand

    Known as House Brands in the US and Home Brands in Australia. Products which are sold by a retailer under the retailer’s own name, rather than the name of the manufacturer.

Owner-Operator

    A self-employed commercial truck or lorry driver who uses their own vehicle to run a business.