Management Glossary

  Terms beginning with n

North American Industry Classification System

Contributed by: Managerwise Staff
See: North American Industry Classification System

natural advantages

Advantages that organizations gain as an intrinsic element of their location, without the need for any efforts on the part of the organization (other than choosing the location in the first place). Natural advantages include a favorable climate, the proximity of natural resources that are the company's raw materials, a large population of well educated workers, etc.

Contributed by: Managerwise Staff

natural monopoly
A market situation in which fixed costs are exceptionally high and variable costs are extremely low relative to those fixed costs. In this case, in absence of any regulations forcing competition, once one company dominates the market no other company can reasonably expect to compete in that market profitably. A typical example of a natural monopoly is wired telephone service. The cost of building the initial network of wires throughout a geographic area is extremely high, but, once the network is built, the cost of connecting one new subscriber to the network is relatively low. Thus, once a telephone company builds its network and captures most of the market it can amortize its fixed costs over a large number of customers. In this situation, unless a prospective competitor has exceptionally deep pockets, new companies would not be able to enter the market because, if they set their prices competitive with the incumbent companies, the revenue from their much smaller customer bases would be insufficient to cover their enormous financing costs. And if their prices are not competitive with the incumbent they will likely not win many, if any, customers. Governments can break up natural monopolies by forcing the incumbents to share their networks with competitors for a regulated fee. Of course, new technologies (such as cell phones) may also serve to disrupt former monopolies.
Contributed by: Managerwise Staff
See: fixed cost, variable cost

nondisclosure agreement
Contributed by: ManagerWise Staff
See: nondisclosure agreement

Nearshoring is a subset of offshoring, but, whereas with offshoring work may be sent anywhere in the world, with nearshoring the work is done in a nearby country, typically one that shares a border with the country in which the company that is nearshoring some of its functions is domiciled. Nearshoring is typically done to take advantage of some lower costs or unique skills availability, but without the logistic and linguistic challenges that may come with more distant offshoring.
Contributed by: Managerwise Staff
See: offshoring, outsourcing

negative reinforcement
Punishing employee behaviors that are not desired. That punishment can be a demotion, removal of perks, reduction of performance bonuses, verbal criticism, firings or any other negative consequence.
Contributed by: Managerwise Staff
See: positive reinforcement

net present value

A measure (abbreviated as NPV) that takes into account the time value of money, i.e. the concept that money spent or earned today is worth more than money spent or earned tomorrow. For example if in investment pays you $100 today, you could can then invest that return to earn more money than you would if the original investment did not pay you for a year. The formula for calculating NPV is:

NPV = Sum over the life of an investment ( ct  

(1 + i)t  

c = the net cash flow (inflows minus outflows) in time period numbert.
i = the interest rate used to discount money over for each time period (months, quarters or years depending on how precisely you wish to calculate NPV)

Contributed by: ManagerWise Staff
See: internal rate of return

net rent
Rent excluding taxes and operating expenses.
Contributed by: ManagerWise Staff
See: gross rent

  1. Not Invented Here
  2. National Institutes of Health (an agency of the U.S. Department of Health & Human Services)
Contributed by:
See: not invented here

nominal account
A revenue or expense account on the income statement that is closed out to zero by debiting or crediting the amount in it to another account(s).
Contributed by: ManagerWise Staff
See: account

nominal interest rate

A rate of interest that does not take into account the effects of inflation.

Contributed by: Managerwise Staff
See: real interest rate

non-executive director

A member of the board of directors who, apart from his or her service on the board, is not an employee of the corporation and has no day-to-day operational role in the company. A non-executive director has all of the rights and responsibilities of other directors.

Also referred to as an "outside director".

Contributed by: Managerwise Staff
See: board of directors

nondisclosure agreement
A contract that prohibits a person (and/or a company and it's employees) from disclosing proprietary information and trade secrets that are or may be revealed to that person during the course of a business interaction of any sort. Often abbreviated as NDA For example, a potential investor may be required to sign an NDA before being shown the company's business plan and any new technologies that the company has under development. Likewise, a consultant may be required to sign an NDA as part of his or her contract with the company.
Contributed by: ManagerWise

North American Industry classification System

A series of codes developed jointly by the United States, Canada and Mexico as a standardized way of categorizing industries and assigning companies to industries. Abbreviated as NAICS. Replaces SIC (Standard Industrial Classification).

Contributed by: ManagerWise Staff
See: standard industrial classification

not invented here

Shorthand for common characteristic within many organizations of not trusting anything that was developed outside of the organization. It is a common (but often misguided) reason for developing processes, sub-assemblies and parts internally rather than acquiring them from another organization. Abbreviated as NIH (not to be confused with the National Institutes of Health, an agency of the U.S. Department of Health & Human Services).

Contributed by: Managerwise Staff

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