A level Key terms to learn https://www.aqa.org.uk/resources/business/gcse/business/teach/subject-specific-vocabulary

Question 1

Sole trader

Answer 1

where one exclusive owner owns the business. (they are unincorporated)

Question 2

Partnership

Answer 2

where 2-20 people own a business through a deed of partnership. (also unincorporated)

Question 3

Private Limited Company (Ltd)

Answer 3

Where shareholders are invited to buy shares into a business. (incorporated)

Question 4

Public Limited Company (Plc)

Answer 4

Where shares are sold to the public through the stock exchange. (incorporated)

Question 5

Aims

Answer 5

Long term goals that a business sets to achieve its overall targets and mission statements.

Question 6

Assets

Answer 6

Something that the business owns (has value)

Question 7

Average rate of return

Answer 7

The average profit for the year as a percentage of the original investment.

Average rate of return = average return per annum/initial investment × 100

Question 8

Boston matrix

Answer 8

A grid analysing the contribution made by each product in a business’ product portfolio through the product’s market share and the rate of growth in the market.

Question 9

Brand image

Answer 9

The consumers’ perception of the brand; its character, qualities and shortcomings. It is developed over time and operates as a consistent theme through advertising campaigns.

Question 10

Break-even chart

Answer 10

A diagrammatic representation of the costs and revenue for a product; it plots total costs against total sales revenue, showing the break-even point where they cross.

Question 11

Break-even output/ point

Answer 11

The point at which the business’ total sales equals the total costs. There is neither profit nor loss.

Question 12

Buffer stock

Answer 12

A stock of raw materials held in reserve to protect the production process from unforeseen shortages.

Question 13

Business plan

Answer 13

A detailed statement of how the business intends to operate, either at start-up or during a given period of time. Business plans are based on forecasts and so cover only a short time.

Question 14

Centralisation

Answer 14

Maintaining control by keeping authority and decision making at the senior levels of the organisation. (at the top)

Question 15

Chain of command

Answer 15

The line through the hierarchy that shows who is responsible for whom from top to bottom of an organisation.

Question 16

Channels of distribution

Answer 16

The route the ownership of the product transfers from the seller to the buyer; it may be a single transaction or pass through others such as wholesalers, distributors, agents and retailers.

Question 17

Commission

Answer 17

An amount of money paid to an employee that is based on a percentage of the sales he/she achieved; paid in addition to a basic salary.

Question 18

Competition

Answer 18

The rivalry between businesses looking to sell their goods/services in the same market.

Question 19

Competitive pricing

Answer 19

Setting the price of a product so that it is in line with competitors’ prices.

Question 20

Consumer law

Answer 20

Laws designed to ensure that businesses make products that are safe and of good quality, and that they deal with customers honestly and fairly.

Question 21

Consumer spending

Answer 21

The money spent by households on goods and services to satisfy their needs and wants.

Question 22

Contracts of employment

Answer 22

A legal document that sets out the terms and conditions of the job for the employer and the employee.

Question 23

Cost

Answer 23

The money spent by a business on goods and services.

Question 24

Cost-plus pricing

Answer 24

Setting the price of a good or service at an amount/ percentage higher than the cost of producing it so that a profit is made.

Question 25

Customer

Answer 25

Individuals, businesses or organisations that purchase goods/services and make decisions about which supplier to choose.

Question 26

Customer engagement

Answer 26

The relationship between the business and the customer that puts the customer’s requirements at the centre of the operation to build brand loyalty.

Question 27

Customer loyalty

Answer 27

The likelihood that past customers will continue to buy from the business, enhanced by high quality customer service and/or reward programmes.

Question 28

Customer satisfaction

Answer 28

Whether customers are pleased with the goods/services they receive; whether they would purchase again.

Question 29

Decentralisation

Answer 29

Where authority/ decision making is spread widely through the organisation.

Question 30

Delayering

Answer 30

The reorganisation of the organisation’s employees so that there are fewer levels of management. (removing layers of a hierarchy)

Question 31

Delegation

Answer 31

Allocating a task to someone who would not normally be responsible for it.

Question 32

Demand

Answer 32

The quantity of a particular product that will be bought at particular price over a specific time.

Question 33

Diseconomies of scale
When a business grows too large, leading to a possible increase in unit cost.

Question 34

Dividend

Answer 34

A portion of the after-tax profit that is paid to shareholders according to the number of shares they own.

Question 35

E-commerce

Answer 35

Business transactions carried out electronically on the internet.

Question 36

Economies of scale

Answer 36

The cost advantage of producing on a large scale. As output increases the unit cost decreases.

Question 37

Incorporated

Answer 37

when the company is a separate legal entity to its individual owners.