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AQA A-Level Business Key Terms > AQA Business A1 Key Terms Units 1-6 > Flashcards

AQA Business A1 Key Terms Units 1-6 Flashcards

1
Q

a business

give definition

A

an entity established to fulfil a want or need ; usually a commercial purpose to produce and sell something

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2
Q

Mission statement

What is it and why is it useful?

A

Sets out a business’s overall purpose to direct and stimulate the entire organisationeg. Nike - to bring inspiration and innovation to every athlete in the world.

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3
Q

Aims

A

Long term plans of the business from which its corporate objectives are derivedeg growth

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4
Q

Objectives

A

Medium to long term goals established to coordinate the business. There is a hierarchy ie corporate, functional, departmental, individual

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5
Q

SMART objectives

What does SMART stand for? Can you give an example?

A

Objectives have much high chance of being achieved if Specific, Measurable, Agreed, Realistic and Time-bound)

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6
Q

Profit

What is it? Why is it important? Can you give some formulas?

A

A core objectives of most businesses. Measures the extent to which revenues from selling a product exceed the costs incurred in producing it over time. A business cannot survive long without making profits. Profit = Total Revenue - Total Costs

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7
Q

Cash flow

What is cash flow? Why is it important?

A

Core short-term obejctive - The amount of money moving into and out of a business over a time period. Need positive cash flow to pay bills

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8
Q

Stakeholders

What are they and why do they matter?

A

Individuals or groups (such as employees, customers and local residents) who have an interest in the businessand differing degrees of power over the business

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9
Q

Revenue

What is it? What are some other names for revenue? What is formula?

A

The earnings or income generated by a firm as a result of its trading activities (also called turnover or sales revenue)

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10
Q

Fixed costs

What are they? What are some examples?

A

Costs that do not alter when a business alters its level of output. Examples include rent and rates.Also called indirect costs

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11
Q

Variable costs

What are they? What are some examples?

A

Costs that alter directly with the business’s level of output, for example raw materials, fuel costs, etc - also called direct costs

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12
Q

Total costs

What is the formula?

A

Fixed and variable costs added together

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13
Q

Average costs

What are they? What are they also known as?

A

Total costs of production divided by the level of production or output to give the cost of producing a single unit of output

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14
Q

Sole trader

What is is and what are advantages and disadvantages?

A

A business that is owned and managed by one person, but it may employ other people. Advantage is single owner has all control and profit for themselves but can be very difficult as they have sole responsibility for solving all problems

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15
Q

Partnership

A

An unlimited liability form of ownership where 2-20 people own a business together - owners have unlimited liability for debts of business

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16
Q

Unlimited liability

What is this and why does it matter?

A

Occurs when an individual or group of individuals is personally responsible for all the actions of their business

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17
Q

Private Limited Company (Ltd)

A

A business organisation that has its own legal identity and that has limited liability and where investors are invited to buy in (not publically traded)

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18
Q

Public Limited Company (plc)

A

a large business where ownership is open to anybody around the world - shares are traded on stock exchange; share price changes with performance and reflects supply and demand for the shares. eg Tesco

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19
Q

not-for-profit organisation

A

an organisation that is not run for profit eg Greenpeace - it usually follows a social cause

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20
Q

Public sector organisation

A

an organisation that is funded by the government to provide services for the public - eg NHS, schools, local government, etc

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21
Q

Charity

A

a not for profit which is funded by donations or charity shop sales eg CancerResearch

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22
Q

Mutuals

A

an organisation that has a shared ownership structure where its customers are its owners and a get an annual dividend based on the percentage of their purchases eg COOP

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23
Q

Incorporation

A

The process of establishing a business as a separate legal entity that allows it to benefit from limited liability

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24
Q

Shareholder

A

A person or group that has an ownership stake in a business

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25
Q

Limited liability

What is this and why is it so important? What ownership forms have this?

A

the shareholder’s liability for the debts of the business is limited to their investment. personal assets are safe

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26
Q

Dividends

A

A share in the profits of a company that are distributed to the holders of certain types of company shares

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27
Q

Ordinary share capital

A

Money invested into a business by owners - its the money raised from the sale of shares eg 1000 shares at £10 each is £10,000 of ordinary share capital in the business

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28
Q

Market capitalisation

What is it and what is the formula?

A

The total value of the issued shares of a public limited company(share price * number of shares issued)

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29
Q

Takeover

A

Occurs when one company acquires control of another company by buying more than 50% of its share capital(can only happen with plcs)

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30
Q

Privatisation

A

The process under which the state sells businesses that it has previously owned and managed to private individuals and businesses

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31
Q

external environment

A

the trading environment in which the business operates - determined by economic, political, social, technological, legal, ethical factors and the level of competition. These forces are outside control of the business and create opportunities and threats to which the business must respond.

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32
Q

Market conditions

A

Features of a market that affect demand - such as the level of sales, degree of seasonaility, the rate at which sales are changing and the number and strength of competitors.

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33
Q

Demand

A

The amount of a particular good or service that consumers or organisations want, and can afford, to buy at given prices. Could be seen a level of sales.

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34
Q

Gross Domestic Product (GDP)

A

Measures the value of a country’s total output of goods and services over a period of time, normally one year

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35
Q

Business ethics

A

Refer to whether a business decision is perceived as morally right or wrong

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36
Q

Incomes

A

How much people are paid by their employers. Higher incomes mean more money available to spend which is good for business.

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37
Q

Interest rates

A

The cost of borrowed money eg 5% For an individual it may be the mortgage of their home. For a business it wil be business loans. Changing rates make the cost of the loans change month to month.

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38
Q

Goods

A

A physical (tangible) product such as a house or a designer suit

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39
Q

Service

A

An intangible item such as insurance or decorating

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40
Q

Product

A

A general term which includes goods and services

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41
Q

Fair trade

A

A social movement that exists to promote improved trading terms and living conditions for producers of products in less developed countries

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42
Q

Sustainable production

A

Occurs when the supply of a product does not impose costs on future generations by, for example, depleting non

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43
Q

Leadership

A

Includes the functions of ruling, guiding and inspiring other people within an organisation in pursuit of agreed objectives. Has a direct impact on staff morale and performance

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44
Q

Leadership styles

A

differing approaches to managing people - often based around how much trust is given and/or how much leaders and managers involve staff in the decision-making

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45
Q

Authoritarian leadership

A

leadership where very little automomy is given to staff - staff not involved in decision making and leader exerts full control and close supervision

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46
Q

Democratic leadership

A

staff are normally asked for input in decision-making and feel involved in the business

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47
Q

Management

A

activities include - Planning, setting objectives, organising, directing, reviewing and controlling all or part of a business enterprise

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48
Q

Authority

A

The power or ability to carry through an action

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49
Q

Delegation

A

Passing authority down the organisational hierarchy

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50
Q

Empowerment

A

Provides subordinates with the means to exercise power or control over their working lives

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51
Q

Decentralisation

A

Passing authority from the centre of the organisation to those working elsewhere in the business

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52
Q

Tannenbaum Schmidt continuum

A

model of leadership showing the degree of autonomy and involvement in decision-making that managers/ leaders wil give their staff (sell vs tell)

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53
Q

Blake Mouton Grid

A

Leadership model showing the mix of how much leaders focus on performance vs how much they focus on staff welfare (eg produce/ perish vs country club style leadership)

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54
Q

Programmed decisions

A

Familiar and routine decisions

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55
Q

Non programmed decisions

A

Less structured decisions that require unique solutionsand alot more careful thought and analysis

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56
Q

Risk

A

The chance of incurring misfortune or loss- the higher the risk the more careful the decision making needs to be

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57
Q

Uncertainty

A

A situation in which there is a lack of knowledge and events, outcomes or consequences are unpredictable

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58
Q

Opportunity cost

A

The next best alternative foregone

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59
Q

Scientific decision making

A

Based on data and uses logical, rational approach to decision making

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60
Q

Decision tree

A

A scientific decision-making model that represents the likely outcomes for a business of a number of courses of action on a diagram showing the financial consequences of each.

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61
Q

Probability

A

The chance of a particular event occurring

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62
Q

Expected values

A

The financial outcomes from a specific course of action adjusted to allow for the probability of it occurring(eg high/ low sales)

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63
Q

Net gains

A

The total expected values of a course of action minus the costs associated with it

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64
Q

Ethics

A

Moral principles, which should underpin business decisions and actions

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65
Q

influences on decision-making

A

factors that affect the business decision eg objectives, ethics, risk v reward, resource contraints, opportunity costs, competitors actions etc

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66
Q

Stakeholders

A

Groups or individuals who have an interest in a business

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67
Q

Social responsibility

A

The duties a business has towards stakeholder groups such as employees, customers and the government

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68
Q

Communication

A

The exchange of information or ideas between two or more parties

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69
Q

Stakeholder engagement

A

A process by which managers involve individuals and groups who may be affected by their decisions in those decisions

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70
Q

Stakeholder mapping

A

allows the business to consider differing stakeholder needs when making decisions based around differing levels of interest and power eg ‘key players’ have high power/high interest and need to be managed carefully

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71
Q

Consultation

A

A process by which one group discovers the views of another one

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72
Q

Marketing objectives

A

A target set for the marketing function, for example to increase sales by 10% within

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73
Q

Big data

A

A term used to describe a massive volume of both organised and non

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74
Q

Primary market research

A

Gathers data for the first time for a specific purposeeg with questionnaires, focus groups, observations etc

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75
Q

Quantitiive data

A

Data where findings can be quantified - ie counted by numbers eg 5000 people chose product A

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76
Q

Qualitative data

A

data focussing on reasons for choices or other non-number factors eg around quality

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77
Q

Sales Forecasting

A

the process of predicting future demand so that business operations can be planned accordingly - eg using extrapolation of correlation

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78
Q

Sales value

A

Measures the level of sales in a given period in pounds sterling (in the UK)

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79
Q

Sales volume

A

Measures the level of sales in a given period in terms of units sold

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80
Q

Market share

A

Measures the sales of one brand or business as a percentage of total market sales in a given period

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81
Q

Sales growth

A

The percentage change in sales volume or value over a given period

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82
Q

Market growth

A

The percentage change in the total sales in the market over a given period(formula is difference / orginal level) *100

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83
Q

Globalisation

A

The increasing trade between countries and the growing internationalisation of businesses

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84
Q

Marketing research

A

Involves gathering and analysing data relevant to the marketing process

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85
Q

Competitiveness

A

Measures the extent to which a business offers good value for money relative to competitors

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86
Q

Secondary market research

A

Uses data that already existseg reports, company data, news articles, etc

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87
Q

Target population

A

All the items or people that are relevant to the market research being undertaken

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88
Q

Sampling

A

the process of picking a group of customers to do the research on -eg quota or randon sampling - need to have a valid sample whose views accurately represent the views of the wider population

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89
Q

Sample

A

A group of people or items selected to represent the target population

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90
Q

Market mapping

A

Analyses market conditions to identify the position of one product or brand relative to others in the market in terms of given criteriaeg price v quality - identifies nearest competitors and potential gaps

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91
Q

Extrapolation

A

a method of sales forecasting where past data is used to identify trendlines and these are projected forward

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92
Q

Correlation

A

a sales forecasting technique that attempts to identify the strength of the link between 2 variables - an independent one and a dependent one eg impact of advertising spend on sales - strong positive correlation can give very useful insights

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93
Q

Confidence level

A

The probability that the research findings are correcteg 95% confident that the customers will make the choices as choice in the research

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94
Q

Confidence interval

A

The possible range of outcomes for a given confidence level (eg plus of minus 5%) so 95% confident that sales will be eg 2000 plus or minus 5%

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95
Q

Product

A

the items that a business are selling; products normally need a Unique Selling Point to make them stand out from competitors products

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96
Q

Unique Selling Point (USP)

A

the product feature that is the key to its appeal to customers eg lowest price; best quality; uniqueness; etc

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97
Q

Brand

A

A “promise of an experience” and conveys to consumers a certain assurance as to the nature of the product or service they will receive

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98
Q

Patent

A

Protects new inventions and covers how things work, what they do, how they do it, what they are made of and how they are made

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99
Q

Trade mark

A

A sign which can distinguish the goods and services of a business from those of its competitors

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100
Q

Price elasticity of demand (PED)

A

Measures how responsive demand is to changes in the price, all other factors constant. Key concept as it helps businesses set prices that maximise revenue

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101
Q

Price elastic demand

A

ie PED > 1. sales are predicted to change by bigger proportion than price change. eg if prices decrease by 10% then sales will increase by more than 10%

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102
Q

Price Inelastic demand

A

ie PED < 1 sales are predicted to change by smaller proportion than price change. eg if prices decrease by 10% then sales will increase by less than 10%. Careful! - this price drop would lose the business overall revenue.

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103
Q

Factors affecting price elasticity

A

availability of substitutes; whether good is luxury or necessity; proportion of income spent on the good

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104
Q

Income elasticity of demand (YED)

A

Measures how responsive demand is to changes in the income, all other factors constant

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105
Q

Income inelastic demand

A

a market situation where a change in consumers incomes will lead to a less than proportional change in demand eg if incomes go up by 5% then demand (sales) will go up by less than 5%

106
Q

Income elastic demand

A

a market situation where a change in consumers incomes will lead to a more than proportional change in demand eg if incomes go up by 5% then demand (sales) will go up by more than 5%

107
Q

Factors affecting income elasticity

A

What type of good it is (inferior good YED is negative so as incomes rise people buy less of these; normal goods YED is between 0 and 1; and then for luxury goods people buy disproportionally more of these if incomes rise)

108
Q

Big data

A

Refers to large and complex data sets

109
Q

Segmentation

A

Occurs when similar customer needs and wants are grouped within a market

110
Q

Market segments

A

The groups of similar needs and wants within a market

111
Q

Targeting

A

Occurs when a business decides which segments it wants to operate in/ target eg young men aged 18-35 living in Brighton

112
Q

Niche marketing

A

Focuses on a particular segment of the marketeg selling golf equipment to golfers

113
Q

Mass marketing

A

An approach that aims to provide products that meet some of the needs of a large proportion of the marketeg products such as soap

114
Q

Positioning

A

Identifies the benefit and price combination of a product relative to competitors

115
Q

Marketing mix

A

a KEY theory in business showing what marketing techniques can be used to sell a product (7Ps - product, price, place, promotion, physical environment, people and packaging)

116
Q

Consumer products

A

Goods bought for consumption by the general public

117
Q

Industrial products

A

Goods bought for use in business processes

118
Q

Relationship marketing

A

An approach to marketing in which a company seeks to build long term relationships with its customers by providing consistent satisfaction

119
Q

Product life cycle model

A

Shows the sales of a product over its lifeacross various stages eg research, intorduction, growth, maturity and decline - diff techniques can be used at different stages to boost sales

120
Q

Product portfolio analysis

A

Examines the market position of all of the products of a business, for example in terms of market share or market growth

121
Q

Boston Matrix

A

Analyses all of the firm’s products in terms of their market share and the growth of the market(products classifies into stars, cash cows, question marks and dogs)

122
Q

Balanced portfolio

A

An appropriate mix of products in terms of their market shares and market growth

123
Q

Pricing policy

A

a business approach to pricing its products that achieves highest revenue

124
Q

penetration pricing

A

pricing products very cheaply at first to gain a hold in the market and then slowly raising over time eg Uber taxis

125
Q

price skimming

A

charging very high prices knowing that customers will pay - perhaps due to inelastic demand eg for iphones, designer brands

126
Q

promotion

A

how businesses make customers aware of the products and create a desire to purchase eg advertising

127
Q

promotional mix

A

the range of techniques used together to build brand aware and drive sales growth eg advertising (print, digital, tv, radio, social, etc)

128
Q

Social media

A

Refers to the social interaction among people where they create, share or exchange information and ideas in virtual communities

129
Q

social media marketing

A

using social media to promote products including use of influencers

130
Q

Viral marketing

A

A marketing technique that uses social media and networks to raise brand awareness and boost sales by getting users to recommend the promotional campaign to others

131
Q

Multichannel distribution

A

Means that customers can buy the product in several ways, for example instore, online, through app or ‘click and collect’

132
Q

E-commerce

A

The buying and selling of products and services through electronic means eg websites

133
Q

Operations management

A

Describes the activities, decisions and responsibilities of the managing production and delivery of products and services

134
Q

Labour intensive production

A

where a relatively high proportion of labour is used in the production used compared to capital equipment, for example hairdressing, school teaching

135
Q

Capital intensive production

A

Uses a relatively high proportion of capital equipment relative to labour, for example a bottling process, car manufacturing, etc

136
Q

Optimal mix of capital and labour

A

the ideal proportion of labour and capital that achieves desired quality with lowest unit costs

137
Q

Supply chain

A

Is the series of activities involved in receiving the initial raw materials to providing the final product

138
Q

Operational objectives

A

targets within the ops mgnt function eg improve quality, speed of response, dependability, reliability, etc)

139
Q

Added Value

A

the process of increasing the worth of an produced good beyond the cost of its components. eg by branding, exclusivity, etc

140
Q

Competitive advantage

A

Is a way in which a business offers superior value to its competitors. usually based on focus on price vs quality/ uniqueness

141
Q

Total costs

A

Are made up of fixed costs and variable costs; Formula TC = FC + VC

142
Q

Unit costs (average costs)

A

Are the cost per unit - keep as low as possible to improve profits; Formula: Unit Costs = total cost/number of units

143
Q

Capacity

A

Is the maximum output of a business at a moment in time given its resourceseg 1000 cars per day

144
Q

Capacity utilisation

A

Measures the existing output over a given period as a percentage of the maximum outputeg 92 % ; needs to be high otherwise shows wasted resources and inefficiencies

145
Q

Labour productivity

A

Is the amount of output per employee; Formula: Labour productivity = Total Output / number of staff. higher is better - higher productivity gives lower unit costs allowing savings

146
Q

Efficiency

A

Is measured by the inputs used to generate output; improving efficiency is key business goal

147
Q

Lean production

A

Occurs when managers reduce waste and therefore operations become more efficient

148
Q

Just in Time Production

A

A type of lean production technique where suppliers bought and delivered just before they are needed in the production process; saves money and space but higher risk

149
Q

Just in Case Production

A

An approach to managing supplies where larger orders are places so that there is always some spare raw materials in case of supply chain disruption eg delivery problems

150
Q

Quality

A

Is measured by the extent to which product meets its customer requirements

151
Q

Quality assurance

A

Is the maintenance of product quality by attention to detail at every stage of the production process; checking quality is perfect at each stage in production; ‘no-fault forward’ idea

152
Q

Quality control

A

Is the system of maintaining standards by testing or inspecting the output against standards

153
Q

Mass customisation

A

Is the term for producing on a large scale while still enabling individual customer preferences to be met

154
Q

Inventory

A

Is the goods or stock it holds

155
Q

matching supply to demand

A

an important operational focus so that there is no overproduction (waste) and no underproduction (lost opportunities for sales); can be done by outsourcing; use of temp staff; producing to order)

156
Q

Part time staff

A

Work less than a full working week, for example 20 hours per week

157
Q

Temporary staff

A

Work for a limited period of time as needed, for example for the summer eg in hotel industry more staff are needed during holiday period

158
Q

producing/ making to order

A

an approach to production where order must be recieved before item is made; if business cannot afford to not sell the item - it is already sold, then the make it

159
Q

Supply chain

A

Refers to all of the providers of resources (such as money, people, finance, machinery, equipment) at different stages of the operations process

160
Q

inventory control chart

A

a tool used to track inventory levels to show when a business needs to reorder inventory to ensure it arrives before business runs out and cannot produce

161
Q

reorder level

A

the inventory level that is reached when a new order is placed

162
Q

reorder quantity

A

the quantity of inventory that is ordered when the reorder level is reached

163
Q

buffer stock

A

spare stock/ inventory that can be used in emergency is new stock does not arrive

164
Q

lead time

A

the time it takes from an order being placed for the stock to arrive

165
Q

Vertical integration

A

Is the combination of two or more stages of production normally operated by separate companies

166
Q

influences of choice of supplier

A

eg price charges, location, time it will take, existing relationships, quality, etc

167
Q

Corporate social responsibility

A

Refers to the extent to which a business takes into account its stakeholder views and accepts its obligations to society over and above the legal requirements

168
Q

Outsourcing

A

Is when a business uses an outside supplierto help cover spikes in demand or where a specialsim is required

169
Q

Financial objectives

A

objectives pursued by the finance department (or function) within an organisationeg improving profits, cash flow, etc

170
Q

Profit

A

Measures the extent to which revenues from selling a product over some time period exceed the costs incurred in producing it

171
Q

Cash flow

A

The movement of cash into and out of a business over time; essential for a business to have enough cash readily available to cover essential bills eg staff, materials, rent etc

172
Q

Return on Investment (ROI)

A

the profit made from an investment relative to its cost; FORMULA ROI= (profit / cost) * 100 the higher the better

173
Q

Income statement

A

Records a business’ sales revenue over a trading period and all relevant costs incurred as well as the business’ profit or loss

174
Q

Gross profit

A

Income received from sales minus the cost of goods and services sold; shows how well a business is managing its direct costs

175
Q

Direct costs

A

Expenditure that can clearly be allocated to a particular product or area of the business e.g. raw materials and components

176
Q

Indirect costs

A

Expenditure that relates to all aspects of a business’ activities, such as maintenance costs for buildings or senior managers’ salaries

177
Q

Operating profit

A

The financial surplus arising from a business’ normal trading activities and before taxationie gross profit - expenses

178
Q

Profit for the year

A

the final measure of a business’ profits that takes into account a wider range of expenditures and incomes including taxation ie operating profit - all other costs = net profit (ie profit for the year)

179
Q

Capital Investment

A

The purchase of assets such as property, vehicles and machinery that will be used for a considerable time by the business

180
Q

Non-current assets

A

the items a business ownes whose value doesnt change much from month to month eg property, vehicles, etc

181
Q

Current assets

A

the items a business ownes whose value does change from month to month ie in the short term (current period) eg cash, receivables, inventory, etc

182
Q

Capital expenditure

A

Spending undertaken by businesses to purchase non

183
Q

Capital structure

A

the proportion of debt to equity in the business (ie how much of all the money in the business is borrowed?)

184
Q

Budgets

A

Financial plans that forecast revenue from sales and expected costs over a time period; they are financial targets which allow a business to track its performance and taken action as required

185
Q

Variance analysis

A

The process of investigating any differences between forecast (budgeted) data and actual figures

186
Q

Favourable Variance

A

a variance that is good news for the business ie where costs are lower than expected or sales income is higher

187
Q

Adverse Variance

A

a variance that is bad news for a business - ie where costs are higher than expected or sales income is lower than expected

188
Q

Cash flow forecasts

A

State the inflows and outflows of cash that the managers of a business expect over some future period; Opening Balance + inflows - outflows = Closing Balance; need to have a surplus showing or take action

189
Q

Trade credit

A

The period of time given by suppliers before customers have to pay for goods and services

190
Q

Breakeven analysis

A

a modelling tool for a business to examine the impact of differing levels of selling price, variable cost per unit and fixed costs on its ability to make a profit.

191
Q

Breakeven output

A

That level of output or production at which total costs exactly equal revenue from sales; FORMULA Breakeven Level = Fixed Costs / (selling price - variable cost per unit)

192
Q

Breakeven Chart

A

A chart showing output on x axis and money on Y axis and 3 lines ie Fixed costs, Total Revenue and Total Costs. Where TR intersects with TC line is the breakeven level. Sales beyond that point contribute to profit

193
Q

Contribution per unit

A

The difference between selling price and variable cost per unit. Also Total Contribution = Contrinbution per unit * items sold

194
Q

Margin of safety (MOS)

A

Measures the amount by which a business’ current level of output exceeds breakeven level; the more the better

195
Q

Profitability

A

A measure of financial performance that compares a business’ profits to some other factors such as revenue

196
Q

Profit margin

A

A ratio that expresses a business’ profit as a percentage of its revenues

197
Q

Internal source of finance

A

A source of finance that exists within the business

198
Q

External source of finance

A

An injection of funds into the business from outside - eg from individuals, other businesses or financial institutions

199
Q

Short term finance

A

Finance needed for a limited period of time, normally less than one year

200
Q

Long term finance

A

Sources of finance that are needed over a longer period of time, usually over a year

201
Q

Bank loan

A

The amount of money provided by a business for a stated purpose in return for a payment in a the form of interest charges

202
Q

Overdraft

A

Exists when a business is allowed to spend more than it holds in its current bank account up to an agreed limit; essential as part of managing cash flow

203
Q

Venture capital

A

Funds advanced to businesses thought to be relatively high risk in the form of share and loan capital

204
Q

debt factoring

A

selling debts to a debt collector who will give instant cash for a reduced proportion of what is owed; debt factoring business keeps the difference from what they can recover

205
Q

Share capital

A

Finance invested into a company as a result of the sale of shares in the business

206
Q

retained profit

A

the profits built up from running the business over time; the most common source of finance; internal and simple to access

207
Q

Mortgages

A

Long term loans, repaid over periods of up to 50 years, and used to purchase property

208
Q

Debentures

A

Loans with fixed interest rates that are long term and may not even have a repayment date

209
Q

Crowdfunding

A

Practice of funding a project or venture by raising many small amounts of money from a large number of people, typically via the internet

210
Q

Opportunity cost

A

The next best alternative that is foregone

211
Q

Trade credit

A

Offered when customers are allowed a period of time (frequently 30,60 or 90 days) to pay for products they have bought

212
Q

payables

A

money owed to the business from customers who bought on credit

213
Q

receivables

A

debts the business owes eg to it suppliers

214
Q

Human resource objectives

A

The targets pursued by the HR function or department of the businesseg improving engagement and involvement; talent development; improving diversity of staff; more training to improve skills; better workforce planning etc

215
Q

Labour productivity

A

Measures the output of a firm in relation to its number of employees

216
Q

Employee engagement

A

Describes the connection between a business’s employees and its mission, goals and objectives

217
Q

Employee involvement

A

Exists in a business in which people are able to have an impact on decisions and actions that affect their working lives

218
Q

Training

A

A process whereby an employee gains job related skills and knowledge

219
Q

Talent development

A

The development and guidance of outstanding or star employees who have the potential to make major contributions to an organisation’s performance and success

220
Q

Valuing Diversity

A

Valuing the differences between individual employees and their backgrounds and also the differences that may exist between different groups of employees

221
Q

Unit labour costs

A

Measure the labour cost per unit of output produced

222
Q

Labour turnover

A

The percentage of a business’s employees who leave the business over some period of time (normally a year)FORMULA labour turnover = (leavers / average staff) * 100. UK average is 12%

223
Q

Labour retention

A

The extent to which a business holds onto its employees; low retention can be sign of dissatisfied staff and causes high recruitment costs

224
Q

Human resource plan

A

Assesses the current and future capacity of a business’s workforce and sets out actions necessary to meet the business’s future human resource needs; also called workforce plan; the plan to have right staff in right place at right time to deliver services

225
Q

Big data

A

Describes the enormous quantity of structured and unstructured data that is difficult to process using traditional techniques such as databases

226
Q

Job design

A

The process of grouping together or dividing up tasks and responsibilities to create complete jobs

227
Q

Job enrichment

A

Occurs when employee’s jobs are redesigned to provide them with more challenging and complex tasks

228
Q

Empowerment

A

A series of actions designed to give employees greater control over their working lives

229
Q

Authority

A

The power to give orders, make decisions and to control events and people

230
Q

Organisational structure

A

The way a business is arranged to carry out its activities; depicted in organisational chart; important to organise staff effectively for teamwork, comms, efficiency etc

231
Q

Organisational design

A

A process to ensure that the organisation is appropriately structured to deliver organisational objectives in the short and long term

232
Q

Levels of hierarchy

A

Refer to the number of layers of authority within an organisation i.e. how many levels exist between the CEO and the shop floor employee

233
Q

Tall structures

A

Have many layers; often bigger more traditional organisations; lots of opp for promotion but comms can be difficult

234
Q

Flat structures

A

Have fewer layers; often smaller more dynamic businesses; staff more easily able to adapt roles and work across tradional boundaries

235
Q

Span of control

A

The number of subordinates directly responsible to a manager

236
Q

Chain of command

A

The line of communication and authority existing within a business i.e. a shop floor worker reports to a supervisor, who is responsible to a departmental manager and so on

237
Q

Delegation

A

The passing down of authority (but not responsibility) down the organisational structure

238
Q

Human resource flow

A

The movement of employees through an organisation, starting with recruitment

239
Q

Recruitment and selection

A

The process of filling an organisation’s job vacancies by appointing new staff

240
Q

Redundancy

A

Takes place when an employee is dismissed because a job no longer exists

241
Q

Dismissal

A

Takes place when an employer terminates an employee’s contract of employment and leads to employees exiting the human resource flow

242
Q

Redeployment

A

Occurs when an employee is offered suitable alternative employment within the same business

243
Q

Motivation

A

Describes the factors that arouse, maintain and channel behaviour towards a goal; highly motivated staff try much harder and give extra effort and the performance of the whole business improves

244
Q

Division of labour

A

The breaking down of production into a series of small tasks carried out repetitively by relatively unskilled labour

245
Q

Time Rates

A

Staff are paid by the hour eg £12

246
Q

Salary

A

An annual payment eg £35000 per year paid monthly

247
Q

Commission

A

A method of payment in which the amount paid is related to the value of goods or services that an employee sells

248
Q

Bonus pay

A

an extra sum paid if certain targets are achieved. so full pay may be salary with opportunity to earn extra 50% bonus

249
Q

Piece rate

A

A system whereby employees are paid according to the quantity of a product they produce; encourages speed of production

250
Q

Performance related pay

A

Some part of an employee’s pay is linked to the achievement of targets at workeg 80% set salary and 20% performance related

251
Q

Variable pay

A

A flexible form of pay that offers employees a highly individual pay system related to their performance at work

252
Q

Employee welfare

A

A broad term covering a wide range of facilities that are essential for the well

253
Q

Appraisal

A

The process of considering and evaluating the performance of an individual employee

254
Q

Teamworking

A

When an organisation breaks down its production processes into large units instead of relying upon the use of the division of labour

255
Q

Trade union

A

An organisation of workers established to protect and improve working conditions of its membersincluding pay rates, annual leave, etc

256
Q

Collective bargaining

A

involves negotiations between management and employee’s representatives, often trade unions, over pay and other conditions of employment. used eg in NHS and schools for teachers, doctors, nurses etc. cannot do individual bargaining as too many staff

257
Q

Works council

A

A forum within a business where workers and management meet to discuss issues such as working conditions, pay and training. Its a method of staff involvement in decision making

258
Q

Communication

A

The transfer of information between people; a key elememt of a successful business; becomes more important and difficult the bigger and org gets

259
Q

Arbitration

A

A procedure for the settling of a dispute if all informal attempts fail, under which the parties agree to be bound by the decision of a third party

260
Q

Industrial dispute

A

A disagreement between an employer and its employees, usually represented by a trade union, over some aspect of the terms and conditions of employmentusually pay

261
Q

Conciliation

A

A method of resolving individual or collective disputes in which a neutral third party encourages the continuation of negotiationsand tres to facilitate an agreeable outcome for all sides

AQA A-Level Business Key Terms (1 decks)

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