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Business A-Level > Basic Definitions > Flashcards

Basic Definitions Flashcards

1
Q

What is Revenue (Turn over)??

A

The amount of money that is earned from the selling of goods and services

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2
Q

What is Competitive Pricing??

A

Price-matching other companies or going below their prices to gain more customers

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3
Q

What is Profit??

A

Achieving a sales revenue that is higher than the total cost

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4
Q

What is Growth??

A

To increase the size or volume of sales by the value

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5
Q

What is an Entrepreneur??

A

People who turn ideas into businesses

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6
Q

What is Survival??

A

To continue to exist as a business

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7
Q

What are Fixed Costs??

A

Costs that are not impacted by the level of output

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8
Q

What are Variable Costs??

A

Costs that are influenced by the level of output

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9
Q

What is the Economy Scale about??

A

It’s all about reducing the costs of things

E.g. Stock

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10
Q

What is an Autocratic leading style??

A

When managers take in no inputs for subordinates, exert authority & make choices off their own beliefs.

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11
Q

What is a democratic leading style??

A

When managers value subordinate inputs, rely on their them and share team responsibilities.

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12
Q

What is Opportunity Cost??

A

The loss of other alternatives when one alternative is chosen

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13
Q

What is cash flow?

A

The movement of money coming into and out of a bank

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14
Q

What is a cash flow forecast?

A

A forward looking statement that tries to predict future cash inflows and outflows

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15
Q

What is an opening balance??

A

How much money the business has at the start of each month

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16
Q

What is a closing balance??

A

How much money the business has at the end of the month

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17
Q

What is net cash flow??

A

The result of inflows and outflows in a period of time

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18
Q

What are receivables??

A

When a business is owed money from customers

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19
Q

What are payables??

A

When a business owes money to suppliers

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20
Q

What are trade creditors?

A

People you owe money to

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21
Q

What is an overdraft??

A

An agreement with the bank allowing the business to withdraw money above the amount available

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22
Q

What is debt factoring??

A

The process of selling a business’ debts

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23
Q

What are credit terms??

A

The amount of time a customer is given to pay for their goods and services

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24
Q

What is credit control??

A

the process of chasing payments from debtors

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25
Q

What are marketing objectives??

A

The targets that the marketing function of a business wants to achieve in a period of time

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26
Q

What is sales volume??

A

The amount of sales expressed as a number of units sold
E.g. 20 tonnes of wool

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27
Q

What is sales value??

A

The amount of sales expressed as the total sum of money spent by consumers
E.g. £3million expenditure on merch

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28
Q

What is market size??

A

The total sales value or sales volume in a given market

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29
Q

What is market growth??

A

The % increase in the size of the market by the value or volume over a period of time

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30
Q

What is market share??

A

The proportion of total market sales that a firm has

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31
Q

What is branding??

A

A promotional method that involves the creation of a distinguished identity for a business and their products

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32
Q

What is brand loyalty??

A

When customers keep returning to buy from a recognised brand

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33
Q

What are stakeholders??

A

Anyone with an interest in the actions of a business

34
Q

What is a primary stakeholder??

A

Someone in a direct relationship with the business

35
Q

What is benchmarking??

A

Identifying the best practices from other firms and adopting elements of this in the firms performance

36
Q

What is capital expenditure??

A

Spending money on machinery

37
Q

What is equity??

A

Capital invested by the shareholders of a company

38
Q

What is market research??

A

The collection and analysis of data information to inform a business about its market

39
Q

What are gross profit margins (GPM)??

A

A measure of a firms profitability by looking at the relationships between gross profit and sales

40
Q

What is operating profit margins (OPM)??

A

A measure of profitability by looking at the relationships between net profit and sales revenue

41
Q

What is price elasticity??

A

When demand has disproportional responses to price changes of products or services

42
Q

What is price inelasticity??

A

When demand for a product is proportional to the change of its price.

43
Q

What is market segmentation??

A

Occurs when the market is split into subgroups of consumers with similar characteristics

44
Q

What is demographic segmentation??

A

Identifying subgroups of the population based on their demographic profile or characteristics

45
Q

What is income segmentation

A

Identified subgroups of the market based on their levels of income and professions

46
Q

What are the 7P’s of of marketing??

A

Product. Price. Place. Promotion. People. Physical environment. Process.

47
Q

What is a cash cow??

A

This is an established product of a business that have high market share in a low growth market

48
Q

What are rising stars??

A

Products growing in demand, with the potential to become cash cows. They are typically funded by cash cows and face fierce competition

49
Q

What is a problem child??

A

Products with low market share in a high growth market. They can be turned into cash cows with a lot of cost, time and attention

50
Q

What are dogs (marketing)??

A

Products likely to be discontinued due to having little market share and little growth

51
Q

What is the product life cycle??

A

A technique used to track the stages a product goes through during its life. Also tracks the sales of a product from start to end

52
Q

What are the product life cycle stages??

A

Development > introduction > growth > maturity > decline > extension strategies

53
Q

What’s Added Value??

A

The difference between the costs to produce a good or service and the it’s price.

Branding & quality influence it .

54
Q

What’s a mission statement ??

A

It’s an outline of why a business exists and what it hopes to achieve

55
Q

What’s a mission statement ??

A

It’s an outline of why a business exists and what it hopes to achieve

56
Q

What are corporate objectives??

A

Objectives that the entire business hope to achieve across all the functions of the business
(Marketing, Financial, HR, Operations)

57
Q

What is a SWOT analysis??

A
  • Its an analysis that considers the Strengths, Weaknesses , Opportunities and Threats that a business is facing.
  • The strength and weaknesses are internal factors to its current position.
  • The opportunities and threats are external factors expected to occur in its future.
58
Q

What are the Stages of SWOT Analysis??

A
  1. Internal analysis
  2. External analysis
  3. Prepare SWOT
  4. Generate strategic plans
59
Q

what is a Balance sheet?

A

Its a financial statement that summaries the financial state of a business at a point in time

60
Q

what is an income statement?

A

a representation of a company’s revenue, expenses and profitability over a period of time

61
Q

what is ROCE?

A

Return On Capital Employed (ROCE) is a financial ratio that is used to measure the profitability of a company and the efficiency with which it uses its capital.

62
Q

what is Liquidity?

A
  • it’s a measure of a business’ ability to survive in the short-term.
  • It involves covering any short-term liabilities such as loans, staff wages, bills and taxes.
63
Q

What is the acid test ratio?

A

its a test used to indicate a company’s ability to pay off its current liabilities without relying on the sale of inventory or on obtaining additional financing.

64
Q

what is Gearing?

A
  • it measures what proportion of a business’ capital is funded through long-term loans.
  • A highly geared business is of greater risk if interest rates are likely to increase
65
Q

What are Efficiency ratios?

A

they assess the internal management of business i.e. how efficient are managers controlling the current assets

66
Q

What are payable days?

A

they’re a measure of how long it takes, on average, for a the business to pay of supplies it has purchased on credit

67
Q

what are Receivable days?

A

they’re a measure of how long it takes for a customer to pay the business for goods and services it has purchased on credit.

68
Q

what is inventory turnover?

A
  • it is the average inventory held which can be calculated by finding averages of inventory at the start and end of the year.
  • It measures how frequently a business turns over its inventory within a year.
  • Can vary depending on the nature of the firm
69
Q

what is data mining?

A

it is the process of analysing data from different perspectives and then summarising it into useful information.

70
Q

what are operations?

A

They are all about the measurement of performance, efficiency, costs and time

71
Q

What are competition laws?

A
  • They are laws that look to promote fair competition in markets while stopping he abuse of consumers by firms due to monopoly
  • This means anticompetitive practices (price fixing) between firms are illegal
72
Q

what is a monopoly?

A
  • it exists where there is only one business in the market
  • The government refer to any business that has at least 25% market share as having monopoly powers
73
Q

What is a Cartel

A

where two or more businesses work together and agree not to compete with each other

74
Q

What is short-termism?

A
  • when investors, companies, or countries focus on short-term results to the detriment of long-term growth
  • Its a financially-based approach
75
Q

What is profit quality?

A
  • it’s the degree to which profit is likely to continue into the future, i.e. the sustainability of the profit
  • A high quality profit is one which can be repeated or sustained but a low profit quality is one which it is difficult to repeat
76
Q

what are core competencies?

A
  • they are the advantages that one company has over its competitors that can’t be copied.
  • It’s the areas of business that the company excels at, and it’s often what the company is known for.
77
Q

What is regulation?

A

Regulation is the creation of rules and sanctions within an industry in order to modify the economic behaviour of firms

78
Q

what are SMEs??

A

Small and Medium sized Enterprises are Defined by the number of employees, turnover and net worth shown on a balance sheet

79
Q

what is De-Regulation?

A

De-regulation is the opening of markets to new competition through the removal of rules and regulations that created barriers to entry

80
Q

Affects of De-Regulation?

A
  • lowers costs of operations, allowing more businesses to enter a market, and lowers prices for consumers.
  • Businesses strive to reduce costs to compete effectively .
  • Businesses strive to meet consumer demand by reducing price and providing a greater range of products .
  • Less government intervention allows firms to produce to the need of the market.
81
Q

What is corperate privatization?

A
  • Privatization describes a transition
    that takes a company from being publicly
    traded to becoming privately held. From a plc to an Ltd
  • Privatization leads to monopoly power as
    most privatized firms operate in markets
    with barriers to entry such as economies of
    large scale
82
Q

what are arguments for Regulation?

A

Protect consumers against the abuse of monopoly power that would lead to higher prices, supernormal profits, and inefficiency

To create an environment that will encourage businesses to strive for efficiency through reduced costs

This has been achieved through capping prices, forcing businesses to cut costs in order to increase profit

To ensure quality and choice are maintained

Business A-Level (2 decks)

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