business Flashcards
Dynamic nature of business:
the idea that
business is ever-changing because external
factors, such as technology, are always changing.
Venture capital:
risk capital provided by an
investor willing to take a risk in return for a
share in any later profi ts; the venture capital
provider will take a share stake in the business.
Demand:
the number of units that customers
want – and can afford – to buy.
Entrepreneurs:
business people who see
opportunities and are willing to take risks in
making them happen.
Obsolete:
a product or service with sales that
have declined or come to an end as customers
fi nd something new.
Adapting existing products:
fi nding new products based on the original one, such as Wall’s White
Chocolate Magnum.
Competitive advantage:
a feature of a business that helps it to succeed against rivals.
Original ideas:
ideas that have not been done before.
Business failure:
the collapse of a business,
probably leading to its closure.
Independence:
the need by many business
owners to make their own decisions and be their
own boss.
Lack of fi nancial security:
uncertainty for the
business owner about day-to-day family income
and assets.
Risk and reward:
the balance between the worst
that can happen and the best that can happen.
Customer needs:
the products or services
people need to make life comfortable.
Customer wants:
what people choose to spend
their money on, once the weekly bills have been
paid.
Goods:
products that may be fresh, such as
apples, or manufactured, such as Heinz Baked
Beans.
Services:
providing useful ways to help people
live their lives, for example shops, restaurants
and hospitals.
Branding:
giving a product or service
‘personality’, with a name and logo that makes
it stand out.
Unique selling point (USP):
an original feature
of a product that rivals aren’t offering.
Value added:
the difference between the
selling price and the cost of bought-in goods
and services (the difference that creates the
possibility of profi t).
Business decisions:
choices that have to be
made, usually within a short time period.
Human resources:
resources: a term used by
organisations that simply means employees.
Resources:
things or people that can be used
to help build and run the business.
Risk taking:
making decisions where unknown
factors or chances of failure loom large in the
decision-maker’s mind.
Focus group:
a group discussion among people
selected from the target market; it draws on
psychology to provide qualitative insights into
consumer attitudes.
Qualitative data:
in-depth research into the
opinions and views of a small group of potential
or actual customers; it can provide insight into
why consumers buy what they buy.
Primary research:
research conducted
fi rst-hand; it is tailored to a company’s specifi c
needs, for example a quantitative sales
estimate for a brand new chocolate bar.
Lifestyle:
grouping people by common
characteristics in how they live, from their
participation in sports and leisure to their views
on the environment, taste in music and even
nerdier things such as a passion for trains.
Gap in the market:
an area on a market map
where few or no existing brands operate,
implying a business opportunity to fi ll an unmet
consumer need.
Quantitative data:
factual research among
a large enough sample of people to provide
statistically reliable results, for example a
survey of 500 people aged 15–24 years.
Location:
the extent to which consumers identify
with the place where they were born or grew up.
Demographics:
the study of the statistical
differences that exist within a population, both
now and in the future.
Secondary research:
when a company uses
research that has already been carried out for
general purposes.
Market map:
measuring where existing brands
sit on a two-factor grid, for example young/old
compared with high price/low price.
Market segments:
the subsets within a market
that have been identifi ed as a result of market
segmentation.
(The) competition:
companies operating in your
market or market sector.
Competitive environment:
environment: the strength of
competition between companies in the same
market.
Unethical:
an action or decision that is wrong
from a moral standpoint.
Aims:
a general statement of where you’re
heading, for example ‘to get to university’.
Innovative:
a new, perhaps original, product or
process.
Market share:
the percentage of a market held
by one company or brand.
Objectives:
a clear, measurable goal, so
success or failure is clear to see.
SMART objectives:
objectives: targets that are specifi c,
measurable, achievable, realistic and time-bound.
Survival:
keeping the business going, which
ultimately depends on determination and cash.
Fixed costs:
costs that don’t vary just because
output varies, for example rent.
Interest:
the charges made by banks for the
cash they have lent to a business, for example six
per cent per year.
Profit
the difference between revenue and total
costs; if the fi gure is negative the business is
making a loss.
Revenue:
the total value of the sales made within
a set period of time, such as a month.
Total costs:
all the costs for a set period of time,
such as a month.
Variable costs:
costs that vary as output varies,
such as raw materials.
Break-even:
the level of sales at which total
costs are equal to total revenue. At this point
the business is making neither a profi t nor a
loss.
Break-even chart:
a graph showing a company’s
revenue and total costs at all possible levels of
output.
Margin of safety:
the amount by which demand
can fall before the business starts making losses.
Cash:
the money the fi rm holds in notes and
coins, and in its bank accounts.
Cash fl ow:
the movement of money into and out
of the fi rm’s bank account.
Insolvency:
when a business lacks the cash to
pay its debts.
Overdraft:
the amount of the agreed overdraft
facility that the business uses.
Overdraft facility:
an agreed maximum level of
overdraft.
Cash fl ow forecast:
estimating the likely fl ows
of cash over the coming months and, therefore,
the overall state of one’s bank balance.
Closing balance:
the amount of cash left in the
bank at the end of the month.
Negative cash fl ow:
when cash outfl ows are
greater than cash infl ows.
Opening balance:
the amount of cash in the
bank at the start of the month.
Crowdfunding:
raising capital online from
many small investors (but not through the stock
market).
Dividends:
payments made to shareholders
from the company’s yearly profi ts. The
directors of the company decide how large a
dividend payment to make; in a bad year they
can decide on zero.
Retained profi t:
profi t kept within the business
(not paid out in dividends); this is the best
source of fi nance for expansion.
Share capital:
raising fi nance by selling part-
ownership in the business. Shareholders
have the right to question the directors and to
receive part of the yearly profi ts.
