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business Flashcards

1
Q

Asset

A

Something the business owns; it has a value

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2
Q

Average rate of return

A

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

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

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3
Q

Brand image

A

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.

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4
Q

Break-even chart

A

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.

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5
Q

Break-even output

A

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

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6
Q

Buffer stock

A

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

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7
Q

Business plan

A

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.

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8
Q

Cash flow forecast

A

A financial planning tool that estimates the money coming into and going out of the business on a month-by-month basis; it allows the business to predict times when additional finance may be needed to maintain liquidity.

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9
Q

Cash inflow

A

Money received by the business from its operations or investments.

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10
Q

Cash outflow

A

Money paid out by the business to fund its operations or investment activities.

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11
Q

Centralisation

A

Maintaining control by keeping authority at the senior levels of the organisation.

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12
Q

Chain of command

A

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

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13
Q

Channels of distribution

A

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.

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14
Q

Closing balance

A

The amount that remains in the account at the end of an accounting period.

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15
Q

Commission

A

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.

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16
Q

Competition

A

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

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17
Q

Competitive pricing

A

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

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18
Q

Consumer law

A

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

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19
Q

Cost

A

The money spent by a business on goods and services.

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20
Q

Customer

A

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

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21
Q

Customer engagement

A

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

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22
Q

Customer loyalty

A

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

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23
Q

Customer satisfaction

A

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

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24
Q

Decentralisation

A

Where authority is spread widely through the organisation.

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25
Delegation
Allocating a task to someone who would not normally be responsible for it.
26
Directors
The people who are elected by the shareholders to run the business on their behalf.
27
Disposal of waste
The removal, storage or destruction of unwanted material. Methods include recycling, burning and landfill sites.
28
Dividend
A portion of the after-tax profit that is paid to shareholders according to the number of shares they own.
29
E-commerce
Business transactions carried out electronically on the internet.
30
Employees
Individuals who work full time or part time for the business; they have a contract of employment detailing their duties and rights.
31
Enterprise
ability to identify business ideas and opportunities to bring them to fruition and to take risks where appropriate.
32
Entrepreneur
A person who has the vision to use initiative to make business ideas happen, managing the resources and risks.
33
Ethical objectives
A business’ goals that relate to fair business practice or moral guidelines and make a positive contribution to the business’ reputation.
34
Exchange rates
The price of one currency based on another or the cost of buying one currency from another, for example £1 = $1.21.
35
Export
Good/service sold to a customer in another country.
36
External growth
The growth of a business by joining with another by merger or takeover.
37
External sources of finance
Obtaining funds from sources that are not part of the business; possibilities include bank loan, mortgage, overdraft, additional partner or share issue.
38
Fixed costs
The costs that stay largely the same, regardless of the business’ output.
39
Focus groups
A small number of people from the target market brought together to discuss a particular product; produces qualitative data about their preferences and opinions.
40
Franchising
The sale of the rights to use/sell a product by a franchisor to a franchisee. A fixed fee and/or a percentage is paid in return. The franchiser specifies the standards and provides training and support.
41
Gap in the market
An opportunity for a new business (or expansion) which may meet a need that is not being met, or a group of potential customers who are not yet purchasing a particular good/service.
42
Goods
Items that are produced from raw materials for sale to businesses or consumers.
43
Government grants
Money available from the government to fund projects that it wants to support; the money is not repaid, but there are conditions and often progress reports are required.
44
Hierarchy
The management structure of a business/organisation showing the levels of responsibility. It is often shown as an organisation chart.
45
Import
Good/service bought from a supplier in another country.
46
Integration
Two or more businesses join together
47
Interest rates
The rate charged for borrowing money over a period of time, or the reward for saving money.
48
Liability
The extent of the owner’s/owners’ responsibility for the debts of the business.
49
Limited liability
The owners are not responsible for the debts of the business. The limit of their liability for the business’ debts is the amount they invested.
50
Loans
A fixed sum of money borrowed for a specified period of time at an agreed rate of interest; repaid in instalments.
51
Margin of safety
The amount by which current sales exceed the break-even level of output.
52
Market research
Collecting information about the customers’ needs, wants and preferences that will help the business to make design, production and marketing decisions
53
Market share
The proportion of the whole market for a product that is held by the business.
54
Marketing mix
The combination of four areas of marketing activities (price, product, promotion and place) to make sure that customers’ needs and wants are met while generating optimum revenue.
55
Mergers
When two or more businesses agree to join together.
56
Mortgage
A method of borrowing to purchase property, using the property as security.
57
Motivation
The reasons people are interested in and committed to their job.
58
Needs
The human wants that are essential to survival; clothing, food, shelter, warmth or water.
59
Net cash flow
The difference between cash inflows and cash outflows. Net cash flow = cash inflows – cash outflows
60
Off-the-job training
Employees are trained away from their job, at a college, training provider or the business’ training centre.
61
On-the-job training
Employees learn alongside experienced colleagues while they are doing the job.
62
Opening balance
The amount brought forward from the end of the preceding accounting period so that it is the starting figure for the new one.
63
Opportunity cost
The cost of making one choice concerning the use of limited resources at the expense of an alternative choice.
64
Organic growth
A business grows by increasing its output, by increasing its customer base or by developing new product(s).
65
Overdraft
Borrowing from a bank by drawing from a current account so that the balance becomes less than zero.
66
Partnerships
A business that is owned and operated by a group of between 2 or more people.
67
Primary research
Collecting information first-hand direct from the public; field research including surveys, questionnaires and testing designed specifically for the market/product.
68
Private limited company (ltd)
A business that is owned by shareholders; the shares are not available to the general public. Shareholders have limited liability.
69
Profit
The difference between the money received from the sale of a good/service and the amount it cost; the amount that remains after all the costs have been paid. Profit = total revenue – total cost
70
Public limited company (plc)
Public limited company (plc) A business that is owned by shareholders. Anyone can buy shares in the business. Shareholders have limited liability.
71
Qualitative market research
Collecting information about potential customers’ opinions and preferences about the attributes/characteristics/properties of a product; open questions allow respondents to express their own views by not limiting their responses.
72
Quantitative market research
Using sampling techniques such as surveys where the findings are expressed numerically; closed questions allow a limited choice of responses and are easy to turn into statistics for analysis.
73
Retained profit
An internal source of finance; a portion of the year’s profit is kept back to fund projects.
74
Revenue
The income generated from the sale of goods/services.
75
Secondary research
Examining information from published sources; desk research using information that has been collected for other purposes.
76
Segmentation
Breaking the whole market for a product into different groups or types of consumers with similar needs/wants/characteristics; enables the marketing mix to be designed to meet their needs more precisely.
77
Service
An action that is carried out to fulfil a need or demand in return for payment.
78
Shareholder(s)
Those people who own shares in a limited company; each shareholder is a part owner of the business.
79
Span of control
The number of people for whom a manager is directly responsible.
80
Stakeholders
Those with an interest in the way that a business operates.
81
Share capital
the money a company raises from selling shares
82
Survival
The capacity of a business to stay in business. It is dependent on the business selling sufficient amounts of its goods/services to cover all its costs.
83
Target market
The particular group of customers to which a business aims to sell its product; a particular market segment.
84
Total costs
All the costs involved in producing goods/services. Total costs = fixed costs + variable costs
85
Trade credit
The process of buying items from a supplier and paying for them later; for example, 30 days after invoice date.
86
Unlimited liability
When the owner(s) are responsible for all the debts of the business. Their personal funds would be used to settle the business’ debts if the business’ funds were insufficient.
87
Venture capital
money invested by an individual or group that is willing to take the risk of funding a new business in exchange for an agreed share of the profits
88
Variable costs
The costs that change as the business' output changes.
89
Wants
Things that people would like to have; not limited to the things they need to survive.

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