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A Level Business > Business and its environment > Flashcards

Business and its environment Flashcards

1
Q

Consumer goods

A

The physical and tangible goods sold to the general public – they include durable consumer goods, such as cars and washing machines, and non-durable consumer goods, such as food, drinks and sweets that can be used only once.

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2
Q

Consumer services

A

The non-tangible products sold to the general public – they include hotel accommodation, insurance services and train journeys.

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3
Q

Capital goods

A

The physical goods used by the industry to aid in the production of other goods and services, such as machines and commercial vehicles.

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4
Q

Creating value

A

Increasing the difference between the cost of purchasing bought-in materials and the price the finished goods are sold for.

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5
Q

Added value

A

The difference between the cost of purchasing bought-in materials and the price the finished goods are sold for.

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6
Q

Opportunity cost

A

The benefit of the next most desired option which is given up.

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7
Q

Entrepreneur

A

Someone who takes the financial risk of starting and managing a new venture.

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8
Q

Social enterprise

A

A business with mainly social objectives that reinvests most of its profits into benefiting society rather than maximizing returns to owners.

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9
Q

Triple bottom line

A

The three objectives of social enterprises: economic, social, and environmental.

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10
Q

Primary sector business activity

A

Firms engaged in farming, fishing, oil extraction and all other industries that extract natural resources so that they can be used and processed by other firms.

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11
Q

Secondary sector business activity

A

Firms that manufacture and process products from natural resources, including computers, brewing, baking, clothes-making and construction.

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12
Q

Tertiary sector business activity

A

Firms that provide services to consumers and other businesses, such as retailing, transport, insurance, banking, hotels, tourism and telecommunications.

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13
Q

Public sector

A

Comprises organizations accountable to and controlled by central or local government (the state).

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14
Q

Private sector

A

Comprises businesses owned and controlled by individuals or groups of individuals.

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15
Q

Mixed economy

A

Economic resources are owned and controlled by both private and public sectors.

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16
Q

Free-market economy

A

Economic resources are owned largely by the private sector with very little state intervention.

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17
Q

Command economy

A

Economic resources are owned, planned and controlled by the state.

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18
Q

Sole trader

A

A business in which one person provides the permanent finance and, in return, has full control of the business and is able to keep all of the profits.

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19
Q

Partnership

A

A business formed by two or more people to carry on a business together, with shared capital investment and, usually, shared responsibilities.

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20
Q

Limited liability

A

The only liability – or potential loss – a shareholder has if the company fails is the amount invested in the company, not the total wealth of the shareholder.

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21
Q

Private limited company

A

A small to medium-sized business that is owned by shareholders who are often members of the same family; this company cannot sell shares to the general public.

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22
Q

Share

A

A certificate confirming part ownership of a company and entitling the shareholder to dividends and certain shareholder rights.

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23
Q

Shareholder

A

A person or institution owning shares in a limited company.

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24
Q

Public limited company

A

A limited company, often a large business, with legal rights to sell shares to the general public – share prices are quoted on the national stock exchange.

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25
Q

Memorandum of Association

A

This states the name of the company, the address of the head office through which it can be contacted, the maximum share capital for which the company seeks authorization and the declared aims of the business.

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26
Q

Articles of Association

A

This document covers the internal workings and control of the business – for example, the names of directors and the procedures to be followed at the meetings will be declared.

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27
Q

Franchise

A

A business that uses the name, logo and trading systems of an existing successful business.

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28
Q

Joint venture

A

Two or more businesses agree to work closely together on a particular project and create a separate business division to do so.

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29
Q

Holding company

A

A business organization that owns and controls a number of separate businesses, but does not unite them into one unified company.

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30
Q

Public corporation

A

A business enterprise owned and controlled by the state – also known as nationalized industry.

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31
Q

Free trade

A

No restrictions or trade barriers exist that might prevent or limit trade between countries.

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32
Q

Tariffs

A

Taxes imposed on imported goods to make them more expensive than they would otherwise be.

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33
Q

Quotas

A

Limits on the physical quantity or value of certain goods that might be imported.

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34
Q

Voluntary export limits

A

An exporting country agrees to limit the quantity of certain goods sold to one country (possibly to discourage the setting of tariffs/quotas).

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35
Q

Protectionism

A

Using barriers to free trade to protect a country’s own domestic industries.

36
Q

Globalisation

A

The increasing freedom of movement of goods, capital and people around the world.

37
Q

Multinational business

A

Business organisation that has its head quarters in one country, but with operating branches, factories and assembly plants in other countries.

38
Q

Privatisation

A

Selling state-owned and controlled business organisations to investors in the private sector.

39
Q

Revenue

A

Total value of sales made by a business in a given time period.

40
Q

Capital employed

A

The total value of all long-term finance invested in the business.

41
Q

Market capitalization

A

The total value of a company’s issued shares.

42
Q

Internal growth

A

Expansion of a business by means of opening new branches, shops or factories (also known as organic growth).

43
Q

External growth

A

Business expansion achieved by means of merging with or taking over another business, from either the same or a different industry.

44
Q

Merger

A

An agreement by shareholders and managers of two businesses to bring both firms together under a common board of directors with shareholders in both businesses owning shares in the newly merged business.

45
Q

Takeover

A

When a company buys more than 50% of the shares of another company and becomes the controlling owner of it - often referred to as ‘acquisition’.

46
Q

Synergy

A

Literally means that ‘the whole is greater than the sum of parts’, so in integration it is often assumed that the new, larger business will be more successful than the two, formerly separate, businesses were.

47
Q

Mission statement

A

A statement of the business’s core aims, phrased in a way to motivate employees and to stimulate interest by outside groups.

48
Q

Corporate social responsibility

A

This concept applies to those businesses that consider the interests of society by taking responsibility for the impact of their decisions and activities on consumers, employees, communities and the environment.

49
Q

Management by objectives

A

A method of coordinating and motivating all staff in an organization by dividing its overall aim into specific targets for each department, manager and employee.

50
Q

Ethical code (code of conduct)

A

A document detailing a company’s rules and guidelines on staff behavior that must be followed by all employees.

51
Q

Stakeholders

A

People or groups of people who can be affected by – and therefore have and interest in – any action by an organization.

52
Q

Stakeholder concept

A

The view that businesses and their managers have responsibilities to a wide range of groups, not just shareholders.

53
Q

Corporate social responsibility

A

The concept that accepts that businesses should consider the interests of society in their activities and decisions, beyond the legal obligations they have.

54
Q

Monopoly

A

Theoretically a situation in which there is only one supplier, but this is very rare: for government policy purposes this is usually redefined as a business controlling at least 25% of the market.

55
Q

Social audit

A

A report on the impact a business has on society - this can cover pollution levels, health and safety record, sources of supplies, customer satisfaction and contribution to the community.

56
Q

Information technology

A

The use of electronic technology to gather, store, process and communicate information.

57
Q

Innovation

A

Creating more effective processes, products or ways of doing things in a business.

58
Q

Computer-aided design

A

Using computers and IT when designing products.

59
Q

Computer-aided manufacturing

A

The use of computers and computer-controlled machinery to speed up the production process and make it more flexible.

60
Q

Environmental audits

A

Assess the impact of a business’s activities on the environment.

61
Q

Pressure groups

A

Organisations created by people with a common interest or aim who put pressure on businesses and governments to change policies so that an objective is reached.

62
Q

Economic growth

A

An increase in a country’s productive potential measured by an increase in its real GDP.

63
Q

Gross domestic product (GDP)

A

The total value of goods and services produced in a country in one year - real GDP has been adjusted for inflation.

64
Q

Business investment

A

Expenditure by business on capital equipment, new technology and research and development.

65
Q

Business cycle

A

The regular swings in economic activity, measured by real GDP, that occur in most economies, varying from boom conditions (high demand and rapid growth) to recession when total national output declines.

66
Q

Recession

A

A period of six months or more of declining real GDP.

67
Q

Inflation

A

An increase in the average price level of goods and services - it results in a fall in the value of money.

68
Q

Deflation

A

A fall in the average price level of goods and services.

69
Q

Working population

A

All those in the population of working age who are willing and able to work.

70
Q

Unemployment

A

This exists when members of the working population are willing and able to work, but are unable to find a job.

71
Q

Cyclic unemployment

A

Unemployment resulting from low demand for goods and services in the economy during a period of slow economic growth or a recession.

72
Q

Structural unemployment

A

Unemployment caused by the decline in important industries, leading to significant job losses in one sector of industry.

73
Q

Frictional unemployment

A

Unemployment resulting from workers losing or leaving jobs and taking a substantial period of time to find alternative employment.

74
Q

Balance of payments (current account)

A

This account records the value of trade in goods and services between one country and the rest of the world. A deficit means that the value of goods and services imported exceeds the value of goods and services exported.

75
Q

Exchange rate

A

The price of one currency in terms of another.

76
Q

Exchange rate depreciation

A

A fall in the external value of a currency as measured by its exchange rate against other currencies.

77
Q

Imports

A

Goods and services purchased from other countries.

78
Q

Exports

A

Goods and services sold to consumers and businesses in other countries.

79
Q

Exchange rate appreciation

A

A rise in the external value of a currency as measured by its exchange rate against other currencies.

80
Q

Fiscal policy

A

Concerned with decisions about government expenditure, tax rates and government borrowing - these operate largely through the government’s annual budget decisions.

81
Q

Government budget deficit

A

The value of government spending exceeds revenue from taxation.

82
Q

Government budget surplus

A

Taxation revenue exceeds the value of government spending.

83
Q

Monetary policy

A

Is concerned with decisions about the rate of interest and the supply of money in the economy.

84
Q

Market failure

A

When markets fail to achieve the most efficient allocation of resources and there is under- or overproduction of certain goods or services.

85
Q

External costs

A

Cost of an economic activity that are not paid for y the producer or consumer, but by the rest of society.

86
Q

Income elasticity of demand

A

Measures the responsiveness of demand for a product after a change in consumer incomes.

A Level Business (6 decks)

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