Business definitions Flashcards
Advertising
any message that a firm pays for, which promotes the firm or its products
Aim
an overall goal that a business is trying to achieve
Apprenticeship
a method of training where someone works and learns about their trade at the same time, and is awarded a qualification once they have gained a certain level of skill
ARR
the average rate of return on an investment
Asset
a valuable item owned by a business, or money owed to the business
Authority
power that people in an organisational structure have over the people in the layers below
Automation
when a machine works by itself, with little or no human involvement
Autonomy
where a worker is given the freedom to make their own decisions in a job
Average unit cost
how much each product costs to make (calculated by dividing total costs by output)
Award scheme
a method of motivation where employees are given recognition for hard work
Bar gate stock graph
a graph that is used to manage a business’s stock levels
Batch production
a method of production in which a firm makes one batch of identical items at one time
Bonus
a lump sum added to an employee’s pay, usually once a year
Boston Matrix
a method used to analyse a business’s product portfolio. Products are plotted according to their market share and how fast the market they are in is growing
Brand image
the impression that customers have of a company or the products it sells
Break-even level of output
the level of output at which a company’s total revenue equals its total costs
Business plan
an outline of what a business will don and how it aims to do it
Capital
a company’s wealth in the form of money or other assets
Capital employed
the total amount of money into and out of the business
Cash
the money a business can spend immediately
Cash flow
the flow of money into and out of a business
Cash inflow
money that flows into a business
Cash outflow
money that flows out of a business
Census
an official survey of a country’s population
Centralised organisation
an organisation with a structure in which all major decisions are made by one person or a few senior managers at the top of the organisational structure
Chain of command
the chain connecting directors to operatives in an organisational structure
Channel of distribution
the way that products get from manufacturer to a consumer
Commission
money paid to sales staff for every item they sell on top of their basic salary
Competitive pricing
a pricing strategy in which a firm charges similar prices to other firms
Competitor
a business which sells the same products in the same market as another business
Consumer
the person who uses a good or service
Contract of employment
a legal agreement between an employee and their employer about a job
Cost
an expense paid out to run a business
Cost-plus pricing
a pricing strategy in which the cost of making the product is increased by a certain percentage to work out the price the product will be sold for
Credit
an agreement that a customer will pay for something at a later date
Credit terms
the terms of a credit agreement that tell a customer how long they have to pay
Crowd funding
when a large number of people each contribute money towards funding a new business or a business idea
current asset
an asset that doesn’t last very long
current liability
a debt that a business has to pay off soon
customer service
any interaction a business has with its customers
CV
a summary of a person’s personal details, skills, qualifications and interests
decentralised organisation
an organisation with a structure in which the authority to make decisions is shared between people at different layers of the organisational structure
delayering
removing layers of management from an organisation
delegation
passing tasks or responsibilities onto another person
demand
how much of a product or service people will be willing to buy at a given price
depreciation
the amount of value that assets have lost over time due to wear and tear
design mix
the different elements of design needed to make a product successful including its function, cost and appearance
differentiation
making products or services distinctive in the market
dis-economy of sales
when growth leads to an increase in average unit cost
diversification
when two unrelated firms join together allowing them to move into new markets
dividend
a payment that a shareholders get if the company makes a profit
e-commerce
buying and selling products on the internet
e-tailor
a company that sells products online
economy of scales
a reduction in average unit cost that comes from producing on a large scale
enterprise
the process of identifying new business opportunities and then taking advantage of them
entreprenur
someone who takes on the risks of enterprise activity
exchange rate
a value that tells you how much one unit of a currency costs in a different country
extension strategy
an action intended to extend the life of a product
external expansion
when a company grows by merging with or taking over another firm (inorganic growth)
external recrutment
where a business recruits new people from outside the company
factor of prodution
a limited resource used to provide a good or service
fixed asset
an asset that a business keeps long-term or uses repeatably
fixed cost
a cost that doesn’t vary with output
flat organisation structure
an organisational structure with very few layers
flexible working
when working hours and patterns are adapted to suit the employee
flow producion
a method of production in which all products are identical and are made as quickly as possible
formal training
a method of training which has a set plan with learning objectives and a schedule
franchise
where a company lets another firm sell its products or use its trademarks in return for a free or a percentage of the products
freelance contract
when a self-employed person is recruited by a company on a temporary basis usually to work on a specific project
fringe benefit
any reward for an employee that is not part of their regular income
full-time staff
employees that generally work 35-40 hours a week
gap in the market
a customer need that isn’t being met
globalisation
the process by which businesses and countries around the world become more interconnected
government grant
a sum of money which is given by the government and does not have to be repaid
gross profit
the profit left over once the cost of sales has been taken away from the total revenue
gross profit margin
the fraction of every pound spent by customers that doesn’t go towards making the product
hierarchical structure
an organisational structure with lots of layers
hire purchase
when a firm purchases something by first paying a deposit and then paying the rest in instalments over a period of time while they have use of the product
human resources
the people needed to run a business or the department that organise people in a firm
income statement
a financial statement that shows how the income of a business has changed over a period of time
incoporated
a business that has its own legal identity
induction training
a training program that introduces new employees to a workplace
inflation
an increase in the price of goods and services
informal training
a method of training which has no strict plan and is usually given by other workers
insolvency
when a firm is unable to pay its debts
interest rate
a value which shows the cost of borrowing money or the reward given for saving money
internal expansion
when a company grows by expanding its own activities
internal recruitment
where existing employees are recruited into new roles within a business
investment
money which is put into a business to make improvements in order to make the business more profitable
job analysis
a process in which every little detail of a job is thought thought about
job description
a written description of what a job involves
job enrichment
where a worker is given greater responsibility in their job
job production
a method of production in which each product has a unique design based on the customer specification
job rotation
where a worker is occasionally moved from one job to another
job share
where the work and pay of one full-time job is shared between two people
just-in-case
a method used in stock management in which buffer stock of items are kept at every stage of the production process
just-in-time
a method used in production or stock management in which stock levels are kept at a bare minimum - products are made just in time for delivery
lean production
a production strategy that aims to use as few resources as possible and to have as little waste as possible
limited liability
where the owners of a business are not legally responsible for all the debts a business has
liquidity
how easily an asset can be converted into money
loan
a long term source of money that must be paid back to the lender
logistics
getting goods or services from one part of the supply chain to another
long-term liability
a debt that a business has to pay off over a long period of time
loss
where the total costs for a company over a period of time are greater than its revenue
loss leader pricing
a pricing strategy in which the price of a product is set below cost
m-commerce
when goods and services are bought on the internet using a wireless mobile device such as a smartphone or tablet
margin of safety
the gap between current level of output and the break even level of output
market
a place where goods are traded between customers and suppliers, trade in a particular type of product or the potential customers of the product
market map
a diagram showing some of the features of the market
market research
when a business investigates different aspects of a market e.g. demand for a product, the competition and the target market
market share
the proportion of total sales within a market that is controlled by a business
market size
the number of individuals within a market that are potential buyers and sellers of products, or the total value of products in the market
marketing mix
the four elements that must be considered for good marketing:product, price, place and promotion
mass market
a large group of potential customers for a product
merger
when two companies join together to form a new lager firm
mortgage
a loan used to finance buying a property
multinational
a single business that operates in more than one country
net profit
the profit left over when all costs are taken into account
net profit margin
the fraction of every pound spent by customers that the company gets to keep
niche market
a small and specialised group of potential customers for a product
objective
a measurable step that a business will set in order to work towards an aim
obsolete
when a product is no longer used,usually because it has become out-dated and has been replaced by something else
off-the-job training
a method of training in which an employee learns away from their workplace
on-the-job training
a method of training in which an employee is shown how to do their job by another employee and then given the opportunity to practice
operating profit
the money left over after paying all the costs of running the business
opportunity cost
the value of something that’s given up in order to do something else
organic growth
when a company grows by expanding its own activities (also called internal expansion)
outsourcing
when a business pays another firm to carry out tasks it could do itself
overdraft
when more money is taken out of a bank than has been paid into it
part-time staff
employees that generally work 10-30 hours per week
partnership
a business ownership structure in which a small number of people own an unincorporated company
performance review
a system for assessing an employees progress and helping them to develop
permanent contract
a contract of employment that has no end-date
person specification
a list of the qualifications, experience, skills and attitudes a person needs for a particular job
pressure group
an organisation that tries to influence what people think about a certain subject
price penetration
a pricing strategy in which a firm charges a very low price for a product when it is new
price skimming
a pricing strategy in which a firm charges a high price for a product to begin with
primary research
market research that involves getting information from customers or potential customers
private limited company
a business ownership structure that is incorporated and has shares, but the shares can only be sold with the agreement of all the shareholders
procurement
the act of finding and buying things that a business needs from outside the business
product life cycle
the different stages that a product goes through over time
product portfolio
the rage of different products that a business sells
productivity
how many products are made in a certain amount of time or for a certain amount of money
profit
the difference between revenue and cost over a period of time
promotion
when an employee is given a higher status or position within a firm
promotional mix
the combination of different promotional methods a firm uses to promote a product
promotional pricing
when products are put on offer so that their average unit price is reduced for a limited period of time
public limited company
a business ownership structure that is incorporated and has shares that can be bought and sold by anyone
public relations
business activities which involve communicating with the media in an attempt to promote a firm or its products tot he public
purchasing economy of scales
a reduction in average unit cost that comes from a firm being offered a lower unit cost from suppliers when it buys its supplies in bulk
qualitative information
information that involves people’s feelings or opinions
quality assurance
a way of maintaining quality by checking that quality standards are being met throughout each process involved in making the product
quality control
a way of maintaining quality by checking products for faults at certain stages during the production process
quantitative information
information that can be measured or reduced to numbers
remote working
when an employee works in a location away from their employer’s office
remuneration
payment to an employee for the work that they have done for an employer
retailer
a business that sells products to consumers
retained profit
profit that is put back into the business
revenue
the income earned by a business in a given time period
salary
a fixed payment that is made to employees every month
sales process
a series of steps for finding and selling to customers, as well as providing customer service
sales promotion
a short-term method used to boost a firm’s sales e.g. 2 for 1
secondary research
market research that involves looking at data from outside the business
segmentation
when people within a market are divided into different groups
self-employed
when someone owns their own business and takes their income from the profits of the firm
self-learning
where and employee seeks out their own training and development
share
a unit of ownership in a company. owners of shares can share in the profits of the company
share capital
money gained through issuing shares in the company
sole trader
a business ownership structure where one person owns an unincorporated company
span of control
the number of workers who report to one manager in a heirachy
sponsorship
a method of promotion in which a business gives money to an organisation or event. in return the organisation or event displays the business’s name
staff retention
when a business keeps all of its staff
stakeholder
any individual or group of people that is affected by a business
start-up capital
the money or assets needed to set up a business
statement of financial position
a financial statement that records a business’s assets and liabilities at a particular moment in time
stock market
a market where shares of public limited companies can be bought and sold
subordinate
someone below another person in an organisational structure
supply chain
the group of firms that re involved in all various processes required to make a finished product or service available tot he customer
sustainability
working in way that doesn’t damage the Earth for future generations
takeover
when an existing business expands by buying more than half the shares in another firm
tall organisational structure
a organisational hierarchy with lots of layers
tariff
a tax on goods that are being imported or exported
technical economies of scale
a reduction in average unit cost that comes from a firm being able to afford more advanced machinery or use larger premises than a smaller firm
telesales
selling products to consumers via phone
temporary contract
a contract of employment that is only for a fixed period of time
total cost
the fixed and variable costs for a business added together
total quality management
a strategy that aims to make quality the responsibility of every employee in an organisation
trade bloc
a group of countries that has few or no trade barriers between them
trade credit
when a business gives firms time to pay for certain purchases
unincoporated
a business that doesn’t have its own legal identity
unique selling point
this is some feature that makes a product different from its competitors
unlimited liability
where the owners of a business are legally responsible for all debts a business has
variable cost
a cost that increases as a firm expands out
venture capital
money raised through selling shares to individuals or businesses who specialise in giving finance to new or expanding small firms
viral advertising
when adverts are shared and viewed many times ina short time period, often via social media
vocational qualification
a qualification that is specific to a certain job
wage
payment that is usually made to employees weekly or monthly
wholesaler
a business that buys products in bulk and stores them in a warehouse
working capital
the money available for the day-to-day operating of the business
zero hour contract
a contract of employment which means the employer doesn’t have to offer the employee any work at all and the employee doesn’t have to accept any work that is offered to them
