Business Key Terms Flashcards
1
Q
Aims
A
A business aim is the overall target or goal of the business. Objectives are the steps a business needs to take to meet its overall aims.
2
Q
Objectives
A
Objectives are the steps a business needs to take to meet its overall aims. A business may have several different objectives that will help it to meet its aim.
3
Q
Example of Aims
A
An example of a business aim is ‘to make £120,000 profit’. An example of a business objective is ‘to make £10,000 profit each month for the next year’.
4
Q
Business Growth
A
Business growth is expanding a business to generate additional profits. A business can grow in one or more areas to achieve this expansion. Some common areas of business growth include: Many companies use business growth plans when planning for future expansions.
5
Q
Internal Growth / Organic Growth
A
Internal growth, or organic growth, occurs when a business decides to expand its own activities by launching new products and/or entering new markets. Businesses do this in order to improve their chances of increasing their customers, revenues and profits. Many new businesses start out with one product idea.
6
Q
External Growth
A
External Growth refers to the inorganic growth strategy wherein a company uses external resources and capabilities, but not the available internal resources, to expand its business activities. This strategy results in an increase in sales and profitability through purchasing other companies or building a business relationship with them.
7
Q
Backwards Vertical Growth
A
Backward Vertical Integration / Growth – when the business takes over a company at an earlier stage in the production process for example its supplier/source of goods and materials Forward vertical integration is when Ford buy out or merge with their customers, which in this case could be a car showroom (e.g. Arnold Clark).
8
Q
Forwards Vertical Growth
A
Forward Vertical Integration / Growth occurs when a business takes control of another that operates at a later stage in the supply chain. e.g. a vehicle manufacturer buys a car retail business.
9
Q
Diversification
A
Diversification of business refers to a growth strategy that ventures into a new market. Also, it involves the introduction of new products or services within the industry. (New EVERYTHING). Growing into a business that has no relation to the original.
10
Q
Horizontal Growth
A
Horizontal growth means expanding products or services to new markets. This can be done by developing a new market or penetrating an existing market.
11
Q
Business Plan
A
A business plan is a document created by a company that describes the company’s goals, operations, industry standing, marketing objectives, and financial projections. The information it contains can be a helpful guide in running the company.
12
Q
Capital
A
Capital refers to the financial resources that businesses can use to fund their operations like cash, machinery, equipment and other resources. These are the assets that allow the business to produce a product or service to sell to customers.
13
Q
Dividend
A
A Dividend is a sum of money paid regularly (typically annually) by a company to its shareholders out of its profits (or reserves).
14
Q
Entrepreneur
A
An Entrepreneur is a person who sets up a business or businesses, taking on financial risks in the hope of profit.
15
Q
Characteristics of an Entrepreneur
A
The four main characteristics of an Entrepreneur:
Risk Taking
Confidence
Creative
Determined
16
Q
Stakeholders
A
A stakeholder is a person, group or organization with a vested interest, or stake, in the decision-making and activities of a business, organization or project. Stakeholders can be members of the organization they have a stake in, or they can have no official affiliation.
17
Q
Examples of External Stakeholders
A
Customers
The Government
Suppliers
Local Communities
Creditors
Junior Shareholders
Shareholders
18
Q
Examples of Internal Stakeholders
A
Employees
Management
Board Of Directors
The Business Owner
Clients
Chief Executive Officer (CEO)
Shareholders
19
Q
Sole Trader
A
A sole trader, also known as a sole proprietorship, is a simple business structure in which one individual runs and owns the entire business. A sole trader is entitled to keep all profits after taxes have been deducted but is also liable for all losses the business incurs.
20
Q
Advantages of sole trader
A
- Keeps all the profit
- Owner has complete
control - Quick/easy to set up
21
Q
Disadvantages of sole trader
A
- Won’t benefit from
economies of scale - Likely to work long hours
- Lenders may be reluctant to
give them finance as it’s
risky - UNLIMITED LIABILITY
22
Q
Partnership
A
A business owned by between two and twenty partners.
23
Q
Advantages of Partnership
A
- Partners can bring different
skills/expertise to the
business - Raise more capital
- Quick/easy to set up
24
Q
Disadvantages of Partnership
A
- Have to share profits
- Disagreements
- UNLIMITED LIABILITY
25
Private Limited Company - LTD
A smaller business owned by at least two shareholders. Shares cannot be sold to the general public. Has Ltd after its name
26
Advantages of LTD
- LIMITED LIABILITY
- Can sell shares to raise
capital
27
Disadvantages of LTD
- Have to publish financial
information
- Takes time to set up
- Profits have to be shared
between shareholders
28
Public Limited Company - PLC
A large business where shares can be sold to the general public enabling vast sums of money to be raised to develop the company. Has plc after its name
29
Advantages of PLC
- Able to raise finance through
share capital
- Limited liability
- Considered more reliable to
lenders
- More public awareness of
business
30
Disadvantages of PLC
- Risk of being taken over
- Financial accounts published
- More public scrutiny/attention
- Shareholders have more influence
on how business is run
31
Limited Liability
Where the responsibility for the debts of a business is limited to the
amount invested by a shareholder. A feature of private and public
limited companies
32
Unlimited Liability
Where the responsibility for all the debts of a business rests with the
owners of the business. A feature of sole traders and partnerships
33
Limited Liability Partnership
Part partnership, part limited company. Owners are members, not
partners. They have limited liability and have to make their finances
available to the public
34
Marketing
Finding the needs of consumers and demonstrating how a business fulfils those needs in a way that increases sales.
35
Market Share
The percentage of total sales of a product that a business has made. If a business sells 20,000 products and the total market for that product is 50,000, then the business has a market share of 40%.
36
Merger
Where two or more businesses agree to join together.
37
Takeover
Where a business takes a controlling interest in another business
38
Operate
A term used to explain how a business works
39
Profit
The difference between revenue and costs
40
Providing a Service
Where a business makes sure that the needs of the customers are
being met
41
Resources
The things a business sells needs to make it work, including finance, staff and materials
42
Satisficing
Making just enough profit to provide the business owner with a decent living. More common in smaller businesses
43
Shareholders
Are the owners of a private or public limited company
44
Sleeping Partner
A partner who invests in a partnership but has no part in the running of the business
45
Spotting an Opportunity
The ability to see the need for a particular product or service that customers need
46
Survival
When a business just manages to keep going
47
Success
For a business, can take many forms, including making profit, surviving and providing a good service to customers
48
Market Research
The collection of data on consumer habits to help decision-making in marketing
49
Primary Market Research
Data collected first-hand, often in the form of surveys. Sometimes referred to as field research
50
Advantages of Primary Market Research
Up to date
Tailored to needs of
business
Data that no competitors
have access to
51
Disadvantages of Primary Market Research
Time consuming
Expensive to carry out
Interview bias
52
Secondary Market Research
The collection of data using research or information provided by others, such as magazines, journals and the internet. Often called
desk research
53
Advantages of Secondary Market Research
Available immediately
Free or very cheap
54
Disadvantages of Secondary Market Research
Could be out of date
May not be accurate or reliable
Competitors have access to the same data
55
Questionnaire
A question sheet filled in by the consumer
56
Trials
Used to test whether customers will buy a product
57
Focus Groups
Selected small groups of customers who give their opinion on products
58
Census Data
Data collected by the Government every 10 years, questioning the entire population on their income, occupation etc.
59
Interview
A question sheet filled in by the person conducting the interview, someone questioning another person
60
Qualitative Market Research
Data based on opinions of those being asked
61
Quantitative Market Research
Data collected that is based on facts or numbers, usually easier to analyse than qualitative data
62
Marketing
Finding the needs of consumers and demonstrating how a business
63
The 4P's
Price, Product, Promotion and Place
64
Promotional Pricing
Where prices are reduced to give products a boost or to sell off old
stock. Most commonly seen as sales in shops
65
Advertising Campaign
A series of advertisements, often using different advertising media
66
Advertising Media
The methods by which a business can advertise a product. Includes newspapers, TV and radio
67
Point of Sale Promotion
Includes price reductions, loss leaders, competitions and free samples
68
Price
The amount of money for which something is sold or offered for sale
69
Competitor Pricing
When a price is set based on prices charged by competitor businesses for a similar product
70
Cost-Plus Pricing
A pricing method that adds a percentage of profit to the total costs of making a product. This gives the selling price.
71
Penetration Pricing
When a price is set lower than the competitor businesses. Often
used by new businesses to break into a market. This should only be
seen as a short-term strategy
72
Price Skimming
Where a new product is more advanced than that of competitors; a price is set high as some customers are willing to pay higher prices to own the newest technology.
73
Product
something that is made to be sold, usually something that is produced by an industrial process or, less commonly, something that is grown or obtained through farming
74
Design
An important element in a number of different products, especially where style and technology work together
75
Innovation
The improvement on an original idea, which will often involve using
new processes. It is closely linked to design, where new ideas can be
used in a product due to changes in design
76
Product Life Cycle
The life of a product, usually shown as a graph divided up into four
stages: introduction; growth; maturity; and decline
77
Introduction
When a product or service is first on sale
78
Growth
When sales are growing strongly as the new product or service becomes known
79
Maturity
When sales are at their highest level
80
Decline
When sales are falling as the product or service is seen by customers
as being old and they switch to newer products and services
81
Extension Strategy
The attempt by a company to increase sales of a product by, for example, making changes to it or finding new uses for it
82
Application Form (Employees)
The application form allows the employer to pose a series of specific questions that every candidate must answer. A standard form helps to speed up the application process and enables recruiters to compare applications more easily. It also makes it easier to weed out unsuitable or under-qualified candidates.
83
Apprenticeship
An apprenticeship is a paid job where the employee learns and gains valuable experiences through on-the-job training and classroom-based learning.
84
Authority
The power or right to give orders, make decisions, and enforce obedience
85
Accountability
Accountability is the fact of being responsible for what you do and able to give a satisfactory reason for it, or the degree to which this happens.
86
Award Scheme
Award Schemes are a way of rewarding employees and others with cash, goods or holidays rather than increases in pay.
87
Bonus
A sum of money added to a person's wages as a reward for good performance
88
Chain of Command
A system in a Business by which instructions are passed from one person to another.
89
Communication
The imparting or exchanging of information by speaking, writing, or using some other medium
90
Contract of Employment
A contract between an employer and an employee is a legally binding agreement. This could be a 'contract of employment' or a 'contract of service'. An employment contract can be agreed: verbally – this is when it's agreed through conversations in writing – for example, a job offer letter or through emails
91
Customer Service
The assistance and advice provided by a company to those people who buy or use its products or services.
92
CV
A brief account of a person's education, qualifications, and previous occupations, typically sent with a job application.
93
Delegation
Delegation is the act of empowering to act for another or a group of persons chosen to represent others.
94
Development
Long term and is focused on the worker to help to realise their longer-term potential
95
Digital Communication
The exchange of information electronically
96
Discrimination
When one worker is treated differently from another for no acceptable reason. There are several unacceptable reasons for different treatment
97
Employment Agency
An agency that has workers readily available for business hire, usually for a short period of time
98
Employment Law
Designed to protect workers from employers who may treat them unfairly
99
Employment Tribunal
A panel that hears cases where employment laws may have been broken and which comes to a decision either in favour of the employer or employee
100
External Communication
Communication between people in an organisation and others outside that organisation
101
External Methods of Recruitment
Include websites, newspapers, social media and specialist magazines
102
External Recruitment
When a job vacancy is filled by employing someone from outside the business
103
Feedback
The response made by a person who receives a communication
104
Flexible Working
The practice of people working partly at their place of work and partly elsewhere, perhaps at home or while they are mobile
105
Formal Communication
Communication that uses the official channels of communication
106
Fringe Benefits
Additional benefits that workers receive on top of their pay. They include pensions, childcare vouchers, subsidised canteen meals
107
Full-Time Working
When a person works 35 hours or more per week
108
Functions
Different types of work that need to be done in business including production, finance and marketing
109
Group Activities
Usually designed to test how well an applicant works with others
110
Holiday Entitlement
The amount of paid holiday that a worker can have in a year
111
Horizontal Communication
Communication between people on the same level of the hierarchy in an organisation
112
Human Resources
The workers employed by a business
113
Human Resources Plan
A plan detailing workers a business needs – how many, whether they will be full time or part time, the skills they should have and when they will work
114
Identifying Human Resource Needs
The activity of thinking about the purposes of human resources, and how many and what types of workers will be needed
115
Induction Training
Training to introduce a new worker to the business, place of work and their fellow workers as well as their jobs
116
Informal Communication
Communication that is outside the official channels of communication
117
Internal Communication
Communication between people employed in the same organisation
118
Internal Methods of Recruitment
Includes notice boards, word of mouth, company website and emails to staff
119
Internal Recruitment
When a job vacancy is filled by employing someone who is already an employee of the business
120
Interviews
Sessions in which the people making the appointment asks questions of the applicants
121
Job Description
Lists the main duties, tasks and responsibilities of a worker
122
Layers
The number of levels of authority that there are in a chain of command
123
Letter of Application
A letter written by the applicant usually explaining why they think they are suitable for the job
124
Motivation
How workers are encouraged to work hard
125
Off-the-Job Training
Occurs away from the job. It may still be at the same place of work, or the employee may be sent somewhere else for the training
126
On-the-Job Training
Occurs at the place of work and while the the worker is doing their job
127
Organisation Chart
A diagram that shows how the workers are organised in a business and who is in charge of whom
128
Pay
The money earned by workers as a reward for the work they do
129
Part Time Working
When a person works fewer than 35 hours per week
130
Person
Specification
Lists the qualities, qualifications and knowledge that a person should have to do a particular job
131
Praise
A method of motivating a worker by complimenting their work and so making their work recognised and valued
132
Productivity
A measure of output per worker. It is the only way of measuring the performance of workers
133
Professional Development
Includes both vocational and academic development. It involves learning over a long period of time. Workers may learn through external courses with this learning being reinforced by practical activity in the workplace.
134
Profit Sharing
When workers receive some of the profits made by a business
135
Recruitment Agency
A specialist agency that carries out all the tasks involved in recruitment and selection of workers on behalf of an organisation
136
References
Statements from a previous or current employer or other responsible person about the suitability of the applicant for the job
137
Regulations
Rules imposed on businesses by the government
138
Retention
When workers can be kept employed by businesses rather than them leaving to work elsewhere
139
Retention of Workers
When workers choose to stay in a firm rather than move elsewhere
140
Selection
The process of choosing between applicants for a job
141
Self-Employment
When people work as their own business, selling their work to buyers who may be consumers or other businesses
142
Skills Gap
When the business recruits skilled workers because it is short of them
143
Skills Shortage
Refers to a situation in which businesses cannot recruit workers with the skills they need
144
Social Media
Online applications that allow people to create and share content to participate
145
Span of Control
The number of subordinates who report directly to the line manager
146
Statement of Employment Particulars
Part of the employment contract. It gives details of the terms of employment
147
Subordinates
The workers that a line manager is responsible for
148
Temporary Working
When a person only works for a short period of time for an employer, sometimes on a short-term contract or sometimes just on a day-to-day basis as needed
149
Tests
Activities completed by applicants which check their skills
150
The Purpose of Human Resources
The work that must be done by human resources. It is usually broken down into a number of different jobs
151
Trade Union
An employee organisation that exists to represent the interest of its members
152
Training
Short term and is focused on helping a worker to do his or her job well
153
Turnover of Labour
A measure of the number of proportion of a staff who leave a firm each year and need replacing
154
Verbal Communication
Communication by speaking
155
Vertical Communication
Communication up or down the hierarchy within an organisation
156
Website
An online location with several pages that can be contacted by internet users through its address
157
Working Environment
The quality of the physical workplace and its climate
158
159
Working Time Directive
A statement of maximum number of hours that a person can be asked to work
160
Working While Mobile
When people work when they are on the move, travelling or on holiday
161
Written Communication
Communication by written words and diagrams
162
Zero-Hours Contracts
Contracts given to employees which do not guarantee any work. The business will call workers if and when they are needed to ask them to come in to work
163
After-sales service
Advice and help given to a customer after they have bought a product or service
164
As Described
Means that goods must be as the business described them
165
Automation
A production process involving machinery that is not controlled by a person but usually controlled by a computer
166
Batch Production
The process of production where one type of product is made and then production is switched to make a different product
167
Click and Collect
Ordering online and collecting goods from the store at a later time
168
Consumer Laws
The area of law which protects the customers of a business. This is mainly through the Consumer Rights Act of 2015
169
Customer Engagement
The contact between the business and the customer
170
Customer Service
The name given to an area of business that deals with customer enquiries
171
E-Commerce
The bringing together of buying and selling electronically
172
Face to Face Selling
Usually completed in a shop where there is direct contact between buyer and seller
173
Fit for Purpose
Means that goods must do what they are meant to do
174
Flow Production
Production of one product that takes place continuously using a production or assembly line. This is sometimes called mass production
175
Job Production
The process of production where products are made individually
176
Labour
A factor of production. It is the labour employed by businesses to produce goods and services
177
Location
The place where a business is sited
178
Logistics
The management of the transportation and storage of goods
179
Procurement
The management of purchasing within a business
180
Product Knowledge
The detailed knowledge of a product or service that staff within a business use to help persuade a customer to buy
181
Product Processes
The three methods or processes of production – job, batch and flow
182
Proximity
Means ‘nearness to’. It can refer to proximity to the market, to raw materials and to labour supplies
183
Quality
About a product being fit for purpose
184
Quality Assurance
An approach that involves the whole business focusing on quality, thus aiming to prevent quality problems arising
185
Quality Control
A system for inspecting the quality of the goods or services produced and that they are of a good standard
186
Raw Materials
Materials that are processed in some way as part of the manufacture of a product
187
Recalls
When a fault occurs with a product and the business asks for the product to be brought back so it can be repaired or replaced
188
Returns
Goods which customers take back to the shop because there are problems with the quality of them
189
Reputation
What customers say and feel about a business. Damage to a reputation can seriously affect a business
190
Robotics
The use of robots in the process of productions
191
Suppliers
Parties who supply goods and/or services to a business
192
Satisfactory Quality of Goods
How the goods are made will reflect the price. A high-priced product must be of high quality
193
Telesales
Sales completed over the telephone
194
Transport Infrastructure
The provision of roads, railways, ports and airports in an area for transporting goods and people
