Business Key Terms // Amber Flashcards
A business which sells (or supplies) products to another business.
Supplier
Any person or organisation which buys or is supplied with a product or by a business.
Customer
The person who ultimately uses (or consumes) a product.
Consumer
Value for money
Disability access
Good quality
Safe environment
Customer Needs
The gathering of new information which has not been collected before. E.g Survey, focus group, interview
Primary (or field) Research
Research involving asking questions of people or organisations.
Survey
Those who provide data for a survey usually by answering questions in a questionnaire or interview.
Respondents
A list of questions to be answered by respondents, designed to gather information about consumers’ tastes.
Questionnaire
In market research, a group of people brought together to answer questions and discuss a product, brand or issue.
Focus Group
Information that has already been gathered e.g sales records, government statistics, newspaper articles
Secondary (or desk) Research
Information about opinions, judgements and attitudes. E.g interviews, focus groups, questionnaires
Qualitative Data
Data that can be expressed as numbers and can be statistically analysed. E.g survey, sales data
Quantitative Data
Part of a market that contains a group of buyers with similar buying habits, such as age or income.
Market Segment
When the price is very important in the decision about whether or not to buy.
Price Sensitive
A diagram that shows the range of possible positions for two features of a product, such as low to high price and low to high quality.
Market Map (Perceptual Map or Positioning Map)
Occurs when no business is currently serving the needs of customers for a particular product.
Gap In The Market
A group of similar products made by a business like a number of different soap products.
Product Range
A named product which customers see as being different from other products and which they can associate or identify with.
Brand
The increase worth that a business creates for a product; it is the difference between what a business pays to its suppliers and the price that is able to charge for the product/ service.
Added Value
A characteristic of a product that make it different from other similar products being sold in the market such as design, quality or image.
Unique selling point or USP
The right given by one business to another to sell goods or services using its name.
Franchise
A business that agrees to manufacture, distribute or provide a branded product, under licence by a franchisor.
Franchisee
The business that gives franchisees the right to sell its product, in return for a fixed sum of money or a royalty payment.
Franchisor
A person who owns and runs their own business and takes risks.
Entrepreneur
A willingness by an individual or a business to take risks, show initiative and undertake new ventures.
Enterprise
Physical, tangible products like a car, a pair of scissors or a television set.
Goods
Non-physical, intangible products like a taxi journey, a haircut or a television programme.
Services
An advantage a business has that enable it to perform better than its rivals in the market and which is both distinctive and defensible.
Competitive Advantage
Thinking differently to try and find new and unexpected ideas.
Lateral Thinking
A technique of creative thinking where participants are encourage to think of as many ideas as possible about an issue or a problem.
Blue Skies Thinking
The discovery of new processes and potential new products, typically after a period of research.
Invention
The process of transforming inventions into products that can be sold to customers.
Innovation
Right of ownership of an invention or process when it is registered with the government.
Patent
Legal ownership of material such as books, music and films which prevents these being copied by others.
CopyRight
The symbol, sign, or other features of a product or business that can be protected by law.
TradeMarks
The probability of a negative event occurring.
Calculated Risk
Financial Objectives
Targets expressed in money terms such as making a profit, earning income or building wealth.
SMART
Specific, measurable, achievable, realistic and timed
Revenues
Sales Revenue
Turnover
Sales Turnover
The amount of income received from selling goods or services over a period of time
Total Revenue
TR = P x Q
Total Revenue = Price x Quantity
Sales Volume
The number of items or products or services sold by a business over a period of time.
Fixed Costs
Costs which do not vary with the output produced such as rent, business rates, advertising costs, administration costs and salaries.
Total Costs
All the costs of a business; it is equal to fixed costs plus variable costs.
Total Costs
TC = FC + VC
Total Costs = Fixed Costs + Variable Costs
Variable Costs
Costs which change directly with the number of products made by a business such as the cost of buying raw materials.
Profit
Occurs when the revenues of a business are greater than its costs over a period of time.
TR - TC = P
Cash Flow
The flow of cash into and out of a business
Inflow
The cash flowing into a business, its receipts
Outflow
The cash flowing out of a business, its payments
Net Cash Flow
The receipts of a business minus its payments
Inflows – Outflows = Net Cash Flow
Insolvency
When a business can no longer pay its debts
Cash Flow Forecast
A prediction of how cash will flow through a business in a period of time in future
Opening Balance
The amount of money in a business at the start of the month
Closing Balance
The amount of money in a business at the end of the month
Trade Credit
Where a supplier gives a customer a period of time to pay a bill (or invoice) for goods or services once they have been delivered
Stocks
Materials that a business holds. Some could be materials waiting to be used in the production process and some could be finished stock waiting to be delivered to customers.
Long Term Finance
Sources of money for businesses that are borrowed or invested typically for more than a year e.g Mortgage, Venture Capitalist
Short Term Finance
Sources of money for businesses that may have to be repaid with immediately or fairly quickly, such as an overdraft, usually within a year.
Personal Savings
Money that has been set aside and not spent by individuals and households
Share Capital
The monetary value of a company which belongs to its shareholders, for example, of five people each invest £10,000 into a business, the share capital will be £50,000
Shareholders
The owners of a company
Venture Capitalist
An individual or company which buys shares in what they hope will be a fast growing company with a long term view of selling the shares at a profit
Loan
Borrowing a sum of money which has to be repaid with interest over a period of time, such as 1-5 years
Security (or collateral)
Assets owned by a business which are used to guarantee repayments of a loan; if the business fails to pay off the loan the lender can sell what has been offered as security
Mortgage
A loan where property is used as security
Dividend
A share of the profits of a company received by shareholders who own shares
Retained Profit
Profit which is kept back in the business and used to pay for investment in the business
Leasing
Renting equipment or premises
Overdraft Facility
Borrowing money from a bank by drawing more money than is actually in a current account. Interest is charged on the amount overdrawn
Factoring
A source of finance where a business is able to receive cash immediately for the invoices it has issued from a factor, such as a bank, instead of waiting the typical 30 days to be paid
The combination of factors which help the business to take into account customer needs when selling a product - usually summarised as the 4 P’s, which are price, product, promotion and place
Marketing Mix
The amount of money customers have to give up to acquire a product
Price
A good or service produced by a business or organisation and made available to customers for consumption
Product
Communication between the business and customer, making the customer aware that’s the product is available, telling or explaining to them what is the product, making the customers aware of how the product will meet the customers’ needs and persuading them to buy it for the first time or again
Promotion
The way in which a product is distributed - how it gets from the producer to the consumer
Place
The only owner of a business which has unlimited liability
Sole Trader (or sole proprietor)
A legal obligation on the owner of a business to settle (pay off) all debts of the business. In law there is not distinction between what the business owes and owns and what the business owns and owes
Unlimited Liability
Where shareholders of a company are not personally liable for the debts of the company; the most they can loose is the value of their investment in the shares of the company
Limited Liability
The government authorities in the U.K. responsible for collecting tax
HM Revenues and Customs (HMRC)
A tax on the value of the sales: it is paid by businesses to government
VAT (Value Added Tax)
A tax on the value of income earned by workers; this includes sole traders who have to pay income tax on their net earnings
Income Tax
A tax on the earning of workers; Employers’ National Insurance Contributions are paid by employers on the wages of their workers; employees and sole traders have to pay National Insurance Contributions on their earnings
National Insurance Contributions (NICs)
A tax on the profits of limited companies
Corporation Tax
The experience that a customer gets when dealing with a business and the extent to which that experience meets and exceeds customer needs and expectations
Customer Service
A measure of how much products meet customers’ expectations
Customer Satisfaction
Orders or sales that occur from customers who have bought the product or service in the past
Repeat Purchases (or repeat business)
An individual or a group which has an interest in and is affected by the activities of a business; stakeholders have an interest in how the business operates and whether or not it is successful
Stakeholder
