business keyword paper 2 Flashcards
1
Q
(total) fixed costs
A
sum of all the fixed costs
2
Q
(total) sales revenue
A
price x quantity
3
Q
(total) variable costs
A
variable costs per unit x quantity
4
Q
advantage and disadvantage of batch production
A
-can be mechanised= less labour
-workers less motivated with repetitive work
5
Q
advantage and disadvantage of e-commerce
A
-access to global market
-designing and updating websites = expensive
6
Q
advantage and disadvantage of face to face selling
A
-seller can persuade customers to buy more
-expensive
7
Q
advantage and disadvantage of flow production
A
-produce larger quantities = bulk buy raw materials = lower costs
-high costs = machinery = can break down
8
Q
advantage and disadvantage of job production
A
-motivated workers
-skilled labour and craftsmen are expensive
9
Q
advantage and disadvantage of quality assurance
A
-costs reduced = less waste
-time consuming
10
Q
advantage and disadvantage of quality control
A
-customer will not receive a substandard product
-wasteful = costs high
11
Q
advantage and disadvantage of telesales
A
-seller can answer questions instantly
-cold-calling
12
Q
advantages of technology on production
A
-work 24/7= do not need breaks
-increase productivity (output per hour)
-safer, more precise
13
Q
after-sales service
A
advice and help given to customers after they have bought a good
14
Q
as described
A
means that goods must be as the business described them
15
Q
automation
A
a production process involving machinery that is controlled by a computer
16
Q
average fixed costs
A
(total) fixed costs / quantity
17
Q
average rate of return (ARR) & 3 step equations
A
a method of measuring and comparing the profitability of an investment over the life of the investment
1~calculate total profit from investment=total income from investment - cost of investment
2~calculate average profit from investment = total profit from investment/number of years of investment x 100
3~average profit from investment / cost of investment x 100
18
Q
batch production
A
process of production where small quantites of products are made over a short period of time and then switched to another product
19
Q
break-even forecast
A
prediction about the break-even quantity based on estimates of future sales, revenues and costs
20
Q
break-even point
A
total revenue=total costs
the point where the business makes neither a profit nor a loss
21
Q
break-even quantity & equation
A
amount a business must sell to earn enough revenue to just cover its costs so that it does not make a profit nor a loss
FC / price - VC (per unit)
22
Q
cash flow forecast
A
document used to plan for money coming into the business and out of the business. if cash outflow is higher than cash inflow the cash in hand will decrease
23
Q
closing balance & equation
A
amount of cash left at the end of the month and it becomes the opening balance at the start of the next month
net cash flow + opening balance
24
Q
consumer laws
A
area of law which protects the customers of a business through the consumer rights act of 2015
25
crowdfunding
Money is donated or invested by sponsors through an appeal to the public
26
customer engagement
contact between the business and the customer
27
customer service
area of business that deals with customer enquiries
28
e-commerce
the selling and buying of products online
29
expenses
the costs of operating a business
30
expenditure
money that the business pays out
31
face to face selling
direct contact between the buyer and seller
32
factors influencing location
-costs of premises
-proximity to market OR competitors
-availability of labour
33
finance function
often found in larger businesses and manages the finance for future planning and decision making
34
fit for purpose
means that goods must do what they are meant to do
35
fixed costs
costs that dont vary with the level of output e.g rent
36
flow production (mass production)
production of one product that takes place continuously using a production line
37
gross profit & equation
-difference between the money received from selling products and the cost of making them
-total revenue - costs of sales
38
gross profit margin & equation
-tells a business how profitable it is
-gross profit / total revenue x 100
39
job production
process of production where products are made for a specific customer
40
limitations of break-even
- just a prediction
- doesnt take into accounts discounts
41
limitations of cash-flow forecasts
-prediction = things may change e.g. prices
-data may be based on inaccurate information
42
liquidity
ability of a business to pay its short-term debts which must be paid
43
loan
fixed amount of money given to a business by the bank that has to be repaid over time with interest
44
location
place where a business is sited
45
logistics
management of the transportation and storage of goods
46
loss
when costs are greater than revenue
47
margin of safety
the amount by which a business' actual output is greater than its break-even output
48
negative cash flow
when during one month more cash is flowing out of the business than flowing in
49
net cash flow
difference between all the cash entering the business and all of the cash leaving the business.
total inflow - total outflow
50
net profit & equation
-money left after deducting all the costs
-total revenue - costs of sales - expenses
51
net profit margin & equation
-proportion of sales revenue once costs are paid
-net profit / total revenue x 100
52
opening balance
amount of cash at the beginning of the month that was the closing balance of the previous month
53
overdraft
an arrangement with a bank that a business can spend more money than it has in its account
54
owners capital
money from savings put into the business by the owner
55
positive cash flow
when during one month more cash is flowing into the business than flowing out
56
procurement
management of purchasing within a business
57
product knowledge
detailed knowledge of a product that staff use to persuade a customer to buy
58
product processes
the three methods of production - job, batch and flow
59
profit / loss
total revenue - total costs
60
retained profit
profit that is not distributed to shareholders as dividends
61
proximity
means 'near to' - how near it is to something
e.g. proximity to market
62
quality
how well the product meets the needs and expectations of the customer
63
quality assurance
approach that involves the whole business focusing on quality thus aiming to prevent quality problems arising
64
quality control
a system for inspecting the quality of products produced and that they are of good standard
65
recalls
when a fault occurs with a product and the business asks for the product to be bought back so it can repaired or replaced
66
retained profits
profit that is not distributed to shareholders as dividends
67
returns
goods which customers take back to the shop because there are problems with the quality of them
68
sale of assets
goods owned by the business that can be sold to raise money
69
satisfactory quality of goods
how the goods are made will reflect the price - a high priced good must be of high quality
70
share issue
new shares are sold to raise money
71
telesales
sales completed over the phone
72
total costs
total VC + total FC
73
trade credit
when the business has the goods/services to sell and agrees to pay at some time later
74
uses of break-even
-plan how much time produce
-plan the price to charge
75
uses of cash-flow forecast
-anticipate periods of cash shortages
-provide targets
76
variable costs
costs that vary with the level of trade e.g. ingredients for food
77
variable costs (per unit)
total variable costs / quantity
78
what does the consumer rights act 2015 include
-satisfactory quality = goods shoudlnt be faulty or damaged
-as described = goods must match any description shown to customers
-fit for purpose = unusable
79
role of the finance function
-provide financial info to inform future decision making
-make payments
-analyse financial performance
80
why is finance needed
-to pay rent
-hire staff
-to expand
-for marketing
81
advantages and disadvantages of a loan
-long term and helps with all the costs of setting a business up
-money available immediately
-interest must be paid
82
advantages and disadvantages of overdraft
-meet short term cash flow problems
-repayment is only due when the business closes or when it no longer needs it
-flexible
-interest must be paid
83
advantages and disadvantages of trade credit
-no interest if repaid with the agreed time limit
-have goods to sell before paying for them
-goods must be paid for even if they dont sell
84
advantages and disadvantages of retained profit
-no need to repay
-business may not have made enough profit
-owners will not get profit as income
85
advantages and disadvantages of retained profit
-no need to repay= cheap
-flexible
-business may not have made enough profit
-owners will not get profit as income
86
advantages and disadvantages of sale of assets
-no interest
-good if selling off old equipment or stock
-may be difficult to sell
-may take time to sell
87
advantages and disadvantages of owners capital
-doesnt affect ownership/control
-readily available
-no interest
-owners risk savings
-leaves owner without any money for personal things
88
advantages and disadvantages of a new partner
-new skills
-job sharing
-share profits
-decision making shared
89
advantages and disadvantages of share issue
-new investors= more money
-no interest
-share of profits
-owners must share ownership
90
advantages and disadvantages of crowdfunding
-new supporters can contribute a lot of money to the business
-no interest
-might not earn enough money
-if money is raised through investments than ownership will be shared
91
total costs
fixed costs + variable costs
92
importance of cash
-to pay fixed costs
-to pay employees
-to prevent business failure
93
uses of cash flow forecasts
-planning tool= businesses can plan ahead
-to anticipate periods of cash shortages
-provide targets
94
factors affecting choice of finance
-amount needed
-why its required
-legal status of business
-circumstances of business
95
what is internal finance
raising funds from within the business
E.g owners capital, retained profit, selling unwanted assets
96
what is external finance
raising funds from outside the business
E.g. overdraft, trade credit, loans, share issue, new partner, crowdfunding
97
advantages and disadvantages of a mortgage
-bank loan just for the purchase of buildings and land
-can borrow a lot of money
-can be paid back in instalments
-interest still must be paid
-if payments are missed, property can be repossessed
98
how is quality measured
-level of product returns
-customer complaints
-customer loyalty
-customer satisfaction rates
99
what factors influence business locations
-cost of premises
-proximity to consumer footfall
-availability of labour
100
role of procurement
-choosing suppliers
-ordering goods
-identifying goods to buy
101
direct procurement
buying raw materials that are used in the making of the product or delivery of the service
102
indirect procurement
buying maintenance contacts, admin stationary, marketing advert space, ICT
103
how are suppliers chosen
-quality
-reliability= speed and flexibility
-value for money
104
self-service
business procurement team buy a range of commonly used goods through suppliers
105
e-marketplace
the business can register as a buyer and invites suppliers to submit their quotes for the supplies
106
e-auctions
reverse auctions where many sellers bid to supply one buyer, prices go down with each bid rather than rising
107
stages of choosing suppliers
1) identifying goods and services to buy
2)choosing suppliers
3)ordering goods and services
4)receiving deliveries
108
what impacts the decisions of choosing suppliers
-time= if its late, there may be less production
-costs
-customer service= repeat service, lower costs
109
logistics
transportation of raw materials and finished goods
110
supply chain
the network of organisations that get products to customers
1)suppliers of raw materials
2)manufacturers
3)wholesalers/retailers
4)customers
111
what is the consumer rights act
gives consumers the legal right to either get a refund for goods that are unsatisfactory, unfit for purpose or not as described or get it repaired
112
supply chain management
ensures the right quantity of goods are in the right place at the right time, provided with right quality at the right price
113
benefits of a good supply chain
-improved reputation
-customer satisfaction increased
-increased efficiency
114
interest rates
refers to the costs of borrowing money or the reward for saving money, expressed as a %
115
inflation
the average increase in prices of goods/services
116
ethics
principal of knowing right decisions from wrong ones in business
117
ethical considerations a business makes
-treatment of workers e.g. child labour, forced labour
-treatment of suppliers= fair trade
-sourcing e.g. ethical sourcing
118
forced labour
any work/service which people are forced to do against their will under the threat of some form of punishment
119
advantages and disadvantages of ethical behaviour
-better reputation, customer loyalty, lower costs (workers have better conditions so productivity increases)
-lower profit (paying higher costs), investments may be lower, time consuming to write ethical invoices
120
environmental considerations
-sustainability= businesses have an ethical duty to make sure there are enough natural resources for the future e.g. using renewable sources
-waste disposal e.g. reduce, reuse, recycle
-pollution
-climate change
121
advantages and disadvantages of being environmentally friendly
-lower costs (using renewable energy), higher sales, may gain subsidies from the gov
-production costs may be higher, capital costs higher for eco-friendly equipment
122
economic climate
the general condition of the uk economy
123
economy
the production of services and consumption of goods and services and the supply of money
124
inferior goods
as consumer incomes fall, demand for these goods rises
-cheaper + targets for lower socio-economic groups
125
normal goods
as income rises, customers buy more normal goods
-e.g. restaurants, cinemas, nike etc
126
gross domestic product
measure all the products and services sold in the country
127
boom economy
when the business in the country are doing well, GDP is high, unemployment is low so incomes are high
128
economy in recession
GDP is falling, unemployment is high so income is low
129
economic factors
-changing prices & impact on goods demanded= recession= unemployment + rising costs so prices increase so customers switch brands
-changing levels of incomes & impact on goods demanded= disposable income
-changing levels of employment & impact on goods demanded= unemployment-lower income, normal good sales fall
-changing levels of employment & impact on recruitment= larger pool of applicants
-impact on wage costs= willing to work for less= higher profit
-impact on training= costs increase due to untrained employees
130
globalisation
the process by which the world is becoming more interconnected as a result of increased trade between countries
-increased production of goods and services around the world
131
impacts of globalisation
-growth of MNCs (business that has operations in more than one country e.g. toyata)
-influences on business locations
-international branding = recognisable brands + customer loyalty
-how businesses compete internationally = consumers now have more info on products and prices e.g. sales taxes
132
benefits of having a global brand
-higher sales + profits
-packaging + marketing is same
-access to economies of scales
133
advantages and disadvantages of globalisation in the uk
-greater access to foreign markets (sales are lower in one country but high in another), access specialist skills
-struggle to compete on cost for goods as wage rates are high, suffered from structural unemployment based on loss of industries
134
interdependent
two or more businesses are dependent on each other to trade (involves all 4 dpts)
135
business operations dpt
-dpt depends on the size and industry its in though most businesses will have a marketing, HR, and finance dpt
-internal customer concept= the input of one dpt is the output of another therefore they are interdependent on each other
136
business operations dpt
-dpt depends on the size and industry its in though most businesses will have a marketing, HR, and finance dpt
-internal customer concept= the input of one dpt is the output of another therefore they are interdependent on each other
137
finance dpt (interdependent)
-they will prepare the accounts of the business
-Marketing= finance dpt set advertising budgets
-HR= finance dpt set HR budget so they know how many staff to hire
138
HR dpt (interdependent)
-they will interview and hire new candidates
-marketing= hire new marketing research staff
-finance= pay wages
139
marketing dpt (interdependent)
-will decided products made, carry out market research and advertise
-finance= sales forecasts that help set budgets
-HR= promotional staff may be needed
140
impacts of business risks
-business failure= if they fail to plan for the future, may risk losing out to competitors
-failure in start-up plans= high costs + UK tax system
-financial risks for owners (entrepreneurial risks)
-lack of security for owners
141
impacts of business risks
-business failure= if they fail to plan for the future, may risk losing out to competitors
-failure in start-up plans= high costs + UK tax system
-financial risks for owners (entrepreneurial risks)
-lack of security for owners
142
impacts of business rewards
-business success= awards, fame, survival, growth, money
-keeps all the profit
-control= own boss= makes all the decisions
