Business Paper 3 Vocab Flashcards
Break-even
When a business generates just enough revenue to cover its total costs.
Corporation Aim
The specific goal a corporation hopes to achieve
Corporate Objectives
The objectives of a medium to large sized business as a whole
Departmental and functional objectives
The objectives of a department within a business.
Hierarchy
The order or levels of responsibility in an organisation, from lowest to highest
Mission Statement
A brief statement written by the business, describing its purpose and objectives, designed to cover its present operations.
Objective
A target of or outcome for a business that allows it to achieve its aims.
Shareholder
Somebody who owns shares in a company or business.
SMART
Acronym for the attributes of a good objective. Specfic, Measurable, Agreed, Realistic and Time-specific.
Stakeholder
Somebody who has invested money in a business or has an important connection with it. They are therefore affected by the success/failure of the business
Vision
A view of what the corporation wants to be like in the future.
Corporate strategy
The plans and polices developed to meet a company’s objectives.
Customer base
A group of customers that make continual purchases from a business.
Diversification
Developing new products in new markets.
Market Development
The marketing of exisiting products in new markets.
Market Penetration
Using tactics such as the marketing mix to increase the growth of existing products in an existing market.
Portfolio Analysis
A method of categorising all the products of a firm to decide where each one fits within the strategic plans.
Product Development
Marketing new or modified products in existing markets.
Theoretical model
A situation that could exist.
External Audit
An audit of the external environment in which a business finds itself, such as the market within which it operates or government restrictions on its operations.
Flotation
The sale of company shares to the public for the first time. The shares are then traded on the stock market
Internal audit
An analysis of the business itself and how it operates.
Strategic Planning
A process which involves making the vision for the future of the business easier to understand. It also involves identifying the goals that need to be achieved in order to realise that vision.
SWOT Analysis
An analysis of the internal strengths and weaknesses of the business and the opportunities and threats presented by its external environment.
Trade Association
An organisation whose members are all involved in the same industry or trade. The organisation pursues the interests of these businesses.
Cartel
A group of businesses that act together to reduce the competition in a market - by fixing prices, for example
Peer-to-Peer Lending (P2P)
Providing loans to individuals or businesses through online services that match lenders and borrowers.
PESTLE Analysis
Analysis of the external political, economic, social, technological, legal and environmental factors affecting a business.
Predatory Pricing
Setting a low price to force rivals out of business.
Rivalry
The competition that exists between businesses operating in the same market.
Diseconomies of Scale
Rising long-run average costs as a business expands beyond its minimum efficient scale.
Inorganic Growth
A business growth strategy that involves two (or more) businesses joining together to form one much larger one
Economies of Scale
The reductions in average costs experienced by a business as output increases.
External Economies of Scale
The cost reductions available to all businesses as the industry grows.
Internal Economies of Scale
The cost reductions experienced by a single business as it grows
Minimum Efficient Scale
The output that minimises long-run average costs
Organic Growth
A business growth strategy that involves a business growing gradually using its own resources
Sole Trader
A business organisation which has a single owner
Venture Capitalist
Provider of funds for small- or medium-sized companies that may be considered too risky for other investors
Backward Vertical Integration
Joining with a business in the previous stage of production
Franchising
A business model where a business owner allows another person to trade under their name.
Retained Profit
After tax that is ‘ploughed back’ into the business.
Stake
A financial interest in a business which entitles the investor to part-ownership.
Acquisition
The purchase of one company by another
Conglomerate
A very large single business organisation made up of many different businesses through unrelated products.
Forward Vertical Integration
Joining with a business in the next stage of production
Horizontal Integration
The joining of businesses that are in exactly the same line of business
Integration
The joining together of two businesses as a result of a merger or takeover
Merger
Occurs when two (or more) businesses join together and operate as one
Synergy
The combining of two or more activities or businesses which creates a better outcome than the sum of the individual parts
Takeover
The process of one business buying another vertical integration the joining of two businesses at different stages of production
Overtrading
A situation where a business does not have enough cash to support its production and sales, usually because it is growing too fast.
Centring
A method used to calculate the moving average, where the average is plotted or calculated in relation to the central figure.
Correlation
The relationship between two sets of variables
Correlation Coefficient
A measure of the extent of the relationship between two sets of variables.
Extrapolation
Forecasting future trends based on past data.
Line of Best Fit
A straight line down through the centre of a group of data points plotted on a scatter graph.
Moving Average
A succession of averages derived from successive segments of a series of values.
Time-Series Analysis
A method that allows a business to predict future levels from past figures.
Average Rate of Return (ARR)
A method of investment appraisal that measures the net return per annum as a percentage of its initial spending.
Capital Cost
The amount of money spent when setting up a new venture.
Cash inflow
The cash coming into the business.
Cash outflow
The cash going out of the business.
Discounted Cash Flow (DCF)
A method of investment appraisal that takes interest rates into account by calculating the present value of future income.
Investment
The purchase of capital goods.
Investment Appraisal
The evaluation of an investment project to determine whether or not it is likely to be worthwhile.
Net Cash Flow
Cash inflows minus cash outflows.
Net Present Value (NPV)
The present value of future income from an investment project, minus the cost.
Opportunity Cost
When choosing between different alternatives, the opportunity cost is the benefit lost from the next best alternative to the one that has been chosen.
Payback Period
The amount of time it takes to recover the cost of an investment project.
Qualitative
Data expressed through words which conveys attitudes, opinions and feelings
Quantitative
Data expressed through numbers.
Back Data
Data obtained from a previous time period chance node a point on a decision tree diagram (represented by a circle) where a number of outcomes are possible
Decision Tree
A technique which shows all possible outcomes of a decision. The name comes from the similarity of the diagrams to the branches of trees
Expected Value
The numerical value of an outcome multiplied by the probability of that outcome happening
Probability
The chances of an event happening
Rollback Technique
The process of working back through a decision tree (from right to left) calculating the expected values at each node
Critical Path
The tasks involved in a project, which if delayed, could delay the project.
Critical Path Analysis
A method of calculating the minimum time required to complete a project, identifying delays which could be critical to its completion.
Earliest Start Time (EST)
How soon a task in a project can begin. It is influenced by the length of time taken by tasks which must be completed before it can begin.
Free Float
The time by which a task can be delayed without affecting the following task.
Latest Finish Time (LFT)
The latest time that a task in a project can finish.
Nodes
Positions in a network diagram which indicate the start and finish times of tasks.
Total Float
The time by which a task can be delayed without affecting the time needed to complete the project.
Contribution
The amount of money left over from a sale after variable costs have been subtracted from revenue. The money contributes to fixed costs and profit.
Contribution Pricing
A pricing strategy that involves setting a price that exceeds the value of the variable cost.
Overheads
An overhead cost or expense such as lighting, equipment and any extras paid for out of a centralised budget.
Total Contribution
The amount of money left over from the sale of several units, or an order, after variable costs have been covered.
Unit Contribution
The amount of money left over from the sale of a single unit after variable costs have been covered.
Infrastructure
The basic physical and organisational structures and facilities (e.g. buildings, roads, power supplies) needed for the operation of a society or enterprise
Multinational
A business organisation operating in several countries
Organisational Culture
The values, attitudes, beliefs, meanings and norms that are shared by people and groups within an organisation
Strong Culture
A culture where the values, beliefs and ways of working are deeply fixed within the business and its employees
Labour Turnover
The rate at which employees leave a business
Weak Culture
a culture where workers are not fully aligned to the values, beliefs and ways of working of an organisation
Dividend
A sum of money paid regularly (typically annually) by a company to its shareholders out of its profits (or reserves)
Remuneration
The reward for work in the form of pay, salary or wages, including allowances and benefits, such as company cars, health insurance, etc.
Shareholder Value
A measure of company performance that combines the size of dividends with the share price
Audit
An official inspection of an organisation’s accounts, typically by an independent body.
Business Ethics
The moral principles that guide the way in which a business behaves
Corporate Social Responsibility
A business assessing and taking responsibility for its effects on the environment and its impact on social welfare.
Ethical Codes of Practice
Statements about how employees in a business should behave in particular circumstances where they experience ethical issues
Ethics
Moral rules or principles of behaviour that should guide members of a profession or organisation and make them deal honestly and fairly with each other and with their stakeholders.
National minimum wage
The minimum pay per hour all workers are entitled to by law
Living Wage
An hourly rate of pay based on the basic cost of living, set independently of government and updated annually
Solvency
The ability of a business to meet its debts
Absenteeism
Where workers fail to turn up for work without good reason.
Capital Gain
The profit made from selling a share for more than it was bought for
Consultation
Listening to the views of employees before making key decisions that affect them
Labour Productivity
Output per worker in a given time period labour retention.
Quality Circles
where workers are given time to meet regularly to discuss work issues such as solving problems
Labour Retention
The number of employees who remain in a business over a period of time
Insolvency
The state of being unable to pay the money owed, by a person or company, on time.
Transformative Leadership
Where new leadership brings about change with the purpose of improving business performance.
