Business terms Flashcards
added value
selling price - cost of materials
appreciation of currency
rise in exchange rate / value
autocratic
managers take decisions without consulting employees
average cost
total cost / total units
balance sheet
shows value of business’s assets/liabilities on a particular date
batch production
made in groups of certain amount
board of directors
senior managers responsible for strategic decisions
brand
unique name/image/symbol that distinguishes a business from its competitors
brand image
reputation of business held by consumers
break-even
level of output at which total revenue = total costs, no loss or profit
business cycle
fluctuations in economic activity over time, growth boom recession slump
business objective
statement of a specific target that a business works towards
business partnership
two people jointly agree to own and run a business
capital employed
value of shareholders funds / owner’s equity + noncurrent liabilities
capital intensive
machinery is key resource, not labour
cash flow
amount of cash moving in and out of business over period of time
cash flow forecast
estimate of cash inflows and outflows on a monthly basis
chain of command
structure within a business in which instructions are passed down from senior management to lower levels of management
cost of sales
cost per unit x number of output
cost plus pricing
price is set by adding a fixed percentage of profit to the cost of making a product
crowd-funding
large number of people contribute small amounts of money to raise finance for a project
current assets
assets owned by a business that can be quickly converted into cash
customer loyalty
chances of return purchases
delegation
giving a subordinates the authority to perform a task / make a decision
dismissal
termination of employee by employer for either breaking company rules or not meeting requirements
dividends
payment of shareholders from profits of a company
e-commerce
buying and selling over the internet
economic boom
period of time when GDP and level of economic activity rising rapidly
economies of scale
reduction in average costs due to a large scale of operations
economy in recession
sustained reduction in GDP
entrepreneur
a person that organizes, manages, operates and takes the financial risk of opening a new business venture
exchange rate
value of one currency in terms of another
financial bonus
extra pay provided for performance exceeding the target
fixed costs
costs that do not change with output
flow production
large quantities of a standardised product are produced on a continuous production line
focus group
people who have similar characteristics to the target market give their opinions on a product / service
franchise
a business agreement based upon an existing brand name, in which the franchisee purchases a license fro ma franchiser, to sell the franchise’s products under its name
globalisation
process by which countries are connected due to the movement of goods, services, people and capital
GDP
total value of goods and services produced in a country in one year
import quota
limit on the number of goods allowed into a country
import tariff
taxes on goods brought into a country
income statement
a financial document that records the revenue, costs and profit for a given period of time
induction training
introduction given to new employees explaining the methods of the business and introducing them to other workers
inefficient
input:output ratio is low, not productive
internal communication
messages between employees working in the same organisation
inventory
amount of raw materials, work in progress, and finished goods, held by a business intended for sale
job description
outlines of responsibilities and duties expected to be done by someone employed to do a specific job
job enrichment
adding tasks that require higher skill / more responsibility
job production
single specialised product made at a time
joint venture
two or more businesses agree to start a new project together, sharing risk, capital, profits and resources
labour intensive
labour resource input is key resource
level of hierarchy
level of authority and responsibility in an organisation / business structure
limited company
business which has a separate legal identity to its owners
limited liability
liability of shareholders in a company is only limited to the amount they invested
liquidity
ability of a business to pay its short term debts and current liabilities using its current assets
made redundant
worker is no longer required through no fault of their own
managing director
overall senior director with general responsibility for the business as a whole
margin of safety
current level of output - break even output
market economy
an economy in which the government has no control over the factors of production
market orientated company
business that focuses on the needs and requirements of its customers through analysis of market research data, then developing a product
market research
process of collecting, recording, analysing and interpreting information about the customers, competitors and market for a product
market segment
identifiable sub-group of a whole market in which consumers have similar characteristics or preferences
market share
business sales / total market sales x 100
marketing
identifying and anticipating customer wants and providing it
marketing budget
financial plan for the marketing of a product for a specified period of time
marketing mix
blend of price, promotion, product and place, designed to attract customers
mass market
selling the same product to the whole market
micro-finance
financial loans to poor people not served by traditional banks
motivation
reason why employees want to work efficiently for the business
multinational company
business with operations in more than one county
net cash flow
cash inflow - cash outflow per month
net profit
total revenue - total costs
niche market
highly specialised subpart of a larger market
non-current assets
resources owned by a business which will be used for over a year
non-current liabilities
debts of a business payable after more than a year
off-the-job training
training away from workplace by specialist trainers
on-the-job training
training which involves watching a more experienced worker doing the job in the workplace
opportunity cost
benefit that could have been gained by an alternative use of the same resource
organisational structure
number of levels of management and divisions of responsibility within a business
overdraft
loan payable within 12 months
paid by time rate
receive a set amount of pay every hour worked
partnership
2 or more people who agree to own and run a business
piece rate
paid according to number of output produced
pressure group
group formed by people with a common interest to take action to influence business decisions and government policies
price elastic
% change in demand > % change in price
primary market research
collection of new data about potential and existing customers
primary sector
extraction of raw materials
private limited company
business whose shares only sold to family and friends
private sector
business activities are owned by individuals or groups of individuals
product orientated
business that focuses on making the product right then tries to find customers to buy it
productivity
output / input
public corporation
business that is owned and controlled by the government/state
public limited company
business whose shares can be sold to the general public
quality assurance
checking standards throughout production process at every stage
quality control
checking of goods at the end of the production process
retained profit
net profit reinvested back into business after tax and dividend
ROCE
profit / capital employed x 100
revenue
quantity sold x price per unit
rising inflation
increase in general prices over time
secondary market research
information about the market or competition that is already available
shareholder
owners of a limited company
social enterprise
business with both social objectives and aim to make a profit
sole trader
unincorporated business owned by one person
span of control
number of subordinates working and reporting directly to a manager
specialisation
work divided so each worker concentrates on a specific task and becomes expert at it / when people and businesses focus on what they’re best at
stakeholder group
group of people with a direct interest in the performance and activities of a business
sustainable development
business activity that has a positive overall impact on the environment and its stakeholders, ensuring its survival in the future
tertiary sector
industry which provides services to consumers
maturity stage
peak level of sales
total cost
fixed/indirect costs + variable/direct costs
trade receivables
amount of money owed by customers for goods bought on credit terms
trade union
group of workers who join together to ensure their interests are protected
variable cost
costs which change directly with the number of items produced
very competitive
market with a large number of businesses selling similar products
wholesaler
someone that buys and stores large quantities of several producers’ goods then breaks it into bulk deliveries to supply retailers with smaller quantities
working capital
current assets - current liabilities
