Business Vocab

Question 1

Advertising

Answer 1

A method of communicating information about the product; the business pays
for advertising time/space.

Question 2

Aim

Answer 2

The intention to reach a goal.

Question 3

Air pollution

Answer 3

The presence or introduction of harmful substances into the air causing disease,
allergies or damage to humans, animals, plants or the built environment.

Question 4

Asset

Answer 4

Something the business owns; it has a value.

Question 5

Average rate of return

Answer 5

The average profit for the year as a percentage of the original investment.
Average rate or return = average return per annum / initial X 100

Question 6

Boston matrix

Answer 6

A tool for analysing the contribution made by each product in a business’
product portfolio. It plots each product’s position according to its market share
and the rate of growth of the market.

Question 7

Brand image

Answer 7

The consumers’ perception of the brand; its character, qualities and
shortcomings. It is developed over time and operates as a consistent theme
through advertising campaigns.

Question 8

Break-even chart

Answer 8

The route the ownership of the product transfers from the seller to the buyer; it
may be a single transaction or pass through others such as wholesalers,
distributors, agents and retailer

Question 9

Break-even output

Answer 9

The point at which the business’ total sales equals the total costs. There is
neither profit nor loss.

Question 10

Break-even output

Answer 10

The point at which the business’ total sales equals the total costs. There is
neither profit nor loss.

Question 11

Buffer stock

Answer 11

A stock of raw materials held in reserve to protect the production process from
unforeseen shortages.

Question 12

Buffer stock

Answer 12

A stock of raw materials held in reserve to protect the production process from
unforeseen shortages.

Question 13

Business plan

Answer 13

A detailed statement of how the business intends to operate, either at start-up
or during a given period of time. Business plans are based on forecasts and so
cover only a short time.

Question 14

Cash

Answer 14

Money that the business has in cash or at the bank.

Question 15

Cash flow forecast

Answer 15

A financial planning tool that estimates the money coming into and going out of
the business on a month-by-month basis; it allows the business to predict times
when additional finance may be needed to maintain liquidity.

Question 16

Cash inflow

Answer 16

Money received by the business from its operations or investments.

Question 17

Cash outflow

Answer 17

Money paid out by the business to fund its operations or investment activities.

Question 18

Centralisation

Answer 18

Maintaining control by keeping authority at the senior levels of the organisation.

Question 19

Chain of command

Answer 19

The line through the hierarchy that shows who is responsible for whom from top
to bottom of an organisation.

Question 20

Channels of distribution

Answer 20

The route the ownership of the product transfers from the seller to the buyer; it
may be a single transaction or pass through others such as wholesalers,
distributors, agents and retailers.

Question 21

Closing balance

Question 22

Closing balance

Answer 22

The amount that remains in the account at the end of an accounting period.

Question 23

Commission

Answer 23

An amount of money paid to an employee that is based on a percentage of the
sales he/she achieved; paid in addition to a basic salary.

Question 24

Competition

Answer 24

The rivalry between businesses looking to sell their goods/services in the same
market.

Question 25

Competitive pricing

Answer 25

Setting the price of a product so that it is in line with competitors’ prices.

Question 26

Consumer law

Answer 26

Laws designed to ensure that businesses make products that are safe and of
good quality, and that they deal with customers honestly and fairly.

Question 27

Consumer spending

Answer 27

The money spent by households on goods and services to satisfy their needs and
wants.

Question 28

Contracts of employment

Answer 28

A legal document that sets out the terms and conditions of the job for the
employer and the employee.

Question 29

Cost

Answer 29

The money spent by a business on goods and services.

Question 30

Cost-plus pricing

Answer 30

Setting the price of a good or service at an amount higher than the cost of
producing it so that a profit is made.

Question 31

Customer

Answer 31

Individuals, businesses or organisations that purchase goods/services and make
decisions about which supplier to choose.

Question 32

Customer engagement

Answer 32

The relationship between the business and the customer that puts the
customer’s requirements at the centre of the operation to build brand loyalty.

Question 33

Customer loyalty

Answer 33

The likelihood that past customers will continue to buy from the business,
enhanced by high quality customer service and/or reward programmes.

Question 34

Customer satisfaction

Answer 34

Whether customers are pleased with the goods/services they receive; whether
they would purchase again.

Question 35

Decentralisation

Answer 35

Where authority is spread widely through the organisation.

Question 36

Delayering

Answer 36

The reorganisation of the organisation’s employees so that there are fewer levels
of management.

Question 37

Delayering

Answer 37

The reorganisation of the organisation’s employees so that there are fewer levels
of management.