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a2 business studies > BUSS3 Definitions > Flashcards

BUSS3 Definitions Flashcards

0
Q

Business unit strategy

A

How a business attempts to compete successfully in a particular market.

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1
Q

Aims/Goals

A

General statements of what a business intends to achieve. Precise details of those intentions are set out in objectives.

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2
Q

Corporate objectives

A

Objectives that relate to the business as a whole. Usually set by top management.

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3
Q

Corporate strategy

A

Concerned with the overall purpose and scope of the business activities. Used to achieve corporate objectives.

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4
Q

Cost leadership

A

A business strategy concerned with aiming to be the lowest-cost producer in an industry. Usually requires exploitation of economies of scale.

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5
Q

Functional objectives

A

Set for each major business department and designed to ensure that the corporate objectives are met.

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6
Q

Mission statement

A

A written description of the overall objectives and purposes of the business.

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7
Q

Shareholder value

A

Where shareholders earn a return from their investment which is greater than their required rate of return.

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8
Q

SMART objectives

A

Objectives that are more likely to be achieved because they are specific, measurable, achievable, realistic, and timed.

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9
Q

Social responsibility

A

The way in which a business meets its responsibilities to society as a key external stakeholder.

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10
Q

SWOT analysis

A

Assessment of the internal strengths and weaknesses, and the external opportunities and threats that the business needs to consider.

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11
Q

Targets

A

Similar to objectives. Targets are often set at an individual or team level.

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12
Q

Acid test ratio

A

Compares current assets, excluding stock, to current liabilities. Shows how much of what a business owes in the short term is covered by assets.

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13
Q

Asset turnover

A

A ratio that compares the sales revenue a business makes to the value of its total assets.

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14
Q

Assets

A

Amounts owned by, or owed to a business.

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15
Q

Average rate of return

A

A measure of the total accounting return from an investment project.

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16
Q

Balance sheet

A

The financial statement that provides a snapshot of the assets and liabilities of a business at a particular date.

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17
Q

Capital expenditure

A

Expenditure on assets which are intended to be kept in the business rather than sold or turned into products.

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18
Q

Cash flow targets

A

Specific objectives set by a business for cash flow generated by a business.

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19
Q

Corporation tax

A

The tax levied on the profits of companies. The percentage varies depending on the size of the profits earned. Typically 20-30%.

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20
Q

Cost minimisation

A

A strategy of achieving the most cost-effective way of delivering goods and services to the required level of quality.

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21
Q

Creditor/Payable days

A

A ratio that estimates the average period (in days) taken to settle amounts owed by a business to suppliers.

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22
Q

Current ratio

A

Compares current assets, including stock, to current liabilities.

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23
Q

Debentures

A

A long-term source of finance that has fixed interest rates and payback days.

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24
Q

Receivable days

A

Compares the average amount owed to a business by its debtors to the value of the total sales that it gives buyers credit for.

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25
Q

Depreciation

A

An accounting estimate of the fall in value of a fixed asset over time.

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26
Q

Discount factor

A

The multiplication factor that converts a projected cost or benefit in a future year into its present value.

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27
Q

Dividend

A

Amounts paid to shareholders out of the profits earned by a company.

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28
Q

Dividend yield

A

A measure of shareholder return. Calculated by comparing the dividend per share by the share price.

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29
Q

Fixed assets

A

Assets such as property, equipment and vehicles that are intended to be retained and used in a business for more than one year.

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30
Q

Gearing

A

The gearing ratio measures the proportion of assets in a business that are financed by borrowing.

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31
Q

Going concern

A

A business that is viable and able to continue in business for the foreseeable future.

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32
Q

Goodwill

A

An intangible asset that can be included in a balance sheet, it is the difference between the net assets of a business acquired and the price paid for the business.

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33
Q

Income statement

A

A financial statement that summarises the trading results of a business over a specific period. Usually one year.

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34
Q

Investment appraisal

A

Analytical techniques to help management evaluate the returns from potential investments, and to help choose between competing investments.

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35
Q

Liabilities

A

Amounts owed by a business to others.

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36
Q

Liquidity

A

The ability of a business to finance required payments to creditors.

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37
Q

Net present value

A

The present value of a series of future net cash flows that will result from an investment, minus the amount of the original investment.

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38
Q

Operating profit

A

The profit earned by a business from its entire trading operations. Stated before financing and tax.

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39
Q

Overtrading

A

Where a business suffers financial difficulties from expanding too quickly. Usually suffering set-up losses and increased working capital.

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40
Q

Payback period

A

The time it takes for a project to repay its initial investment.

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41
Q

Profit centres

A

A separately identifiable part of a business for which it is possible to identify revenues and costs and calculate a relevant profit.

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42
Q

Profit quality

A

The sustainability of profit from one period to the next. Higher quality profit is profit that is likely to be repeated rather than affected by one-off items.

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43
Q

Profitability

A

The amount of profit earned in a period or rate of profit earned compared with revenue.

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44
Q

Provisions

A

Amounts set aside to cover future costs or liabilities.

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45
Q

Ratio analysis

A

Interpretation of financial performance by calculating and interpreting ratios.

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46
Q

Retained earnings

A

Profits earned by a business that are kept in the business rather than distributed as dividends.

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47
Q

Revenue expenditure

A

Spending on day-to-day operation of the business. For example paying for materials.

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48
Q

Rights issue

A

The issue of new shares to existing shareholders in order to raise new finance. The new shares are usually offered at a significant discount to the existing share price to encourage take-up.

49
Q

ROCE

A

A measure of the percentage return that a business earns from the capital employed in the business. Often referred to as the “primary ratio”.

50
Q

Share capital

A

The amount invested into a company by shareholders.

51
Q

Shareholder returns

A

The rewards earned by shareholders. Dividends paid to them and any increase in the value of their shares.

52
Q

Stock turnover

A

A liquidity ratio that looks at how often a business rotates its stock during a year.

53
Q

Trade creditors

A

Amounts that a business owes to its suppliers.

54
Q

Trade debtors

A

Amounts that awe owed to a business from its customers.

55
Q

Working capital

A

The net amount invested by a business to finance day-to-day trading: usually calculated as current assets less current liabilities.

56
Q

Ansoff’s matrix

A

A strategic model for helping a business analyse the relationship between general strategic direction and suitable marketing strategies.

57
Q

Average

A

A term for various measures of central tendency, including the mean, mode and median.

58
Q

Competitive advantage

A

Skills, competences, resources and other advantages that enable a business to out-perform its competition.

59
Q

Correlation

A

A measure of how close the relationship is between an independent variable and a dependent variable.

60
Q

Customer relationship management (CRM)

A

The process of building a long-term, profitable relationship between a business and its customers.

61
Q

Diversification

A

Part of Ansoff’s Matrix. The relatively risky strategy of trying to enter new markets with new products.

62
Q

Extrapolation

A

The use of trends established by historical data to make predictions about future values.

63
Q

Growth rate

A

The percentage growth over a particular period. Market growth rates are typically quoted in terms of percentage growth per year.

64
Q

Market analysis

A

The process of analysing the size, structure and growth of a market in order to support marketing decisions.

65
Q

Market development

A

A growth strategy where the business seeks to sell its existing products into new markets. From Ansoff’s matrix.

66
Q

Market penetration

A

A relatively low-risk growth strategy where a business focuses on selling existing products into existing markets.

67
Q

Market share

A

The proportion of a market revenue or sales volume that is captured by a business or Brand.

68
Q

Marketing budget

A

Specific amounts that are allocated to activities in the marketing plan.

69
Q

Marketing plan

A

The actions that management intend to take via the marketing mix in order to achieve marketing objectives.

70
Q

Moving average

A

A calculation that takes a data series and smoothes the fluctuations in data to show a trend average.

71
Q

Product development

A

A growth strategy where a business aims to introduce new products into existing markets.

72
Q

Product positioning

A

The way in which the marketing function tries to create an image or identity in the minds of the target market.

73
Q

Repositioning

A

Changing the marketing mix for a product to appeal to a different market segment.

74
Q

Sales forecasting

A

Techniques for estimating the likely demand for a product in future periods.

75
Q

Target market

A

The market segment or segments which a business is attempting to enter with the chosen marketing mix.

76
Q

Test marketing

A

Launching a new product or service in a limited part of the target market in order to gauge the viability of the product and assess the most appropriate marketing mix.

77
Q

Trend

A

A general direction in which something tends to move.

78
Q

Capital intensity

A

The extent to which production or operations depend on investment in and use of capital.

79
Q

Critical path analysis

A

Project management tool that uses network analysis to help manage complex and time sensitive operations.

80
Q

Diseconomies of scale

A

Factors which result in higher unit costs as production output reaches too high a level.

81
Q

Economies of scale

A

Cost advantages that a business can exploit as a result of expanding its scale of production. Economies of scale reduce the average unit cost of production.

82
Q

Efficiency

A

A measure of the ability of a business to achieve the required level of production whilst minimising the use of resources being available to it.

83
Q

Industrial inertia

A

Where a business decides to stay in its existing location despite potentially better locations being available to it.

84
Q

Innovation

A

Putting a new idea or approach into action. The commercial exploitation of ideas.

85
Q

Just-in-time

A

Method of lean production where production resources arrive at the moment they are required rather than being held in stock.

86
Q

Kaizen

A

A cultural approach to lean production and quality assurance. Involves encouraging employees to constantly seek and implement small incremental changes to production in order to improve quality and efficiency.

87
Q

Labour intensity

A

The extent to which production or operations depend on investment in and use of labour.

88
Q

Labour productivity

A

The level of output per unit of labour.

89
Q

Lead time

A

The period of time between an order being placed and being received.

90
Q

Lean production

A

An approach to management that focuses on cutting out waste whilst still ensuring quality.

91
Q

Marketing economies

A

Where marketing costs per unit sold can be lowered by spreading marketing costs over larger output.

92
Q

Minimum efficient scale

A

The minimum output a business needs to achieve in order for it to be able to minimise unit costs.

93
Q

Multinational

A

A business which owns operations in more than one country.

94
Q

Network analysis

A

Breaking a project down into separate activities and their requirements.

95
Q

Offshoring

A

Where a business has work done for it overseas.

96
Q

Outsourcing

A

Where a business has work done for it by someone else.

97
Q

Productivity

A

Measures of how effective a business is in turning resources into output.

98
Q

Purchasing economies

A

Cost savings that arise from buying in bulk or from a more powerful relationship with a supplier due to increased output.

99
Q

Quota

A

A restriction on the volume or quantity of a good that can enter or be sold in a market.

100
Q

Scale

A

The size or output of a business, best measured relative to that of direct competitors.

101
Q

Unit costs

A

The key measure of productive efficiency, calculated as total costs divided by total output (over a specific period).

102
Q

Arbitration

A

An alternative to a court of law in determining legal and employment disputes. Involves a specialist outsider being asked to make a decision on a dispute.

103
Q

Centralisation

A

An organisational structure where authority rests with senior management at the centre of the business.

104
Q

Communication

A

The process by which a message or information is exchanged from a sender to a receiver.

105
Q

Conciliation

A

A way of mediating industrial disputes to gain agreement without going to arbitration.

106
Q

Core workers

A

Employees who are part of the core workforce of a business. Central to the business activities.

107
Q

Decentralisation

A

An organisational structure where authority is delegated further down the hierarchy, away from the centre.

108
Q

Delayering

A

The process of removing one or more layers from the organisational structure.

109
Q

Downsizing

A

The reduction in the scale and resources of a business, usually involving job losses and/or the sale or closure of business units.

110
Q

Flexible working

A

The range of employment options designed to help employees balance work and home live.

111
Q

Gap analysis

A

Analysis of the difference between the workforce needs of a business and its current capabilities.

112
Q

Hard HRM

A

An approach to HRM based on treating employees as resources in the same way as any other business resource.

113
Q

HRM

A

Strategies for managing people in order to achieve business objectives.

114
Q

Labour shortage

A

Where a business finds it does not have sufficient employees in number, or with the right skills and experience, for its needs.

115
Q

Peripheral workers

A

Employees who are on the fringe of the core workforce. They are not essential workers, and their activities can often be outsourced or provided using flexible contracting.

116
Q

Soft HRM

A

An approach to HRM based on treating employees as the most important resource in a business.

117
Q

Staff turnover

A

The proportion of staff that leave their employment with a business over a period, usually measured over a year.

118
Q

Team working

A

Individuals work in groups rather than focusing on their own specialised jobs.

119
Q

Trade union

A

Organisations of employees who seek to negotiate their employment terms through collective bargaining.

120
Q

Workforce planning

A

How a business determines how many and what kind of employees are required.

121
Q

Works council

A

A formal meeting of employer and employees to consider issues affecting the business and workplace.

a2 business studies (6 decks)

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