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Eduqas A Level Business > Component 1 Business Opportunities Key Terms > Flashcards

Component 1 Business Opportunities Key Terms Flashcards

1
Q

101 Enterprise

Enterprise

A

Another name for a business.
Having the skill and taking the initiative and the risk to make a business happen.

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2
Q

101 Enterprise

SME

A

A small to medium sized business that usually has fewer than 50 employees but no more than 250.

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3
Q

101 Enterprise

Needs

A

People have a limited number of needs that must be satisfied if they are to survive.
These would include physical needs such as a minimum amount of food, water, shelter and clothing.

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4
Q

101 Enterprise

Wants

A

Wants are unlimited (infinite) people constantly aim for a better quality of life.
For example, better/more food, better housing, longer holidays, better education, entertainment – in effect any example that is not a basic need.

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5
Q

101 Enterprise

Entrepreneur

A

An entrepreneur is someone who starts and runs a business.
Perhaps he or she makes a product and then sells that product, or perhaps they provide a service.
They quite possibly employ people and, of course, try to make a profit.

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6
Q

101 Enterprise

Primary Sector

A

Produces raw materials, e.g. iron ore (that goes into making steel) and oil (that makes petrol, plastics, etc.), as well as producing final products like fish and oranges.

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7
Q

101 Enterprise

Secondary Sector

A

Manufacturing and construction industries make, build and assemble products.

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8
Q

101 Enterprise

Tertiary Sector

A

Services give value to people but are not physical goods. Services are sometimes classified as direct services (to people), e.g. the police, hairdressing, etc. and commercial services (to business), e.g. business insurance, financial services, etc.

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9
Q

102 Business Plans

Business Plan

A

A statement that outlines the way in which a business will attempt to achieve its objectives - giving a clear idea of its operation and direction.

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10
Q

102 Business Plans

Executive Summary

A

This provides an overview of the business’s aims, objectives and strategy, and is evidence that the proposal is viable.
It sets out how the business is going to be run.

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11
Q

102 Business Plans

The Marketing Plan

A

Important part of any business plan based on both field and desk research. Market research carried out needs, if possible, to establish the size of the market, the needs of the customers
and the level of competition.
When market research findings have been examined then the marketing plan can be prepared.

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12
Q

102 Business Plans

The Operations Plan

A

Include details of where the business will
be located, production methods and any
equipment needed. Plus, information on the
costs of production and where the business will
buy supplies may be included.

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13
Q

102 Business Plans

The Human Resources Plan

A

The number of employees and the skills, experience and qualifications they require will be outlined.
Any management team will also be
identified.

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14
Q

102 Business Plans

The Financial Plan

A

A variety of forecasting will be necessary:
* a sales forecast indicating potential revenues * a cash flow forecast for the first 12 months
* a profit and loss and balance forecast for the end of the first year
* a break-even analysis.

In addition, information on where the finance for starting and running the business will come from, indicating the available start-up capital as well as any potential borrowing.

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15
Q

103 Markets

Market

A

A meeting place between buyers and sellers where goods and services are exchanged, usually for money.

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16
Q

Competition

A

Competition refers to the number of businesses in a market

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17
Q

103 Markets

Mass Market

A

Mass marketing involves a business aiming products at a whole market, rather than particular parts of them, for example, tomato ketchup, tea bags, ITV, Vauxhall Astra, washing powder

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18
Q

103 Markets

Niche Market

A

A niche market is a specialized market segment where you cater for the demand for products/services that are not currently being supplied by the main suppliers.

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19
Q

103 Markets

Market Size

A

The total number of sales, by value or volume, in a market as a whole.

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20
Q

103 Markets

Market Share + Formula

A

This measures the sales of a firm
relative to the market size.

It is calculated by:

Sales of a business
Total Sales in a Market x 100

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21
Q

103 Markets

Market Segmentation

A

Market segmentation is breaking down a market into sub-groups that share similar characteristics.
Identifying and targeting of groups of people with similar needs and developing products or services for each of them.

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22
Q

103 Markets

Monopoly

A

A single producer within a market – one business has 100% of the marketplace. This is known as a pure monopoly.

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23
Q

103 Markets

Oligopoly

A

There are many businesses but only a few dominate the market.

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24
Q

103 Markets

Monopolistic Competition

A

The situation in a market in which elements of monopoly allow individual producers or consumers to exercise some control over market prices.

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25
Q

103 Markets

Perfect Competition

A

A market in which many small firms produce virtually identical products at similar prices. With the ability to enter and leave the market freely. They don’t earn excessive profits.

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26
Q

103 Markets

Consumer Protection

A

The relationship between consumers and producers is not a relationship that is based on a level playing field. The advantage in almost all purchasing and consumption situations lies with big business.

Consumers are protected by:

Sale and Supply of Goods Act 1994 -
Consumer Credit Act 1974
Trade Descriptions Act 1968 and 1972
Distance Selling Regulations

^ You do not need to know all definitions of each of these laws

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27
Q

103 Markets

Supply

A

The amount of a product that suppliers will offer to the market at a given price.

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28
Q

103 Markets

Demand

A

The amount of a product that consumers are willing and able to purchase at any given price.

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29
Q

103 Markets

Market Equilibrium

A

In a free market, demand and supply equal the equilibrium price. This is the price where quantity demanded is equal to quantity supplied.

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30
Q

103 Markets

Price Elasticity of Demand + Formula

A

Measures the sensitivity of demand to a change in price.

Percentage change in quantity demanded/Percentage change in price

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31
Q

103 Markets

Price Elastic

A

A product where a proportionate
increase or decrease in price leads to a
proportionately greater increase or decrease in the quantity sold, i.e. its elasticity is greater than one.

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32
Q

103 Markets

Price Inelastic

A

Where a proportionate change
in a products price leads to a proportionately
smaller change in the quantity sold, i.e.
elasticity is greater than zero but less than
one.

Such products tend to have high product
differentiation, meaning that consumers
perceive them as having no acceptable
substitutes.

33
Q

103 Markets

Income Elasticity of Demand + Formula

A

Measures how sensitive demand is to a change in income.
Percentage change in quantity demanded/Percentage change in income

34
Q

103 Markets

Income Elastic

A

A product where a proportionate
increase or decrease in income leads to
proportionately greater increase or decrease in the quantity sold

35
Q

103 Markets

Inferior Goods

A

These are cheap substitutes of products people prefer to buy when their income is reduced (such as value line baked beans): negative income elasticity.

36
Q

103 Markets

Normal Goods

A

As real incomes increase, the demand for normal goods will also increase: positive income elasticity less than one.

37
Q

103 Markets

Luxury Goods

A

The demand for luxury goods will grow at a faster rate than the increase in real income that created the change in demand: positive income elasticity that is greater than one

38
Q

104 Market Research

Market Research

A

The process of gathering
primary and secondary data on the buying habits, lifestyles, usage and attitudes of actual
and potential customers.

39
Q

104 Market Research

Primary Research

A

(Field research) – collecting primary
data and information that does not already exist.
It is collected for a specific purpose.
Most primary information is gathered through questionnaires, interviews, surveys, focus groups and consumer panel.

40
Q

104 Market Research

Secondary Research

A

Desk research) – identifies, collects
and collates information that is already in existence.
This can be collected internally
or externally.
It may be existing business documents, official publications, yellow pages, industry magazines and online desk research.

41
Q

104 Market Research

Quantitative Data

A

Involves the collection of data that
can be measured. This means the collection
of statistical data such as sales figures and
market share.

42
Q

104 Market Research

Qualitative Data

A

Involves collection of data about attitudes, beliefs, and intentions. Focus groups, participant observation and interviews are common methods used to collect qualitative data.

43
Q

104 Market Research

Sample

A

A group of respondents to a market
research exercise who are selected to be representative of the views of the target market as a whole.

44
Q

104 Market Research

Quota Sampling

A

The population is segmented
into a number of groups that share specific characteristics

45
Q

104 Market Research

Random Sampling

A

Every member of the population has
an equal chance of being interviewed.

46
Q

104 Market Research

Bias

A

Something that may cause data
within a sample to be weighted towards one side.
Such statistical bias occurs when one subgroup outweighs the other in a sample.

47
Q

105 Business Structure

Private Sector

A

The private sector includes all these businesses that are set up by individuals or groups of individuals, e.g. sole traders, partnerships, companies, charities and cooperatives.

48
Q

105 Business Structure

Public Sector

A

The public sector is essentially business activity that is owned/ run by the government for the benefit of everyone, e.g. army, police force, schools, hospitals.

49
Q

105 Business Structure

Sole Traders

A

Owned and run by one individual but they may employ people.
They have unlimited liability.

50
Q

105 Business Structure

Partnerships

A

Owned and run between 2–20 people.
They have unlimited liability.

51
Q

105 Business Structure

Unlimited Liability

A

Where the owners become personally liable for the debts of the business. They are at risk of having personal assets (house, car) seized to pay off debts.

52
Q

105 Business Structure

Private Limited Company (Ltd)

A

Often a small business.
Shares do not trade on the stock exchange.
They have limited liability.

53
Q

105 Business Structure

Public Limited Company (PLC)

A

Is usually a large, well-known business. Shares trade on the stock exchange. They have limited liability.

54
Q

105 Business Structure

Limited Liability

A

The investor/owner is seen as separate to the company (incorporated).
This means they are only liable to the investment in the business.
Personal assets are not at risk to pay debts.

55
Q

105 Business Structure

Social Enterprises

A

Social enterprises include for-profit and not-for-profit businesses (e.g. cooperatives) with primarily social objectives, trading for social and environmental purposes.

56
Q

105 Business Structure

Charities

A

A non-profit-making organisation established with the aim of collecting money from individuals and spending it on a cause, which is usually specified in its title.

57
Q

105 Business Structure

Stakeholders

A

A stakeholder is anyone with an interest in a business. Stakeholders are individuals, groups or organisations that are affected by the activity of the business.

58
Q

106 Business Location

Location

A

Location for new and existing
businesses is still largely determined by:
* access to customers
* access to factors of production
* minimisation of costs.

59
Q

106 Business Location

Infrastructure

A

Infrastructure used to mean roads, rail and shipping.
However, a more modern definition includes electronic communication systems, training agencies and financial services.

60
Q

107 Business Finance

Sale of Assets

A

Established businesses are able to sell off assets that are no longer required, such as buildings and machinery

61
Q

107 Business Finance

Debt Factoring

A

Selling 80-85% of your debt to a third party who then ‘owns your debt’ and chases it up for their own profitable interests.

62
Q

107 Business Finance

Retained/Re-Invested profit

A

Where a business used profits made at the end of the financial year and reinvest them back into the business to fund expenses.

63
Q

107 Business Finance

Share Issue

A

A share issue is the offering for sale of new shares of ownership in a business.

64
Q

107 Business Finance

Overdraft

A

An overdraft is the facility to withdraw more from an account than is in the bank account, resulting in a negative balance

65
Q

107 Business Finance

Bank Loan

A

A loan is borrowing a fixed amount, for a fixed period. Payments made up of interest and capital are made monthly.

66
Q

107 Business Finance

Trade Credit

A

This is an interest-free way to raise finance. Businesses buy items such as fuel and raw material and pay for them at a later date – possibly 30–90 days later.

67
Q

107 Business Finance

Leasing Assets

A

Leasing and hire purchase are methods of gaining the use of capital goods, whilst paying a monthly fee.
With a business lease the company gains use of a productive asset, without ever owning it.

68
Q

108 Revenue and Costs

Revenue

A

Revenue is the money a business makes from sales. The total amount of money a business receives from its sales is called total revenue.

Total revenue = quantity sold x selling price

69
Q

108 Revenue and Costs

Profit

A

The amount left after a business subtracts total costs from the revenue they generate from selling products to customers.

Calculation: Total Revenue – Total Costs

70
Q

108 Revenue and Costs

Fixed Costs

A

Do not vary with output. Fixed costs only change in the long run.

71
Q

108 Revenue and Costs

Variable Costs

A

Costs that vary in direct proportion to changes in output.

72
Q

108 Revenue and Costs

Semi Variable Costs

A

Costs that contain both fixed and variable elements, such as telephone charges where there is a fixed standing charge plus an extra rate that varies according to the number of calls mad.

73
Q

108 Revenue and Costs

Direct Costs

A

Costs that arise specifically from the production of a product or the provision of a service

74
Q

108 Revenue and Costs

Indirect Costs (Overheads)

A

Costs not directly related to production.

75
Q

108 Revenue and Costs

Total Costs

A

Fixed Costs + Variable Costs + Semi-Variable Costs

76
Q

108 Revenue and Costs

Contribution

A

It is the difference between the income generated from sales and the variable costs of producing the goods to generate those sales.
Selling price – variable cost per unit

This allows an organisation to analyse whether each of its products covers its own variable costs.

77
Q

108 Revenue and Costs

Breakeven

A

A diagram that shows the level of output where a business does not make a profit nor a loss.

Fixed Costs/Contribution (Selling Price – Variable Cost per unit)

78
Q

108 Revenue and Costs

Margin of Safety

A

The margin of safety shows how much a producer can reduce output before the business starts to make a loss.

Actual output – Break-even output

Eduqas A Level Business (5 decks)

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