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Business > Definitions > Flashcards

Definitions Flashcards

1
Q

Profit

A

Total revenue is greater than total costs
To make more money than you spent

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2
Q

Mission

A

Overall purpose or main corporate aims

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3
Q

Mission statement

A

Tells you the purpose of a business.

Makes stakeholders aware of what the business does and why and to encourage all employees to work towards these aims

values, strategy, standards

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4
Q

Objectives

A

Helps enable them to achieve their missions

Turns the overall aims of the business into goals that must be met

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5
Q

Corporate objectives

A

Goals of the business as a whole
Depends on the size of a business

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6
Q

Functional objectives

A

Objectives of each department
More detailed and specific - helps achieve corporate objectives

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7
Q

Cash flow

A

Money that moves in and out of a business over a period of time

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8
Q

overtrading

A

business produces too much; they have to pay suppliers and staff so much that they’ll become insolvent before they get a chance to be paid by their customers

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9
Q

Ethical objectives

A

based on moral principles - how to treat people and the environment

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10
Q

Non - profit organizations

A

charities or social enterprises set to achieve social or ethical objectives

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11
Q

Revenue

A

Value of sales or turnover
Amount of money generated by sales of a product before deductions

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12
Q

Fixed costs

A

Don’t change with output

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13
Q

Variable costs

A

Change with output

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14
Q

Loss

A

Total costs are greater than total revenue

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15
Q

Large scale production

A

more output lowers cost per unit produced as FC are shared out between more items

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16
Q

Budgets

A

Forecasts how much costs are going to be over a year

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17
Q

Public sector

A

Owned and run by the government aim to provide services to the public - no profit

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18
Q

Private sector

A

owned and run by private individuals aim to make a profit but can also be non profit

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19
Q

Unlimited liability

A

The business and owner are seen as one under the law
Business debts are personal debts of the owner
Huge financial risk

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20
Q

Limited liability

A

Owner’s aren’t personally responsible for the debts of the business
Separate legal identity
Only lose the money you invest

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21
Q

Sole trader

A

Self employed and has full responsibility for the financial control of the business, meeting running costs and capital requirements
Has unlimited liability

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22
Q

Capital requirements

A

Money invested to set up a business or fund growth

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23
Q

Divorce of ownership and control

A

shares in a PLC can be owned by money - people who own the company don’t necessitate control over the company - controlled by directors

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24
Q

Ordinary share capital

A

shares sold by companies in order to raise money - LT investment

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25
Q

Dividend

A

Payment return for their investment
Proportion of the profits earned by the company paid to shareholders
Fixed amount per share

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26
Q

Market capitalization

A

Total value of all the ordinary shares issued by a company

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27
Q

Shareholder

A

Owns at least one share in a company

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28
Q

Majority shareholder

A

owns more than 50% of the shares
Has the most power in decision making

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29
Q

Capital gain

A

buy share prices when they are low and sell them when risen to make a profit

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30
Q

Interest rates

A

reward for saving and cost of borrowing

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31
Q

Fairtrade

A

Pay higher and fairer prices for products which improves standard of living for suppliers employees

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32
Q

Sweatshop

A

Factory where workers are forced to work long hours in poor conditions for low pay

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33
Q

Management

A

Telling people what to do and organizing resources to get the job done

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34
Q

Leadership

A

motivating and inspiring people - persuasion of decisions

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35
Q

Opportunity cost

A

Value of the next best alternative that’s been given up

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36
Q

Stakeholder

A

Anyone who is affected by a business and has a vested interest in what the business has to offer

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37
Q

Marketing

A

Identifies customer wants and needs and tries to anticipate future demand
Helps businesses earn profit
Research, planning, analysis and the marketing mix

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38
Q

Marketing mix

A

All the decisions a business makes about promoting and selling a product

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39
Q

Primary / secondary data

A

primary - new data
secondary - analyze data already available

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40
Q

Confidence intervals

A

A range of values you’re fairly sure the value for the population will lie within

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41
Q

Product line

A

related products - usually the same product different size, similar characteristics, use and target customers

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42
Q

Product portfolio / mix

A

combination of product lines a business produces - variety at different stages of the product life cycle

43
Q

Boston Matrix

A

compares market growth with market share - size of circle represents product sale value

44
Q

Cost plus pricing

A

price set to cover the cost of making the product and make a profit. added price is called the mark up

45
Q

price skimming

A

new and innovative products sold at high prices when they first reach the market.

46
Q

Penetration pricing

A

launching a product at a low price in order to attract customers and gain market share

47
Q

Predatory pricing

A

lower prices to force another business out of the market and later increasing pricing

48
Q

competitive pricing

A

companies monitor competitors price to set prices at an equal or lower level

49
Q

Psychological pricing

A

based on customer experiences - high price means high quality, insignificant price change can have a big psychological impact on the customer [£99.99 - £100]

50
Q

Loss leaders

A

products sold at or below cost price - indirect profits e.g. in supermarkets

51
Q

dynamic pricing

A

increase revenue by changing prices depending on competitor prices and demand e.g. train tickets

52
Q

Industrial marketing

A

B2B business to business

53
Q

Promotion

A

Inform customers about a product / service or persuade them to buy it

54
Q

Capacity utilization

A

Increasing output so it’s closer to the maximum amount of goods that firms could produce with current levels of staff and machinery

55
Q

Adding value

A

increasing the difference between the cost of the raw materials and the the price the customer pays - increases profit

56
Q

Job production

A

one off items by skilled workers

57
Q

Flow production

A

mass production on continuous production line with division of labor

58
Q

Batch production

A

small batches of identical items

59
Q

Cell production

A

divided into sets of tasks each completed by a work group

60
Q

Lean production

A

streamlined production with waste at a minimum

61
Q

Capacity

A

maximum output that is produced in a given period without buying any more fixed assets

62
Q

Outsource

A

Business uses another firm to do some work on its behalf - meet unexpected demand

63
Q

Productivity

A

output per worker in a given time period

64
Q

Efficiency

A

getting more outputs from a given number of inputs

65
Q

JIT Production

A

efficient stock control as there is reduced waste of materials and products by keeping stock low. supply is directly linked with demand

66
Q

Time based management

A

Reduce wasted time in production processes

67
Q

Lead time

A

Time between a customer placing an order and taking delivery

68
Q

Quality control

A

checking goods as you make them or when they arrive from suppliers

69
Q

Quality assurance

A

introducing measures into the production process to try and ensure things don’t go wrong in the first place, prevent errors

70
Q

Kaizen

A

employees should be slightly improving their work all the time

71
Q

Capital

A

wealth in the form of money or assets owned by a business

72
Q

capital expenditure

A

money spent to buy fixed assets

73
Q

Creditors

A

people who are owed money by the business

74
Q

debtors

A

people who owe the business money

75
Q

payable

A

money that the business owes

76
Q

receivables

A

money that is owed to the business

77
Q

sales and leaseback

A

sell equipment to raise capital and then lease (rent) the equipment back

78
Q

debt factoring

A

When banks and other financial institutions take unpaid invoices off the hands of the business and give them an instant cash payment.
The agent pays the business about 80% of the value of the invoice as an instant cash advance.

79
Q

Budgets

A

forecast future earnings and future spendings

80
Q

Income budget

A

forecasts amount of money that comes as revenue

81
Q

expenditure budget

A

predicts businesses total costs for the year - FC and VC

82
Q

variance

A

difference between actual figures and budgeted figures

83
Q

Break even output

A

Level of sales a business needs to cover its costs
break even point: costs = revenue

84
Q

Overdraft

A

where a bank lets a business have a negative amount of money in its bank account

85
Q

venture capitalist

A

funding in the form of a share or loan capital that is invested in a business that is thought to be high risk and has the potential to be successful.

86
Q

Hard HRM

A

employees seen as a resource, ST, motivated by money, training done to meet production needs

87
Q

Soft HRM

A

employees are the most important resource, LT, motivate workers through empowerment, training done to meet development needs

88
Q

delayering

A

removing parts of the hierarchy to create a flatter structure with wider spans of control

89
Q

delegation

A

giving responsibility for decision making to people below you

90
Q

Centralization

A

All decisions are made by senior managers at the top of the business

91
Q

decentralization

A

shares out authority to more junior employees

92
Q

Balance sheets

A

snapshot of a firms finance at a fixed point in time
show the value of all the businesses assets, liabilities, the value of all the capital and sources of capital

93
Q

Inventories

A

stock - unsold products

94
Q

net current assets

A

working capital available to spend for day to day spending

95
Q

depreciation

A

non current assets losing value over time

96
Q

investment

A

using capital to buy assets that will generate more revenue in the future

97
Q

Non current assets

A

assets the business is likely to keep for more than a year

98
Q

current assets

A

assets the business is likely to exchange for cash within the accounting year they include receivables and inventories

99
Q

current liabilities

A

debts that have to be paid off within a year they include overdrafts, payables, taxes and dividends

100
Q

Income statements

A

shows how much money has been coming into the company as revenue and how much has been going out as expenses

101
Q

liquidity

A

how easily an asset can be turned into cash and used to buy things.

102
Q

current ratio

A

Shows how solvent - able to pay debts a business is

103
Q

Inventory turnover

A

How many times during the year the business has sold all of its stock

104
Q

Gearing

A

shows potential investors where a businesses finance has come from through non current liabilities i.e. shareholders and borrowing. shows how vulnerable a business is to interest rates

Business (6 decks)

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