Definitions Flashcards
1
Q
What is a need?
A
A need is a good or service essential for living.
2
Q
What is a want?
A
A want is a good or service which people would like to have but which is not essential for living. People’s wants are unlimited.
3
Q
What is the economic problem?
A
The economic problem is that there exist unlimited wants but limited resources to produce the goods and services to satisfy those wants creating scarcity.
4
Q
What are the factors of production?
A
Factors of production are those resources needed to produce goods and services. There are four factors of production and they are in limited supply.
5
Q
What is scarcity?
A
Scarcity is the lack of sufficient products to fulfill the total wants of the population.
6
Q
What is opportunity cost?
A
Opportunity cost is the next best alternative given up by choosing another item.
7
Q
What is specialization?
A
Specialization occurs when people and businesses concentrate on what they are best at.
8
Q
What is division of labour?
A
Division of labour is when the production process is split up into different tasks and each worker performs one of those tasks. It is a form of specialization.
9
Q
How do businesses combine factors of production?
A
Businesses combine the factors of production to make goods and services which satisfy people’s wants.
10
Q
What is added value?
A
Added value is the difference between the selling price and the cost of bought-in materials and components.
11
Q
What does the primary sector of industry do?
A
The primary sector of industry extracts and uses the natural resources of Earth to produce raw materials used by other businesses.
12
Q
What does the secondary sector of industry do?
A
The secondary sector of industry manufactures goods using the raw materials provided by the primary sector.
13
Q
What does the tertiary sector of industry do?
A
The tertiary sector of the industry provides services to consumers and other sectors of industry.
14
Q
What is de-industrialisation?
A
De-industrialisation occurs when there is a decline in the importance of the secondary manufacturing sector of industry in a country.
15
Q
What is a mixed economy?
A
A mixed economy has both a private sector and a public state sector.
16
Q
What is capital in business?
A
Capital is the money invested into the business by the owners.
17
Q
What is an entrepreneur?
A
An entrepreneur is a person who organizes operates and takes the risk for a new business venture.
18
Q
What is capital employed?
A
Capital employed is the total value of capital used in the business.
19
Q
What is internal growth in a business?
A
Internal growth occurs when a business expands its existing operations.
20
Q
What is external growth in a business?
A
External growth is when a business takes over or merges with another business also known as integration.
21
Q
What is a takeover?
A
A takeover or acquisition is when one business buys out the owners of another business which then becomes part of the ‘predator’ business.
22
Q
What is a merger?
A
A merger is when the owners of two businesses agree to join their businesses together to make one business.
23
Q
What is horizontal integration?
A
Horizontal integration is when one business merges with or takes over another one in the same industry at the same stage of production.
24
Q
What is vertical integration?
A
Vertical integration is when one business merges with or takes over another one in the same industry but at a different stage of production. Vertical integration can be forward or backwards.
25
What is conglomerate integration?
Conglomerate integration is when one business merges with or takes over a business in a completely different industry also known as diversification.
26
What is a sole trader?
A sole trader is a business owned by one person.
27
What is limited liability?
Limited liability means that the liability of shareholders in a company is limited to only the amount they invested.
28
What is unlimited liability?
Unlimited liability means that the owners of a business can be held responsible for the debts of the business they own; their liability is not limited to the investment they made.
29
What is a partnership?
A partnership is a form of business in which two or more people agree to own a business jointly.
30
What are unincorporated businesses?
Unincorporated businesses do not have a separate legal identity; sole traders and partnerships are unincorporated businesses.
31
What are incorporated businesses?
Incorporated businesses are companies that have separate legal status from their owners.
32
Who are shareholders?
Shareholders are the owners of a limited company. They buy shares which represent part-ownership of the company.
33
What are private limited companies?
Private limited companies are businesses owned by shareholders but they cannot sell shares to the public.
34
What are public limited companies?
Public limited companies are businesses owned by shareholders but they can sell shares to the public and their shares are tradable on the Stock Exchange.
35
What are dividends?
Dividends are payments made to shareholders from the profits after tax of a company; they are the returns to shareholders for investing in the company.
36
What is a franchise?
A franchise is a business based upon the use of the brand names promotional logos and trading methods of an existing successful business. The franchisee buys the license to operate this business from the franchisor.
37
What is a joint venture?
A joint venture is where two or more businesses start a new project together sharing capital risks and profits.
38
What is a public corporation?
A public corporation is a business in the public sector that is owned and controlled by the state government.
39
What are business objectives?
Business objectives are the aims or targets that a business works towards.
40
What is profit?
Profit is the total income of a business revenue minus total costs.
41
What is market share?
Market share is the percentage of total market sales held by one brand or business.
42
What is a social enterprise?
A social enterprise has social objectives as well as an aim to make a profit to reinvest back into the business.
43
What is a stakeholder?
A stakeholder is any person or group with a direct interest in the performance and activities of a business.
44
What is motivation in a business context?
Motivation is the reason why employees want to work hard and work effectively for the business.
45
What is a wage?
A wage is a payment for work usually paid weekly.
46
What is the time rate?
The time rate is the amount paid to an employee for one hour of work.
47
What is piece rate?
The piece rate is the amount paid for each unit of output.
48
What is salary?
Salary is payment for work usually paid monthly.
49
What is a bonus?
A bonus is an additional amount of payment above basic pay as a reward for good work.
50
What is commission?
Commission is a payment relating to the number of sales made.
51
What is profit sharing?
Profit sharing is a system whereby a proportion of the company's profits are paid out to employees.
52
What is job satisfaction?
Job satisfaction is the enjoyment derived from feeling that you have done a good job.
53
What is job rotation?
Job rotation involves workers swapping around and doing each specific task for only a limited time and then changing around again.
54
What is job enrichment?
Job enrichment involves looking at jobs and adding tasks that require more and/or responsibility.
55
What is team-working?
Team-working involves using groups of workers and allocating specific tasks and responsibilities to them.
56
What is training?
Training is the process of improving a worker's skills.
57
What is promotion in a business context?
Promotion is the advancement of an employee in an organisation for example to a higher job/managerial level.
58
What is organisational structure?
Organisational structure refers to the levels of management and division of responsibilities within an organisation.
59
What is an organisational chart?
An organisational chart refers to a diagram that outlines the internal management structure.
60
What is hierarchy in an organisation?
Hierarchy refers to the levels of management in any organisation from the highest to the lowest.
61
What is a level of hierarchy?
A level of hierarchy refers to managers supervisors or other employees who are given a similar level of responsibility in an organisation.
62
What is the chain of command?
The chain of command is the structure in an organisation which allows instructions to be passed down from senior management to lower levels of management.
63
What is the span of control?
The span of control is the number of subordinates working directly under a manager.
64
What are directors in a business?
Directors are senior managers who lead a particular department or division of a business.
65
What are line managers?
Line managers have direct responsibility for people below them in the hierarchy of an organisation.
66
What are supervisors?
Supervisors are junior managers who have direct control over the employees below them in the organisational structure.
67
What are staff managers?
Staff managers are specialists who provide support information and assistance to line managers.
68
What is delegation?
Delegation means giving a subordinate the authority to perform particular tasks.
69
What are leadership styles?
Leadership styles are the different approaches to dealing with people and making decisions when in a position of authority - autocratic democratic and laissez-faire.
70
What is autocratic leadership?
Autocratic leadership is where the manager expects to be in charge of the business and to have their orders followed.
71
What is democratic leadership?
Democratic leadership gets other employees involved in the decision-making process.
72
What is laissez-faire leadership?
Laissez-faire leadership makes the broad objectives of the business known to employees but then they are left to make their own decisions and organize their own work.
73
What is recruitment?
Recruitment is the process of identifying that the business needs to employ someone up to the point at which applications have arrived at the business.
74
What is job analysis?
Job analysis identifies and records the responsibilities and tasks relating to a job.
75
What is a job description?
A job description outlines the responsibilities and duties to be carried out by someone employed to do a specific job.
76
What is a job specification?
A job specification is a document which outlines the requirements qualifications expertise physical characteristics etc. for a specified job.
77
What is internal recruitment?
Internal recruitment is when a vacancy is filled by someone who is an existing employee of the business.
78
What is external recruitment?
External recruitment is when a vacancy is filled by someone who is not an existing employee and will be new to the business.
79
What is induction training?
Induction training is an introduction given to a new employee explaining the business's activities customs and procedures and introducing them to their fellow workers.
80
What is on-the-job training?
On-the-job training occurs by watching a more experienced worker doing the job.
81
What is off-the-job training?
Off-the-job training involves being trained away from the workplace usually by specialist trainers.
82
What is workforce planning?
Workforce planning is establishing the workforce needed by the business for the foreseeable future in terms of the number and skills of employees required.
83
What is dismissal?
Dismissal is when employment is ended against the will of the employee usually for not working according to the employment contract.
84
What is redundancy?
Redundancy is when the employee is no longer needed and so loses their job; it is not due to any aspect of their work being unsatisfactory.
85
What is a contract of employment?
A contract of employment is a legal agreement between an employer and an employee listing the rights and responsibilities of workers.
86
What is communication?
Communication is the transferring of a message from the sender to the receiver who understands the message.
87
What is a message in communication?
A message is the information or instructions being passed by the sender to the receiver.
88
What is internal communication?
Internal communication is communication between members of the same organisation.
89
What is external communication?
External communication is communication between the organisation and other organisations or individuals.
90
Who is the transmitter or sender of a message?
The transmitter or sender of the message is the person starting off the process by sending the message.
91
What is the medium of communication?
The medium of communication is the method used to send a message; for example a letter is a method of written communication and a meeting is a method of verbal communication.
92
Who is the receiver in communication?
The receiver is the person who receives the message.
93
What is feedback in communication?
Feedback is the reply from the receiver which shows whether the message has arrived been understood and if necessary acted upon.
94
What is one-way communication?
One-way communication involves a message which does not call for or require a response.
95
What is two-way communication?
Two-way communication is when the receiver gives a response to the message and there is a discussion about it.
96
What is formal communication?
Formal communication is when messages are sent through established channels using professional language.
97
What is informal communication?
Informal communication is when information is sent and received casually using everyday language.
98
What are communication barriers?
Communication barriers are factors that stop the effective communication of messages.
99
What is marketing?
Marketing is identifying customer wants and satisfying them profitably.
100
Who is a customer?
A customer is a person business or other organisation which buys goods or services from a business.
101
What is customer loyalty?
Customer loyalty is when existing customers continually buy products from the same business.
102
What are customer relationships?
Customer relationships are communicating with customers to encourage them to become loyal to the business and its products.
103
What is market share?
Market share is the percentage of total market sales held by one brand or business.
104
What is a consumer?
A consumer buys goods or services for personal use - not to re-sell.
105
What is a mass market?
A mass market is where there is a large number of sales of a product.
106
What is a niche market?
A niche market is a small usually specialised segment of a much larger market.
107
What is a market segment?
A market segment is an identifiable sub-group of a whole market in which consumers have similar characteristics or preferences.
108
What is market research?
Market research is the process of gathering analyzing and interpreting information about a market.
109
What is a product-orientated business?
A product-orientated business is one whose main focus of activity is on the product itself.
110
What is a market-orientated business?
A market-orientated business carries out market research to find out what consumer wants before a product is developed and produced.
111
What is the marketing budget?
The marketing budget is a financial plan for the marketing of a product or product range for some specific period of time. It specifies how much money is available to market the product or range.
112
What is primary research?
Primary research is the collection and collation of original data via direct contact with potential or existing customers.
113
What is secondary research?
Secondary research uses information that has already been collected and is available for use by others.
114
What is a questionnaire?
A questionnaire is a set of questions to be answered as a means of collecting data for market research.
115
What are online surveys?
Online surveys require the target sample to answer a series of questions over the internet.
116
What are interviews in market research?
Interviews involve asking individuals a series of questions often face-to-face or over the phone.
117
What is a focus group?
A focus group is a group of people who are representative of the target market.
118
What is a sample in market research?
A sample is a group of people who are selected to respond to a market research exercise such as a questionnaire.
119
What is a random sample?
A random sample is when people are selected at random as a source of information for market research.
120
What is a quota sample?
A quota sample is when people are selected on the basis of certain characteristics such as age gender or income as a source of information for market research.
121
What is the marketing mix?
The marketing mix is a term which is used to describe all the activities which go into marketing a product or service often summarized as the four Ps - product price place and promotion.
122
What is the USP?
The USP is the special feature of a product that differentiates it from the products of competitors.
123
What is a brand name?
A brand name is the unique name of a product that distinguishes it from other brands.
124
What is brand loyalty?
Brand loyalty is when consumers keep buying the same brand's products over others.
125
What does it mean to buy the same brand repeatedly?
It refers to consumer behavior where a buyer prefers the same brand again and again instead of choosing a competitor's brand.
126
What is brand image?
Brand image is an image or identity given to a product which gives it a personality of its own and distinguishes it from its competitors' brands.
127
What is packaging?
Packaging is the physical container or wrapping for a product. It is also used for promotion and selling appeal.
128
What does the product life cycle describe?
The product life cycle describes the stages a product will pass through from its introduction through its growth until it is mature and then finally its decline.
129
What is an extension strategy?
An extension strategy is a way of keeping a product at the maturity stage of the life cycle and extending the cycle.
130
What is cost-plus pricing?
Cost-plus pricing is the cost of manufacturing the product plus a profit mark-up.
131
What is competitive pricing?
Competitive pricing is when the product is priced in line with or just below competitors' prices to try to capture more of the market.
132
What is penetration pricing?
Penetration pricing is when the price is set lower than the competitors' prices in order to be able to enter a new market.
133
What is price skimming?
Price skimming is where a high price is set for a new product on the market.
134
What is promotional pricing?
Promotional pricing is when a product is sold at a very low price for a short period of time.
135
What is dynamic pricing?
Dynamic pricing is when businesses change product prices usually when selling online depending on the level of demand.
136
What is price elastic demand?
Price elastic demand is where consumers are very sensitive to changes in price.
137
What is price inelastic demand?
Price inelastic demand is where consumers are not sensitive to changes in price.
138
What is a distribution channel?
A distribution channel is the means by which a product is passed from the place of production to the consumer.
139
What is an agent in business terms?
An agent is an independent person or business that is appointed to deal with the sales and distribution of a product or a range of products.
140
What is promotion in marketing?
Promotion is where marketing activities aim to raise customer awareness of a product or a brand generating sales and helping to create brand loyalty.
141
What is advertising?
Advertising means paying for communication with potential customers about a product to encourage them to buy it.
142
What is informative advertising?
Informative advertising is where the emphasis of advertising or sales promotion is to give full information about the product.
143
What is persuasive advertising?
Persuasive advertising is advertising or promotion which is trying to persuade the consumer that they really need the product and should buy it.
144
What does target audience refer to?
Target audience refers to people who are potential buyers of a product or a service.
145
What are sales promotions?
Sales promotions are incentives such as special offers aimed at consumers to achieve short-term increases in sales.
146
What is a marketing budget?
A marketing budget is a financial plan for the marketing of a product or a product range for a specified period of time.
147
What is social media marketing?
Social media marketing is a form of internet marketing that involves creating and sharing content on social media networks in order to achieve marketing and branding goals.
148
What is viral marketing?
Viral marketing is when consumers are encouraged to share information online about the products of a business.
149
What is e-commerce?
E-commerce is the 'online' buying and selling of goods and services using computer systems linked to the internet and apps on mobile cell phones.
150
What is a marketing strategy?
A marketing strategy is a plan to combine the right combination of the four elements of the marketing mix for a product or a service to achieve a particular marketing objective.
151
What is productivity in operations management?
Productivity is the output measured against the inputs used to create it.
152
What is the buffer inventory level?
The buffer inventory level is the inventory held to deal with uncertainty in customer demand and deliveries of supplies.
153
What is lean production?
Lean production is a term for those techniques used by businesses to cut down on waste and therefore increase efficiency.
154
What does Kaizen mean?
Kaizen is a Japanese term meaning 'continuous improvement through the elimination of waste.
155
What is just-in-time production?
Just-in-time is a production method that involves reducing or virtually eliminating the need to hold inventories of raw materials or unsold inventories of the finished product.
156
What is job production?
Job production is where a single product is made at a time.
157
What is batch production?
Batch production is where a quantity of one product is made and then a quantity of another item will be produced.
158
What is flow production?
Flow production is where large quantities of a product are produced in a continuous process sometimes referred to as mass production.
159
What are fixed costs?
Fixed costs are costs which do not vary in the short run with the number of items sold or produced; they must be paid whether the business is making any sales or not.
160
What are variable costs?
Variable costs are costs which vary directly with the number of items sold or produced.
161
What are total costs?
Total costs are fixed and variable costs combined.
162
What is average cost per unit?
Average cost per unit is the total cost of production divided by total output.
163
What are economies of scale?
Economies of scale are the factors that lead to a reduction in average costs as a business increases in size.
164
What are diseconomies of scale?
Diseconomies of scale are the factors that lead to an increase in average costs as a business grows beyond a certain size.
165
What is the break-even point?
The break-even point is the level of sales at which total costs equal total revenue.
166
What is revenue in business?
The revenue of a business is the income during a period of time from the sale of goods or services.
167
What does quality mean in production?
Quality means to produce a good or service that meets customer expectations.
168
What is quality control?
Quality control is checking for quality at the end of the production process using quality inspectors to find any faults.
169
What is quality assurance?
Quality assurance is the checking for quality standards by employees throughout the production process.
170
What is start-up capital?
Start-up capital is the finance needed by a new business to pay for essential non-current and current assets before it can begin trading.
171
What is working capital?
Working capital is the finance needed by a business to pay for its day-to-day activities.
172
What is capital expenditure?
Capital expenditure is money spent on non-current assets which will last for more than one year.
173
What is revenue expenditure?
Revenue expenditure is money spent on day-to-day expenses which do not involve the purchase of a long-term asset such as wages or rent.
174
What is internal finance?
Internal finance is obtained from within the business itself.
175
What is external finance?
External finance is obtained from sources outside of and separate from the business.
176
What is micro-finance?
Micro-finance is providing financial services including small loans to poor people not served by traditional banks.
177
What is crowdfunding?
Crowdfunding is funding a project or venture by raising money from a large number of people who each contribute a relatively small amount typically via the internet.
178
What is cash flow?
The cash flow of a business is the cash inflows and outflows over a period of time.
179
What are cash inflows?
Cash inflows are the sums of money received by a business during a period of time.
180
What are cash outflows?
Cash outflows are the sums of money paid out by a business during a period of time.
181
What is a cash flow cycle?
A cash flow cycle shows the stages between paying out cash for labor materials and so on and receiving cash from the sale of goods.
182
What is profit?
Profit is the surplus after total costs have been subtracted from revenue.
183
What is a cash flow forecast?
A cash flow forecast is an estimate of future cash inflows and outflows of a business usually on a month-by-month basis.
184
What is net cash flow?
Net cash flow is the difference each month between inflows and outflows.
185
What is closing cash or bank balance?
Closing cash or bank balance is the amount of cash held by the business at the end of each month.
186
What is opening cash or bank balance?
Opening cash or bank balance is the amount of cash held by the business at the start of the month.
187
What are accounts in business?
Accounts are the financial records of a firm's transactions.
188
What are final accounts?
Final accounts are produced at the end of the financial year and give details of the profit or loss made over the year and the worth of the business.
189
What is an income statement?
An income statement is a financial statement that records the income of a business and all costs incurred to earn that income over a period of time.
190
What is the cost of sales?
The cost of sales is the cost of producing or buying the goods actually sold by the business during a time period.
191
What is gross profit?
A gross profit is made when revenue is greater than the cost of sales.
192
What is a trading account?
A trading account shows how the gross profit of a business is calculated.
193
What is net profit?
Net profit is the profit made by a business after all costs have been deducted from revenue.
194
What is depreciation?
Depreciation is the fall in the value of a fixed asset over time.
195
What is retained profit?
Retained profit is the net profit reinvested back into the company after deducting tax and payments to owners such as dividends.
196
What does the statement of financial position show?
The statement of financial position shows the value of a business's assets and liabilities at a particular time.
197
What are assets?
Assets are those items of value which are owned by the business. They may be non-current fixed assets or current assets.
198
What are liabilities?
Liabilities are debts owed by the business. They may be non-current liabilities or current liabilities.
199
What are non-current assets?
Non-current assets are items owned by the business for more than one year.
200
What are current assets?
Current assets are owned by the business and used within one year.
201
What are non-current liabilities?
Non-current liabilities are long-term debts owed by the business repaid over more than one year.
202
What are current liabilities?
Current liabilities are short-term debts owed by the business repaid in less than one year.
203
What is capital employed?
Capital employed is shareholders' equity plus non-current liabilities and is the total long-term and permanent capital invested in a business.
204
What is liquidity?
Liquidity is the ability of a business to pay back its short-term debts.
205
What is profitability?
Profitability is the measurement of the profit made relative to either the value of sales achieved or the capital invested in the business.
206
What does illiquid mean?
Illiquid means that assets are not readily convertible into cash.
207
What is GDP?
Gross Domestic Product (GDP) is the total value of the output of goods and services in a country in one year.
208
What is a recession?
A recession is when there is a period of falling GDP.
209
What is inflation?
Inflation is the increase in the average price level of goods and services over time.
210
What is unemployment?
Unemployment exists when the people who are willing and able to work cannot find a job.
211
What is economic growth?
Economic growth is when a country's GDP increases; more goods and services are produced than in the previous year.
212
What does balance of payments record?
Balance of payments records the difference between a country's exports and imports.
213
What is real income?
Real income is the value of income and it falls when prices rise faster than money income.
214
What are exports?
Exports are goods and services sold from one country to another country.
215
What are imports?
Imports are goods and services bought by one country from other countries.
216
What is the exchange rate?
The exchange rate is the price of one currency in terms of another.
217
What is exchange rate appreciation?
Exchange rate appreciation is the rise in the value of a currency compared with other currencies.
218
What is exchange rate depreciation?
Exchange rate depreciation is the fall in value of a currency compared with other currencies.
219
What is fiscal policy?
Fiscal policy is any change by the government in tax rates or public sector spending.
220
What are direct taxes?
Direct taxes are paid directly from incomes e.g. income tax or profits tax.
221
What are indirect taxes?
Indirect taxes are added to the prices of goods and taxpayers pay the tax as they purchase the goods e.g. VAT.
222
What is disposable income?
Disposable income is the level of income a taxpayer has after paying income tax.
223
What is an import tariff?
An import tariff is a tax on an imported product.
224
What is monetary policy?
Monetary policy is a change in rates by the government or central bank.
225
What are supply-side policies?
Supply-side policies aim to increase supply and make the economy more efficient.
226
What are private costs?
Private costs of an activity are the costs paid for by a business or the consumer of the product.
227
What are private benefits?
Private benefits of an activity are the gains to a business or the consumer of the product.
228
What are external costs?
External costs are costs paid for by the rest of society other than the business as a result of business activity.
229
What are external benefits?
External benefits are the gains to the rest of society other than the business as a result of business activity.
230
What is globalisation?
Globalisation is the term used to describe increases in worldwide trade and movement of people and capital between countries.
231
What is sustainable development?
Sustainable development refers to development that meets the needs of the present without compromising the ability of future generations to meet their own needs.
232
What are free trade agreements?
Free trade agreements exist when countries agree to trade imports/exports with no barriers such as tariffs or quotas.
233
What is protectionism?
Protectionism is when a government protects domestic businesses from foreign competition using tariffs and quotas.
234
What are multinational businesses?
Multinational businesses are those with factories production or service operations in more than one country.
