F291 Flashcards
What are the four inputs into a business?
Capital, enterprise, land and labour
Define entrepreneur.
Someone who makes a business idea happen, either through their own effort, or by organising others to do the work
Define opportunity cost.
The cost of the next best alternative foregone
Define stakeholder.
Any person or group of people who have a direct interest in the business
Define strategic decisions.
Decisions that concern the long-term objectives and overall plans of a business, and are taken by senior management and directors
Define tactical decisions.
Short- or medium-term decisions made on a day-to-day basis, such as ordering stock and planning production schedules
Define cash flow forecast.
Estimating future monthly cash inflows and outflows, to find out the net cash flow
Define collateral.
An asset used as security for a loan. It can be sold by a lender if the borrower fails to pay back a loan
Define negative cash flow.
When cash outflows are greater than inflows
Define overtrading.
When a firm expands without adequate and appropriate funding
Define public limited company.
A company with limited liability, and shares that are available to the public. Its shares can be quoted on the stock market
Define share capital.
Business finance that has no guarantee of repayment or of annual income, but gains a share of the control of the business and its potential profit
Define stock market.
A market for buying and selling company shares. It supervises the issuing of shares by companies. It is also a secondhand market for stocks and shares
Define venture capital.
High-risk capital invested in a combination of loans and shares, usually in a small, dynamic business
Define employment tribunal.
An informal courtroom where legal disputes between employees and employers are settled
Define external recruitment.
Where a job vacancy is filled by appointing a candidate from outside the business
Define induction training.
Familiarises newly appointed workers with key aspects of their jobs and their employer, such as health and safety policies, holiday entitlement and payment arrangements. The aim is to make employees productive as soon as possible
Define internal recruitment.
Where a job vacancy is filled by appointing someone from the existing workforce
Define job description.
A document that outlines the duties and responsibilities associated with a particular job role
Define labour market failure.
The reluctance of employers to invest in training for fear that staff, once trained, will be poached by other firms attempting to avoid training costs. If sufficient firms are discouraged from training employees, overall skill levels within the workforce will fall, leading to a loss of competitiveness for the economy as a whole
Define National Minimum Wage.
The lowest hourly wage rate than an employer can legally pay to an employee
Define off-the-job training.
Where employees leave their normal place of work in order to receive instruction, either within the firm or by using an external organisation such as a college or university
Define on-the-job training.
Where employees acquire or develop skills without leaving their usual workplace, perhaps by being guided through an activity by a more experienced member of staff
Define person specification.
A document that outlines the qualifications, skills and other qualities needed to carry out a particular job successfully
Define selection techniques.
The processes used by an organisation to choose the most appropriate candidate for a job, such as interviewing or testing
Define zero training.
The opposite of customer service, in that it implies that staff need neither skills nor positive attitudes to work for the business
Define backdata.
Keeping records of the results from past research to provide a comparison with the latest results
Define bias.
A factor that causes research findings to be unrepresentative of the whole population
Define primary research.
Finding out information first-hand
Define secondary research.
Finding out information that has already been gathered
Define sample size.
The number of people interviewed; this should be large enough to be confident that the findings are representative of the whole population
Define sampling method.
The approach chosen to select the right people to be part of the research sample
Define diseconomies of scale.
The increase in average costs as a business expands beyond its ability to control and manage itself
Define economies of scale.
The reduction in average costs as a result of savings brought about by an increase in the scale of production
Define primary sector.
Companies and people working to extract raw materials from the earth or sea
Define secondary sector.
Businesses that transform raw materials into finished goods
Define tertiary sector.
Companies and people who provide services, either to the public or to businesses
Define bankrupt.
When an individual is unable to meet personal liabilities, some or all of which can be as a consequence of business activities
Define creditors.
Those owed money by a business
Define incorporation.
Establishing a business as a separate legal entity from its owners, and therefore giving the owners limited liability
Define limited liability.
Owners are not liable for the debts of the business; they can lose no more than the sum they invested
Define Registrar of Companies.
The government department that can allow firms to become incorporated; located at Companies House, where Articles of Association, Memorandums of Association and the annual accounts of limited companies are available for public scrutiny
Define sole trader.
A one-person business with unlimited liability
Define unlimited liability.
Owners are liable for any debts incurred by the business, even if this requires them to sell all their assets and possessions and become personally bankrupt
Define accountable.
The idea that a business and its owners are responsible and answerable to the stakeholders for their activities
Define corporate objectives.
Long- or medium-term objectives that reflect the overall aims of the business
Define hierarchy of objectives.
A model of how the different objectives relate to each other in a hierarchical manner
Define mission statement.
A statement that expresses the goals of the business and the image that the organisation stands for
Define public sector.
In this sector organisations are owned and run on behalf of the public by central or local government
Define social responsibility.
The responsibility of an organisation to maximise positive impact on society and mini,one negative impact on society
Define equilibrium price.
The price at which producers are prepared to supply and consumers are prepared to buy
Define European Union.
A union of countries in Europe with close economic, social and political ties
Define excess demand.
Where prices are set at a low level and consumers are prepared to buy more than suppliers are prepared to supply
Define excess supply.
Where prices are set at a high level and producers are prepared to supply more than consumers are prepared to buy
Define inferior goods.
Products that people turn to when they are hard up, and turn away from when they are better off
Define luxury goods.
Products that people buy much more of hen they feel better off
Define normal goods.
Products or services for which sales change broadly in line with the economy
Define supply.
The quantity of a product that a producer is prepared to sell at a particular price
Define monopolistic competition.
Occurs when the firms competing within a marketplace have sufficient product differentiation to achieve a degree of monopoly power. This usually results from the development of brand names strong enough to prevent competition being purely on the basis of price
Define monopoly.
When one seller controls more than 25% of the market. Monopolies are price makers
Define non-price competition.
Rivalry based on factors other than price
Define oligopolistic.
A market in which a few large companies have a dominant share
Define predatory pricing.
When a large company sets prices low with the deliberate intention of driving a weaker rival out of business
Define USP.
A point of genuine difference that makes one product stand out from the crowd
Define ethics.
Set of morals and beliefs that a company may lay down for its employees. These values often form the culture and objectives of the business
Define business ethics.
The interface between decision making and morals
Why might internal recruitment motivate a workforce?
It shows staff there are opportunities for promotion
Why would a business recruit externally?
New staff bring new ideas and skills into the business
How can businesses advertise job vacancies to external candidates?
Through media advertising such as specialist magazines, job centres, commercial recruitment agencies or executive search consultants who are paid to directly approach individuals
What are the advantages and disadvantages of interviews?
They are cheap and allow a variety of information to be obtained, however they are susceptible to bias and don’t show how competent a candidate will be at their job
What does testing and profiling involve?
Aptitude tests in areas such as maths, English and IT and psychometric profiling which examines the personality and attitudes
What is a disadvantage of profiling?
A business may have a specific personality in mind when recruiting, however a wider variety of personalities may lead to a more creative working environment
What do candidates do at assessment centres?
They take part in role plays and simulations to do with the job they are applying for
What methods of research can be useful when researching a new market or on a low budget?
Observation and retailer research
Which research methods can be used to gain qualitative research?
Group discussions/focus groups, depth interviews, questionnaires
Define random sampling.
Everyone in a population has an equal chance of being selected, names may be picked from a register of some sort and a random number generator used
Define quota sampling.
Selecting a sample in proportion to consumer profiles, cheaper and more effective than random as can be done in interviewers own convenience
Define stratified sampling.
Interviewing only people with a certain characteristic and then randomly sampling or quota sampling
