Key Terms

Question 1

average cost

Answer 1

cost per unit of production (total cost of output / number of units produced)

Question 2

challenge

Answer 2

any internal or external factor that hinders operations and profitability of an organisation

Question 3

public limited company

Answer 3

a limited liability business that allows shareholders to buy and sell shares in the company through public stock exchange

Question 4

contracts

Answer 4

legally binding agreements between 2 parties

Question 5

cost

Answer 5

items of expenditure by a business when producing goods and services

Question 6

directors

Answer 6

senior executives in an organisation who hold autonomous decision-making responsibility and power

Question 7

employees

Answer 7

a type of internal stakeholder and the people who work for the business

Question 8

environmental sustainability

Answer 8

ability of a business to maintain use of its renewable and non-renewable resources for future generations (wherein their resources do not compromise future generations)

Question 9

expansion

Answer 9

growth of a business due to an increase in size of organisation and/or growth in the market

Question 10

fee

Answer 10

payments made to a professional body in exchange for advice or services

Question 11

finance

Answer 11

refers to money required for the business activities

Question 12

location

Answer 12

the geographical position of a business (e.g. farmland that BON hires)

Question 13

permanent employee

Answer 13

workers that have an employment contract on a continual basis

Question 14

privately held company

Answer 14

business owned by shareholders who have limited liability

Question 15

temporary workers

Answer 15

employees hired for a limited period of time or until the completion of a project

Question 16

freelancer

Answer 16

self-employed individual who provides services to their clients, rather than working for an employer

Question 17

greenwashing

Answer 17

refers to misleading marketing tactics that falsely portray sustainable practices

Question 18

interest rate

Answer 18

refers to the cost of borrowing money or the return on savings, expressed as percentage figure

Question 19

line manager

Answer 19

person directly above an employee in the organisational structure

Question 20

above the line promotion

Answer 20

refers to the use of mass media (television, magazine, newspaper, radio) for advertising a product/service

Question 21

advertising

Answer 21

main form of promotion used to shape and develop brand awareness and foster customer perceptions

Question 22

agent

Answer 22

independent person or company appointed and authorised to act on behalf of another person in business and legal dealings

Question 23

bank loan

Answer 23

fixed amount of money borrowed from a bank with regular fixed payments over a period of time

Question 24

below the line promotion

Answer 24

use of non mass-media promotional activities to advertise product/service (discounts, emails, social media, sponsorships, exhibitions)

Question 25

board of directors

Answer 25

elected group of senior executives to represent the interest of shareholders

Question 26

break-even

Answer 26

when a firm’s total sales revenue equals its total costs (no profit or loss)

Question 27

business plan

Answer 27

written document detailing how an organisation sets out to achieve its objectives and strategies to achieve these goals

Question 28

capital expenditure

Answer 28

use of finance, referring to the spending of a business on acquiring/maintaining its non-current assets

Question 29

communication

Answer 29

transfer or exchange of information, ideas or messages from one party to another

Question 30

competition

Answer 30

rivalry within an industry

Question 31

corporate social responsibility

Answer 31

responsible business behaviour towards the individuals and societies along with the natural environment in which it operates

Question 32

cost-plus pricing

Answer 32

pricing method that adds a mark-up to the cost of production of a product to ensure profit is earned

Question 33

creditors

Answer 33

money owed by the firm to other individuals of other business

Question 34

economic sustainability

Answer 34

the ability to generate sufficient revenue and manage costs effectively in the long-term whilst contributing to the economic well-being of its stakeholders

Question 35

fixed costs

Answer 35

costs that do not change with the level of output or sales of a firm

Question 36

infrastructure

Answer 36

physical structures and facilities needed for the operations of a business

Question 37

job production

Answer 37

production method used to make unique or one-off products to meet specific demand of customers

Question 38

revenue stream

Answer 38

money or income coming to the business from a particular activity over a period of time

Question 39

unique selling point

Answer 39

any aspect of a product or organisation that makes it stand out from others in the market

Question 40

brand awareness

Answer 40

the degree of familiarity that people have towards a brand based on logos, slogans or symbols

Question 41

competitive advantage

Answer 41

any edge that a business has over its rivals which allow them to generate larger profits and sales volume

Question 42

customer base

Answer 42

total number of individuals that purchase goods and services from a business

Question 43

overhead costs

Answer 43

ongoing expenses of a business (e.g. rent, salary, utilities, advertising)

Question 44

working capital

Answer 44

amount of finance available to a business for its daily operations (current assets - current liabilities)