Key Terms Flashcards
What is the difference between an aim and an objective ?
An aim is a long term plan of the business
An objective is a medium to long term goal established to coordinate the business
What is the difference between a fixed cost and a variable cost?
A fixed cost doesn’t change with output. For example rent
A variable cost does change with output. For example fuel costs
What is unlimited liability ?
If financial problems occur, the individuals or business could lose their personal assets
What is limited liability ?
If financial problems occur, personal belongings are safe
What is an Ltd?
Private limited company
What is a Plc?
A public limited company
What is market capitalisation?
The total value of the issues shares of a public limited company
What are real incomes?
Real incomes are incomes that are adjusted for the rate of inflation
What are the four factors that shape the external environment ?
Demographic
Economic
Environmental
Market
What is the difference between autocratic leadership and democratic ?
Democratic is a decentralised approach and involves employees in decision making
Autocratic is a centralised approach that involves managers making decisions
What are non programmed decisions ?
Less structured decisions
What are programmed decisions ?
Familiar and routine decisions
What is segmentation?
When similar customer needs and wants are grouped within a market
What is targeting ?
When a business decided which segments it wants to operate in
What is the difference between niche and mass marketing ?
Niche marketing is focusing on specific segments of the market
Mass marketing is focusing on meeting needs of the majority
What is positioning?
Positioning identified the benefit and price combination of a product relative to competitors
What is product portfolio analysis ?
Examines the market position of all the products of a business
What is the difference between penetration pricing and price skimming ?
Price slimming is when demand is inelastic and is successful when a high price is charged
Penetration pricing is when demand is sensitive to price and is successful when a low price is charged
What is capacity ?
The capacity of a business measures the maximum it can produce given its existing resources
What is lean production?
When managers reduce waste and therefore operations become more efficient
What is the difference between quality assurance and quality control?
Quality assurance is attention to detail at every stage of the production
Quality control is maintaining standards by inspection
What is mass customisation ?
Producing on a large scale while still enabling individual customer preferences
What is gross profit?
Income from sales - the cost of good and services sold
What is operating profit ?
Financial surplus arising from the business trading activities before taxation
What is the difference between direct and in direct costs ?
Direct costs are specific to a particular area, for example raw materials
In direct costs are costs that relate to all aspects of a business, for example maintenance costs
What are budgets ?
Budgets are financial plans that forecast revenue from sales
- revenue budgets
- expenditure budgets
- profit budgets
What is variance analysis?
A process for analysing budgets
It investigates the differences between forecast data and actual figures
What is break even out out ?
The level of output at which total costs = revenue
No profit or loss is made
What is the margin of safety?
Measures the amount by which a business’s current level of output exceeds break even output
What are examples of short term sources of finance ?
Retained profit
Debt factoring
Overdrafts
What are examples of long term sources of finance ?
Venture capital
Share capital
Loans and mortgages
Retained profit
What is crowdfunding ?
Funding a project by raising small amounts of money from people using the Internet
What is job design?
The process of grouping together or dividing up tasks and responsibilities to create jobs
What is job enrichment ?
When employees jobs are redesigned to provide them with more challenging and complex tasks
What is span of control?
The number of subordinates directly responsible to a manager
Where is cash cow in terms of the Boston matrix model ?
High market share
Low market growth
Where is the question mark in terms of the Boston matrix model?
Low market share and high market growth
Where is the star in terms of the Boston matrix model?
High market growth and high market share
Where is the dog in terms of the Boston matrix model?
Low market share and low market growth
What is contribution?
The difference between revenue and variable costs
What is extrapolation?
Look at what has happened in past and to continue this trend into the future
