Key Terms

Question 1

Economies of Scale

Answer 1

Cost advantages gained when a size of a business increases

Question 2

Retail customers

Answer 2

Customers who buy finished products

Question 3

Business customers

Answer 3

Businesses that purchase products or services from other businesses

Question 4

Business activity

Answer 4

Tasks completed by a business to achieve its objectives

Question 5

Business aims

Answer 5

A summary of what the business wants to achieve in the future

Question 6

Recessions

Answer 6

A period of economic decline where demand and output fall

Question 7

Diseconomies of scale

Answer 7

Business becomes too large, the cost per unit may increase, business may become more inefficient

Question 8

USP

Answer 8

A specific factor that stands out from its competition

Question 9

Functional area

Answer 9

A division of business where employees have similar roles, skills and expertise

Question 10

Income statement

Answer 10

Financial statement that shows the revenue, expenses the business has paid and received over a period of time

Question 11

Statement of financial postion

Answer 11

A summary statement on a particular date that shows the business’ assets, liabilities and owners equity

Question 12

Cash flow forecasting

Answer 12

Estimating the expected cash inflows and outflows for a period of time in the future

Question 13

Pricing strategy

Answer 13

The method used to determine the price of a product/service- taking into consideration the competitors prices

Question 14

Grievance procedures

Answer 14

A specific process for dealing with complaints made by an employee about their treatment at work

Question 15

Disciplinary procedures

Answer 15

A procedure for dealing with alleged employee misconduct

Question 16

Centralised structure

Answer 16

Where decision making is kept at the top of the hierarchy

Question 17

Flat structure

Answer 17

A company structure containing 3 or less levels

Question 18

Tall structure

Answer 18

A pyramid structure with 4 or more levels

Question 19

Span of control

Answer 19

Number of subordinates a supervisor manages

Question 20

Matrix structure

Answer 20

Employees are grouped by a function and product/project

Question 21

Decentralised structure

Answer 21

Decision making is spread out among the hierarchy

Question 22

Accountability

Answer 22

The responsibility that someone has for the actions that are carried out even if they, themselves haven’t done it

Question 23

Opportunity cost

Answer 23

A benefit, profit or other advantage that must be given up to acquire or achieve something else

Question 24

Depreciation

Answer 24

The cost of an asset consumed over its useful life

Question 25

Chain of command

Answer 25

How many levels it takes to have information passed up the hierarchy

Question 26

Insolvent

Answer 26

Unable to pay its debts

Question 27

Assets

Answer 27

Resources owned by the business thats worth money

Question 28

Current assets

Answer 28

Assets that are going to paid out within a year ie cash in hand or trade payables

Question 29

Fixed/Non-current assets

Answer 29

Assets that are worth money but wont be paid out within a year ie table or computer

Question 30

Conflict resolution

Answer 30

Methods maybe implemented to resolve any issues involving stakeholders

Question 31

Net cash flow

Answer 31

The total difference between money coming in and out

Question 32

Retained profit

Answer 32

The money remaining after costs, taxes and dividends have been deducted