Key Terms In Past Papers

Question 1

Trade credit

Answer 1

To buy goods and/or services without making immediate cash or cheque payments.

Question 2

Market share

Answer 2

The proportion of sales in a market that is taken by one business

Question 3

Secondary market research

Answer 3

Using existing data such as the internet and market reports

Question 4

Primary market research

Answer 4

Research you conduct yourself, involving going directly to the source.
Surveys, interviews etc.

Question 5

Variable costs

Answer 5

Costs that change with the amount produced like packaging and raw materials

Question 6

Partnership

Answer 6

A type of business with 2 or more owners
Advantages - different partners can have different skills
Disadvantages - less profit

Question 7

Marketing mix

Answer 7

Price
Product
Promotion
Place

Question 8

Sole trader

Answer 8

Where an individual runs and owns the entire business,

Disadvantages

• unlimited liability
• harder work
• getting external capital can be difficult

Advantages

• you are your own boss
• you can keep 100% of the profits
• you can make business decisions quicker

Question 9

Market mapping

Answer 9

Shows the companies competition so they can decide what to do in terms of finding gaps etc

Question 10

Selling price per product formula

Answer 10

Total revenue/total number of sales

Question 11

Unlimited liability

Answer 11

The owners of the business are entirely responsible for its debts

Question 12

Limited liability

Answer 12

The business owner/owners are responsible for business debts up to the value they invested into the business

Question 13

PLC

Answer 13

Stand for public limited company and its a company that offers shares of stock to the general public

Advantages - shareholders have limited liability

Disadvantages - expensive to set up

Question 14

LTD

Answer 14

Stand for private limited company and it restricts shareholders from publicly trading shares

Advantages - the owners have limited liability

Disadvantages - shareholders will expect to receive a percentage of the profits

Question 15

Share capital

Answer 15

The funds that a company raises from selling shares to investors

Question 16

Gross profit

Answer 16

Revenue - material and labour

Revenue - cost of sales

Question 17

Net profit

Answer 17

Gross profit - operating expenses

Question 18

External growth

Answer 18

Using external ways to grow your business usually involves a merger or takeover

Question 19

External sources of finance

Answer 19

Money that comes from outside a business

Question 20

Design mix

Answer 20

Function
Cost
Aesthetic

Question 21

Differentiating a product

Answer 21

Product differentiation is what makes you product or service stand out to your target audience

Question 22

Globalisation

Answer 22

Companies operating internationally or on a global scale

Advantages - lower cost for products, access to new markets

Disadvantages - increased competition, environmental concerns

Question 23

Job production

Answer 23

When items are made individually. E.g made to measure clothes

Question 24

Batch production

Answer 24

Where a group of items are made together. E.g a baker makes 50 white loaves and after they are complete they make 50 brown loaves

Question 25

Flow production

Answer 25

Where identical standardised items are produced on an assembly line. E.g most cars are mass produced

Question 26

Pressure group

Answer 26

A group of people who share a common interest and try to influence decisions made by businesses, organisations or governments

Question 27

Permanent contracts

Answer 27

Has no fixed end date so they can leave whenever and it is suitable for long term jobs

Question 28

Temporary contracts

Answer 28

A contract with a specific end date, common in the retail industry or industries with seasonal demand e.g over Christmas a shop would need more staff

Question 29

Market segmentation

Answer 29

Splitting a business’ target market into different groups

Question 30

Focus groups

Answer 30

A group interview on people and they are asked their opinions on the product or service

Question 31

Retained profit

Answer 31

Profits that the owners put back into the business

Question 32

Buffer stock

Answer 32

The lowest amount of stock a business can store on site while still being able to operate effectively