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Business Paper 2 > Key words & definitions > Flashcards

Key words & definitions Flashcards

1
Q

Mechanisation

A

machinery is used but labour is still required

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2
Q

Automation

A

machinery is used and a computer controls it

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3
Q

Lean production

A

A Japanese production system which ensures that waste is kept to a minimum

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4
Q

Just in time (JIT)

A

Stocks of materials are not stored and are used immediately

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5
Q

job production

A

Involved producing each product individually

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6
Q

Batch production

A

used when there are set stages that the production needs to go through. One stage has to be finished before the next stage of production can begin

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7
Q

Flow production (mass production)

A

continuous movement of items through production. When one task finishes, the next task starts immediatley

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8
Q

Division of labour

A

organisation of production into a number of specialised , simple repetitive processes

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9
Q

specialisation

A

workers specialise in carrying out simple production tasks

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10
Q

Process production

A

involves a series of automated processes that are applied to a variety of raw materials. Resulting in a large quantity of products

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11
Q

added value

A

increase the worth that a business makes for a product. It’s the difference between what it costs to produce and the price charged to customers

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12
Q

Efficiency

A

achieving maximum productivity with minimum wasted effort or expense

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13
Q

Total quality management (TQM)

A

Process where all workers are responsible for quality throughout the process

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14
Q

Opportunity cost

A

the costs of missing out on something else

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15
Q

internal finance

A

finance comes from within the business

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16
Q

External finance

A

finance comes from outside of the business

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17
Q

Variable costs

A

costs which change when the output of a business changes

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18
Q

fixed costs

A

costs which remain the same- regardless of output

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19
Q

total costs

A

total costs made by the business

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20
Q

average costs

A

cost for each unit that a business sells

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21
Q

Revenue (turnover)

A

money a business receives for selling it’s goods/ services

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22
Q

Break even

A

the point at which the sales are exactly the same as the costs

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23
Q

margin of safety

A

the difference between the actual level of output and the break even output

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24
Q

semi- variable cost

A

a cost which has both fixed and variable qualities

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25
Q

cash flow

A

movement of money in and out of a business account

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26
Q

inflows (income)

A

money received by a business

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27
Q

outflows (expenditure)

A

money paid out of a business

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28
Q

Net cash flow

A

difference between inflows and outflows

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29
Q

Positive net cash flow

A

inflows are greater than outflows

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30
Q

Negative net cash flow

A

inflows are not enough to cover outflows

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31
Q

Opening/ closing balance

A

amount of money in a business account at any particular time

32
Q

cash flow forecast

A

prediction at the start of the year

33
Q

cash flow statement

A

what actually happened

34
Q

gross profit

A

amount of profit made by a business by selling goods or services, without paying any of the day-to-day running of the business

35
Q

net profit

A

profit made as a result of buying and selling goods; makes an allowance for the costs of running the business

36
Q

accounting

A

the process of keeping financial records

37
Q

expenses

A

costs of running a business that occur as part of a company’s operated activities during a specific accounting period

38
Q

Profit margins

A

ratio of profit over revenue; expressed as a percentage. Mainly an indication of the ability of a company to control costs

39
Q

exchange rates

A

value of currency in terms of another

40
Q

strengthening exchange rates

A

if the pound increases, the value is said to strengthen. the pound will buy MORE of a foreign currency

41
Q

weakening exchange rates

A

if the pound is decrease in value, it is said to have weakened. the pound will buy LESS of a foreign currency

42
Q

imports

A

goods and service bought from other countries; MONEY GOING OUT OF THE UK

43
Q

exports

A

goods and services which are sold to other countries; payments/ money INTO THE UK

44
Q

Interest rate

A

cost of borrowing

45
Q

The European Union

A

a political and economic union of 28 members/ states that are located in Europe

46
Q

Eurozone

A

group of countries in the EU that share the same currency

47
Q

Single market

A

Based on the ‘four freedoms’: free movement of people, goods, services and capital

48
Q

tariffs

A

A tax paid on IMPORTS

49
Q

Quotas

A

limit on the total quantity of products that can be supplied to the market

50
Q

Globalisation

A

the process by which business activities in different countries are becoming more and more connected

51
Q

international trade

A

companies in one country produce goods and services and sell them in other countries

52
Q

production abroad

A

firms may decide to set up their own factories and offices abroad

53
Q

exploitation of workers

A

employees may be paid very low wages and have to work long hours in dangerous conditions

54
Q

pollution

A

developing countries offer suffer from negative impacts of lots of production

55
Q

Culture

A

local culture is being affected by global branding

56
Q

inflation

A

Prices of goods are GENERALLY rising

57
Q

Income tax

A

tax on a person’s income.

Sole traders and partnerships pay income tax

58
Q

national insurance

A

dedicated to support the NHS and sate partnerships

paid by sole traders and partnerships

59
Q

corporation tax

A

paid my limited companies

60
Q

business rates

A

payed by businesses on the property owned

61
Q

council tax

A

payed by home owners/ tenants on the property they live in

62
Q

VAT (value added tax)

A

tax on spending; currently charged at 20%.

VAT is on most goods and services that we buy

63
Q

monopoly

A

a market dominated by one seller

exists when a business has a market share of at least 25%

64
Q

Perfect competition

A

a market where there are a large number of sellers

65
Q

external costs

A

negative externalities

costs of a third party

66
Q

private costs

A

costs to a customer/ business as a result of business production

67
Q

social cost

A

total external costs

costs to anyone in society

68
Q

ethics

A

what is considered morally right and morally wrong

69
Q

purchasing economies of scale

A

a business is given a discount for buying in large quantaties

70
Q

economies of scale

A

unit costs fall as output increases

71
Q

financial economies of scale

A

as a firm gets bigger, it will gain more assets

Bigger firms are more likely to get cheaper loans (low interest rates) as they have more security to offer the bank

72
Q

managerial economies of scale

A

large businesses can afford to employ specialist managers who will increase efficiency

73
Q

Marketing economies of scale

A

larger firms can benefit from being able to use more effective methods of marketing, which reach more people

74
Q

technical economies of scale

A

as a firm gets bigger, it can use better methods and equipment

75
Q

risk bearing economies of scale

A

large firms can spread risk by diversifying into different products or taking over supplies

76
Q

Dis-economies of scale

A

unit costs do not always fall as the scale of production is increased.
if they rise, a firm is said to experience dis- economies of scale.
This usually occurs because the firm becomes too big to be managed efficiently.

Business Paper 2 (3 decks)

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