Paper 1 keywords Flashcards
globalisation
the process in which the world economy becomes increasingly interdependent, the economies are more interlinked
emerging economy
used to describe an economy that is going through rapid industrialisation (manufacturing) and growth, markets are making a transition
gross domestic product (GDP)
the value of all the goods and services produced within an economy over a specified time-period such as a year
GDP per capita
measuring GDP per head of population
purchasing power parity
GDP or GDP per capita adjusted for different costs of living
human development index (HDI)
a composite indicator of developing that that combines GDP with life expectancy and literacy
international trade
the flow of commodities and services on an international scale
fixed capital formation
investment in long term assets such as roads and buildings
imports
products and services produced abroad and consumed domestically
exports
products and services produced domestically and consumed abroad
balance of payments
a record of all the transactions between one country and the rest of the world
balance of payments deficit
when the value of exports is less than the value of imports leading to a build-up of foreign currency debt
balance of payments surplus
when the value of exports is greater than the value of imports for a country
invisible export
the sale of a service to an overseas customer
comparative advantage
the ability of an individual/group to carry out a particular economic activity more efficiently than other activity, exists when there is a relative opportunity cost for certain countries
foreign direct investment
when a business buys non-current assets in another country. It involves establishing operations or acquiring tangible assets, including stakes in other businesses. It is normally by companies rather than governments.
inward FDI
when a country hosts a foreign MNC, and receives investment from outside its economy
outward FDI
when an MNC who has their HQ in your economy, invests in non-current assets in another country
saturated market
a market where growth has ceased and there are no significant opportunities to boost sales other than stealing market share from existing rivals
scientific management
F.W. Taylor suggested that managers should maximise worker productivity by calculating how best to divide up tasks into smaller fragments, then incentivise workers to produce exactly as set out by managers
isolationism
when nations use trade policies designed to put domestic business interests first by imposing trade barriers to hamper imports
free trade
when there are no barriers to trade such as tariffs and non-tariff barriers
liberalisation
when barriers to trade are removed, e.g. by the WTO
regulations
rules created as a result of laws passed by parliament
migration
the movement of people from one town to another in search of a better life
protectionism
it involves any attempt by a country to impose restrictions or trade in goods and services to protect domestic producers from foreign competition, through the use of measures such as tariffs
sunset industry
a declining industry perhaps as the product becomes technologically obsolete or if an industry has become internationally uncompetitive
infant industry
small industries which haven’t had time to grow
import quota
quantitative limits on the level of imports allowed or a limit to the value of imports permitted into a country in a given time period
tariff
an additional tax or duty that raises the price of imported goods and causes a contraction in domestic demand and an expansion in domestic supply
domestic subsidy
a payment by the government to domestic producers in order to help them compete in the international market
regulations
rules created as a result of laws passed by parliament
counter-cyclical
expansionary government policies to counter a downturn in the economic cyle
Keynesian
an economist advocated an increase in government spending in a recession to manage the economic cycle (counter-cyclical policies)
structural unemployment
unemployment caused by the decline of an industry, e.g. coal miners
trade war
an economic battle between two countries based entirely on protectionist measures such as import quotas; which is detrimental to both parties, but neither wants to back down
technical barriers to trade
when a country applies technical regulations, standards- including packaging, marking and labelling standards in order to avoid creating unnecessary obstacles to trade
import licensing
governments grant importers the right to import goods, these can be restricted
trade bloc
usually groups of countries in specific regions that manage and promote trade activities, they aim to have free trade within an external tariff wall
free trade area
where there is free trade between the countries involved but each country can set their own trade restrictions on countries outside of the agreement
customs union
comprises of countries which agree to abolish tariffs and quotas and encourage the free movement of goods and services through adopting a common export tariff
single market
A trade bloc where there is free trade amongst the members, a common external tariff, and freedom of movement of goods/services, capital and people e.g. the EU
appreciation of a currency
when a currency increases in value against another currency
depreciation of a currency
when a currency decreases in value against another currency
pull factors
where businesses are attracted by compelling opportunities to grow by expanding internationally
push factors
where businesses feel they have to expand internationally because of domestic/home market issues
outsourcing
contracting another business to perform a business function on your behalf
offshoring
the act of basing some of a business’ processes or services overseas, so as to take advantage of lower costs
economies of scale
when average costs per unit falls as output increases
competition
rivalry between a business and another business who offers a similar product/service to a similar market
dumping
selling off surplus stock on a foreign market at below cost which puts domestic businesses in the foreign market at a disadvantage
disposable income
the amount a household has left after income taxes have been deducted
infrastructure
the provision of the underpinnings of modern life, e.g. roads, railway
market attractiveness
an analysis of the current and future sales and profit potential of a country or market
polycentric approach
adapting products to culture
bureaucracy
an organisation stifled by paperwork, checking and rechecking of decisions and actions, there are a lot of rules
marketing strategy
a medium-long term plan that is carefully evaluated to achieve a corporate objective, delivered through your marketing mix
mass market
products or services which are targeted at the whole market, e.g. mars bars
niche market
the attempt to create products or services which are targeted towards a specific segment of a market
market size
this is total value/no. of sales in the market
market share
the proportion of total market sales that a firm has
dynamic market
a market that is constantly changing
risk
it is a known possibility of an unfavourable outcome that can be estimated with probabilities
uncertainty
it exists when the outcome of a particular situation is impossible to predict
economies of scale
factors that cause costs per unit to fall when a firm operates at a higher level of production
market research
the process of gathering information about consumers, competitors and distributors within a firm’s market, it is a way of identifying consumers’ buying habits and attitudes to current and future products.
bias
a factor that causes research findings to be unrepresentative of the whole population
product orientation
it is an inward-looking approach focusing on innovation and research and development, they focus on making things they are good at/experienced in making
market orientation
an outward-looking approach focusing on identifying consumer needs and wants and tailoring product development towards it
primary research
finding and collecting information first-hand
secondary research
finding and collecting information which already exists
focus groups
a group of target market demographic respondents that are chosen to take part in a production trial
consumer panels
a group of customers who have been specially selected to give ongoing feedback to the business
qualitative research
research focused on obtaining in-depth detailed information, can identify opinions and why consumers feel the way they do, based on opinions
quantitative research
research that is focused on obtaining numerical data which can be analysed and compared much easier than qualitative
sampling
the process of targeting a group of individuals that have been chosen from a larger group, the results must be representative of the target population
market segmentation
the process of selecting a specific segment of your market and adapting your marketing strategies to this market
market mapping
a grid plotting where each existing brand sits on scales based upon two important features of a market, e.g. price
market positioning
how individual products or brands are seen in relation to their competition by the consumers
competitive advantage
advantages over competitors by offering consumers greater value
added value
the value of the finished good or service over and above the cost of achieving it
product differentiation
the extent to which consumers perceive your brand/product as being different from others
unique selling point
a consumer benefit that no rival can match, perhaps because it is protected by a strong patent
demand
measures the level of interest customers have in buying a product
complementary good
bought in conjunction with each other, such as cars and petrol
substitute good
products or services in competition with each other, the success of one is at the expense of another
inferior goods
goods which sales fall when people are better off, but rise when consumers are struggling financially
luxury goods
goods which sales rise rapidly when people are better off, but may fall rapidly during harder times
normal goods
goods which sales move in-line with changes in consumer incomes
supply
the quantity of a product that producers are able to deliver within a specific time period
supply curve
a graphical representation of the relationship between quantity supplied and price
profit-maximising point
where firms supply at the level that makes as high as a profit as possible
supply chain
the whole path from suppliers of raw materials through production and storage on to customer delivery
commodity market
undifferentiated products such as rice and oil, every kilo is the same as every other kilo
equilibrium
the point where there is a balance between supply and demand, this makes the price stable
market price
when the price of a commodity is determined by market forces (supply and demand)
demand curve
shows how much will be consumed of a good at each and every price level
price elasticity of demand
it measures the extent to which demand for a product changes when its price changes
elastic demand
a product with demand that is highly price sensitive, it has a price elasticity of above 1 which means that the percentage change in demand is greater than the percentage change in price that created it
inelastic demand
a product with demand that is not very sensitive to a change in price, it has a price elasticity of below and means the percentage change in demand is less than the percentage change in price
external constraint
something outside the firm’s control that can prevent it achieving its objectives
income elasticity of demand
it measures the extent to which demand for a product changes when there is a change in consumers’ real incomes
real incomes
this is the amount the average employee receives before any deductions for tax or pension contributions
positive/negative income elasticity
a product for which sales rise when people are better off/ a product for which sales fall when people are better fall
marketing mix
the combination of the 4 factors of product, price, promotion and place in order
design mix
it refers to the way in which all aspects of a product design are considered including, function, aesthetics and economic manufacture
economic manufacture (cost)
the fact that a product has to make a profit and be capable of being manufactured at a cost below the selling price if it is to be viable
sustainability
making a product without affecting the long-term supplies of the inputs into the product
prototype
a test model of a planned design, used to see if it functions properly, with durability, reliability and safety
promotion
this involves using a variety of methods to communicate with customers and persuade them to buy your product
brand
a characteristic, name or symbol that distinguishes with customers and persuade them to buy your product
branding
the skill of giving a product or service distinctiveness- even personality
individual brand
brand associated with specific products giving more stability, e.g. marmite
umbrella/family brand
the use of a single brand name for the name of two or more related products in order to encourage the sales of other products, e.g. Dairy Milk
corporate brand
promoting the brand name of a corporate entity as opposed to specific goods or services, convincing customers that all products across the range share similar benefits, e.g. Nestle
emotional branding
refers to the practise of using the emotions of a consumer to build a brand and is designed to appeal to a customer’s emotion, e.g. John Lewis advert
viral Marketing
a strategy to encourage people to pass on messages to others about a product or service electronically
persuasive advertising
a type of product promotion which aims to persuade a consumer for buying a particular product, especially in the presence of several similar products in the same category
crowdfunding
obtaining external finance from many individual, small investments, usually through a web-based appeal, this has risen through changes in branding through the increased use of social media
public relations
the professional maintenance of a favourable public image by a company or another organisation
price
the amount paid by the customer for a good or service
predatory pricing
when prices are set at a very low level, even below the costs of production in order to drive competitors and new entrants out of a market
price war
a period of fierce competition in which traders cut prices to increase their share of the market
loss leader
pricing a product below cost in order to attract further, profitable business
pricing tactics
short-term pricing responses to opportunities or threats
distribution
how to get the product to the right place for customers to make their purchases. It includes physical or online distribution availability and visibility
barrier to entry
factors that make it hard for new firms to break into an existing market
e-commerce
electronic commerce, carried out online
impulse purchasing
buying in an unplanned way, e.g. going into a store to buy paper but coming out with a mars bar
long tail
the huge number of tiny businesses appealing to minority tastes that can find a profitable existence online because they can target the whole planet, not just the local area
opportunity cost
the cost of missing out on the next best alternative when making a decision
intermediary
a ‘middle-man’ involved in the distribution channel, e.g. wholesaler
product life cycle
a theoretical model which describes the stages a product goes through over its lifetime
extension strategy
strategies in which a business modifies a product to appeal to more customers and prevent sales from declining
product portfolio
all the products in which a business sells
product range
a set of variations made on a specific product made to appeal to different market segments
boston matrix
it is a tool to analyse a product’s share and growth within a market through plotting their portfolio of businesses and brands
new product development (NPD)
it includes the people and processes involved in turning new ideas into products (or services) ready for launch
portfolio anlaysis
it assesses the position of each product or brand in a firm’s portfolio to help determine the right marketing strategy for each
star product
a product that has a high share of fast-growing market
dog product
a product that has a low share of a low-growth market
cash cow
a product that has a high share of a low-growth market
problem child/question mark
a product that has a small share in a rapidly growing market
B2B/B2C
business to customer/business to business
customer loyalty
the likelihood of previous customers repeat purchasing from the same business due to preferred practises from experience and/or emotional attachment
homogenous good
no point of differentiation and therefore each one is the same as each other (making competition focus on price)
labour turnover
the number of staff leaving a company as a percentage of the number employed
zero hour contracting
employee contracts that agree employee duties and hourly pay rates, yet offer no guarantee of ant work in any specific week
flexible workforce
the creating of a multi-skilled and flexible workforce that can quickly adapt to meet a firm’s changing requirements
trade union
an organisation that represents the interests of staff at the workplace
outsourcing
involves a firm finding an external business to carry out part of the production process
redeployment
retaining a staff member to give the skills required to take on a new job role
dismissal
the removal of an individual with no payments at all after several warnings, it can be done due to misconduct or a lack of competence
collective bargaining
negotiation of wages and other conditions of employment by an organised body of employees or employee representatives, e.g. trade unions
individual bargaining
negotiations between individual employees and the employer. This is usually regarding contract of employments and the terms and conditions.
core worker
employees who are essential to the operations of a business, they are generally permanent employees
peripheral worker
those workers who are not seen as being central to a firm’s operations, they may only be needed on a temporary basis
subcontracting
when another business is sued to perform or supply certain aspects of a firm’s operations
hot-desk
an approach that provides a temporary desk for home-workers to use when they come into the main office, they are not allowed to leave any of their personal belongings behind
recruitment
filling job vacancies by defining the job, attractive suitable candidates and selecting those best suited to fill it
training
the process of equipping employees with the skills and knowledge necessary to carry out their job efficiently
shortlist
a list of selected candidates from which a final choice is made
head-hunter
someone who identifies and approaches suitable candidates employed elsewhere to fill business positions
induction training
familiarises newly appointed workers with key aspects of their jobs and their employees where they receive a tour of the organisation and are given details of employment, the aim is to make employees fully productive as soon as possible
on-the-job training
where employees acquire or develop skills without leaving their usual workforce usually through experienced employees
organisational design
creating a formal hierarchy that establishes who is accountable to whom throughout an organisation
hierarchy
a system in which people within an organisation are arranged based upon their importance
chain of command
the lines of authority within a business
span of control
the number of staff who are answerable directly to a manager
delayering
removing a management layer from the organisational structure
line manager
a manager responsible for meeting specific business targets and are responsible for specific staff
delegation
the process of passing down responsibility to a subordinate
centralisation
one in which the decision making power and control remains at the central headquarters in the hands of the top management levels
decentralisation
the transfer of decision making and responsibility from the central headquarters to local divisions
matrix structure
where staff work in project teams in addition to their responsibilities within their own department, therefore meaning that staff can be answerable to more than one boss.
motivation
inspiring the will to work within employees, have the desire to push yourself to achieve what you want to achieve
division of labour
subdividing a task into several activities, enabling workers to specialise and therefore become efficient at completing what may be a small, repetitive task
hygiene factors
everything that surrounds what you do in the job such as pay, working conditions and social status, they are all potential causes of job dissatisfaction according to Herzberg
piecework
working in return for a payment per unit produced
commission
a bonus earned on top of a basic salary, usually in line with a specific achievement, such as meeting a sales target
remuneration
all the financial rewards received by an employee
performance-related pay
a financial reward to staff whose work is considered above average, it is used for employees whose work achievements cannot be assessed simply through numerical measures
empowerment
authority or power is given to an employee to motivate them, through giving increased responsibility and decision making power
consultation
asking the views of the staff you manage, then taking them into account in the decisions you make
quality circles
discussion groups in which staff discuss an operational problem with a view to recommending a solution to management
job enlargement
the general term for anything that increases the scope of a job
job rotation
increasing a worker’s activities by switching between tasks of a similar level of difficulty
leadership
inspiring staff to achieve demanding goals
management
responsible for putting ideas or policies into action, whilst controlling staff
autocratic management
they are authoritarian, they tell employees what to do and do not delegate much or share information with employees
democratic management
they like to involve their workers in decisions, managers discuss what needs to be done and employees are involved in the decision
laissez-faire management
when managers are so busy or so lazy that they do not take the time to ensure that junior staff know what to do or how to do it
paternalistic management
they think and act as a father, they try to do what is best for their staff/children, they believe in the idea that it is very important that they are care for and supported properly and the social needs of their employees
charismatic leadership
people who are able to connect with an audience and who. Can get others to buy into their ideas
hubris
overweening arrogance leading to excessive self-confidence and therefore blindness to the risks being taken
entrepreneur
an individual who looks at business opportunities that exists and turns that idea into action
intrapreneurship
practise of entrepreneurship in an established firm, an intrapreneur has the personal characteristics of an entrepreneur but they work in a large firm
small budget research
this is spending of money prior to undertaking market research, good entrepreneurs must take the time to gain a general understanding of their market, geographical mapping
geographical mapping
plotting on a map the locations of all existing businesses in your market, in order to show where all your competitors are
market niche
a gap in the market, that is, no one else is offering what you want to offer
profit satisficing
it means to find the ideal blend between different pressures, it is finding the ‘right’ profit rather than the biggest
social entrepreneurship
businesses that are created to address a social problem
corporate objectives
they are targets that are set for the whole business which are derived from its aim, they are SMART
functional objectives
objectives for each function (operations, marketing, HR and finance) which help to achieve the corporate objectives
mission
a qualitative statement of the business’ aims expressed in a way to make it seem especially purposeful and motivating
mission statement
the goal of a business, reasons for its existence and their vision for the future which is powerfully expressed
strategy
a medium-to-long term plan for meeting your objectives
unlimited liability
when a business and its owner are the same legal entity, in this case the debts of the business are the debts of the owners, and personal property can be sold to pay the debts of the business
limited liability
when a business is a separate legal identity to its owners, which means that if the business goes bankrupt the owners only lose what they originally put into the business and not their personal belongings
sole trader
a one-person business with unlimited liability, set up by an entrepreneur
partnership
when a business is set up which is comprised of between 2-20 people, they have unlimited liability
limited company
companies that have limited liability, they are considered to be a type of business structure whereby a company is considered a legally distinct body
franchise
when a business sells the rights to its products, name and trading methods to a franchisee, in return for a fee
social enterprise
a business that focuses on putting its profits back into a strong social or environmental mission, they have primarily social objectives rather than monetary
lifestyle businesses
when entrepreneurs start a business based on their own or their family’s needs
online businesses
they can choose between a limited or unlimited structure but these businesses have lower financial risks and higher potential rewards
flotation
when a private limited company expands to the point of having a share capital of more than £50,000 and so they can start to offer shares for sale on the stock market for the first time
incorporation
establishing a business as a separate legal entity from its owners, and therefore giving the owners limited liability
registrar of companies
the government department which allows firms to be incorporated
opportunity cost
the cost of missing out on the next best alternative when making a decision
trade-off
they arise when having more of one thing potentially results in having less of another
overtrading
where a business expands at a rate that cannot be sustained by its capital base
liquidity
the ability of a business to pay its bills on time, which all depends upon having enough cash in the bank
