Paper 1 May 2023 Terminology

Question 1

PLC

Answer 1

A public limited company is a business Organization owned by shareholders with limited liability. The shares in a PLC are traded on a public stock exchange.

Question 2

Specialise (specialized)

Answer 2

Specialization is the process of a business entity focusing on the production of a limited scope of goods or services. This approach to production enables the business to benefit from a greater degree of operational efficiency.

Question 3

Producing (production)

Answer 3

Production is the business function that involves the processing of resources (land, labour, capital, and enterprise) to provide the output of goods and/or services. The purpose is to provide the right quality of goods and/or services in a cost-effective and timely manner.

Question 4

Vision statement

Answer 4

The vision statement of a business is a written statement of what the business aspires to be in the future. Having a vision gives the organization a clear sense of purpose and direction. SVT’s vision statement is “making the world a safer place”.

Question 5

Founding (foundation)

Answer 5

This refers to the date of the official establishment or creation of a business organisation. The owners are called founders or co-founders.

Question 6

Company

Answer 6

A company is a business owned by shareholders who have limited liability. Companies are incorporated organizations, i.e., they are legally separate entities from their owners. This means there is a divorce of ownership and control in a company.

Question 7

Supplies

Answer 7

This refers to the good on service that an organisation is willing and able to produce, usually for commercial gain. In general, the higher the price the greater the quantity suppled as the business can earn higher profit margins.

Question 8

Regional monopoly

Answer 8

A monopoly is a business that has significant market share and hence market power within a particular industry. A pure monopoly has 100% market share, meaning it is the sole supplier of a certain good or service. A regional monopoly con neve exclusive control over the production and distribution of a certain good or service within a specific geographic area.

Question 9

Expansion (expanded)

Answer 9

This is the growth of a business due to on increase in the size of the organization and/or growth in the market. Expansion is usually measured by on increase in variables such as sales revenue, number of employees, or profits.

Question 10

Business sectors

Answer 10

This refers to different ways of classifying different types of businesses based on the goods or services they produce or sell and the markets in which they operate. The main purpose of doing this is to provide a systematic way to analyze and understand the way in which different business sectors work,e.g, agriculture, manufacturing, retail, energy, and healthcare.

Question 11

Products

Answer 11

A product is a good or service which is sold on the market to satisfy the needs and wants of customers. it can be a tangible good (e.g., water filters) or an intangible service (e.g., teaching English as part of SVT’s Outreach Programme).

Question 12

Acquisition (acquiring)

Answer 12

An acquisition is a method of external growth that occurs when one company buys a controlling interest (majority stake) in another business, with mutuel consent, thereby taking overall control and ownership of the target business. This is typically done on a mutually agreed basis, unlike the case of a hostile takeover.

Question 13

Divisions

Answer 13

A division is a separate and distinct strategic business unit (SBU) of an Organization. SVT has four divisions, based on product: fresh water, desalination, engineering, and consumer products.

Question 14

Manufactures

Answer 14

This refers to the process of combining and transforming raw materials and/or components into find goods, ready for sell to customers. SVT’s engineering division produces welter treatment equipment and power turbines.

Question 15

Consumers

Answer 15

Consumers are the end-users of a product. This contrasts with customers who are the buyers of the product.

Question 16

Director

Answer 16

This is a senior executive in an Organization who holds autonomous decision-making responsibility. They are appointed to manage and oversee the operations of a company.

Question 17

Operational authority

Answer 17

This refers to the formal power of responsibility given to an individual or department within a business to carry out specific tasks and functions.it is usually given to the board of directors who hold ultimate responsibility for the organization’s conduct and performance.

Question 18

Tactical authority

Answer 18

This refers to decision-making power of a lower level within an Organization. Those with tactica authority are responsible for achieving specific and more routine goals and objectives of the business.

Question 19

Decision making

Answer 19

This is the management function of enacting or processing important choices and judgements in business operations. Rational dleusiou-making is an integral aspect of business management.

Question 20

Leadership style

Answer 20

This refers to the way in which managers and leaders choose to behave in relation to how they organize, communicate, and manage their employees.

Question 21

Situational leadership style

Answer 21

This is a leadership theory that suggest there is no single ‘best’ leadership style. Instead, effective leadership varies depending on the situation at hand, the persons on team involved, and the task that needs to be accomplished.

Question 22

Change (changes)

Answer 22

Change refers to the modification or transformation in the way business is conducted as a response to internal factors or external influences.it arises when internal and/or external factors that influence the operations of a business do not stay the same.

Question 23

External environment

Answer 23

The external environment refers to the factors beyond the control of the Organization, which have a direct impact on its business operations and performance. Examples include political, economic, social, technological, legal, ethical, and environmental factors.

Question 24

Employees

Answer 24

A type of internal stakeholder, employees are the people who work for a business. They are hived by a business to carry out specific tasks or roles within the Organization. They can have significant influence on the Organization, such as their level of motivation and productivity.

Question 25

Autocratic

Answer 25

An autocratic leader or manager is one who makes all decisions within all organisation and tells the employees what to do and therefore does not allow them to make decisions for themselves. Hence, decision making is swift, but only reflects the opinions (and personality) of the leader.

Question 26

Industry leader

Answer 26

Also known as market leaders, these are firms with the largest market share in a particular industry. Industry leaders tend to enjoy a good corporation image, which can help to attract more investors and better-quality employees.

Question 27

Productivity (productivity per employee)

Answer 27

This refers to how well things are done. it measures the efficiency in the production of goods or services expressed in terms of an input-output ratio, such as the output per worker over a specific time period.

Question 28

Distribution

Answer 28

This refers to the entire process of getting the right product to the right place at the right time where customers want them, all in the most cost-effective way possible.

Question 29

Internal growth strategies

Answer 29

These are the various ways that a business uses to expand by using its operations. Examples include market penetration and product development growth strategies (in reference to Ansoff’s matrix)

Question 30

External growth strategies

Answer 30

These are the various ways that a business uses to expand using third parties, such as through a takeover or acquisition.

Question 31

Income streams

Answer 31

Also known as revenue streams, this refers to the money or income coming into the business from different divisions of the Organizations, e.g., SVT earns revenue from the sales of its wf15 water purifiers as well as the manufacturing and operating of desalination plants across the world.

Question 32

Market growth

Answer 32

This refers to the increase in size of a market ou industry over time. This can be measured in several ways including an increase in sales revenue or the number of customers in a particular market.it is typically associated with an increase in the level of consumer spending in a given market

Question 33

Market

Answer 33

A market refers to the collective groups of existing and potential buyers and sellers of a particular good of service. The market for desalination (of see water) is growing rapidly.

Question 34

Demand

Answer 34

Demand refers to the total amount of good or service purchased of a particular price, in a given time period.

Question 35

Sales

Answer 35

Sales refer to the income of a business derived from the purchase of its goods and/or services from customers.it is calculated by multiplying the selling price of the product by the quantity sold

Question 36

Equipment and machinery

Answer 36

Equipment and machinery are types of fixed assets, ie., long-term tangible assets used in the production of a good or provision of a service. They are not intended for resale and expected to have a useful life of more than twelve months from balance sheet

Question 37

Product range

Answer 37

The product range of a business refers to all products in the product mix, i.e., all the products sold by the business.

Question 38

Takeover

Answer 38

Method of external growth that occurs when one company buys a controlling interest (majority stake) in another business , thereby taking overall control and ownership of the target business. This is typically done ina hostile way, usually against the wishes of the owners of the target company.

Question 39

Board of directors

Answer 39

The board of directors (BOD) of a company refers to on elected group of senior executives to represent the interest of shareholders. The BOD acts as the governing body that oversees the operations and strategic direction of the company. The BOD meets at regular intervals ( at board meetings) to discuss the make decisions about company policies and practices.

Question 40

Salaries

Answer 40

A salary is a form of financial payment made to on employee, based on his/her job as specified in a contract of employment. it is a fixed amount per on a periodic basis, usually per month.

Question 41

Rival businesses

Answer 41

Competitor organisations that operate in the some market or industry. The organisation may have little or no control over the activities of its rival businesses as these are external stakeholders.

Question 42

Financial methods of motivation

Answer 42

This refers to the monetary payments used to reward and/or motivate people In businesses. Examples include salaries, bonuses, and fringe benefits such Es life insurance and pension contributions for SVT’s employees.

Question 43

Non-financial methods of motivation

Answer 43

This refers to the non-monetary methods used to motivate people. Examples include methods to improve job satisfaction, job enlargement, job enrichment, team working, and opportunities for advancement.

Question 44

Economies of scale

Answer 44

This refers to the cost-saving benefits enjoyed by Organization due to its larger scale of operation.it is shown by a fall in unit (average) cost of production following an increase in output. For example, large companies like SVT can reduce their unit cost by using advanced computer technologies to raise productivity

Question 45

HR

Answer 45

The human resources department is the subdivision of en Organization that focuses on the personnel or the employees of the business.

Question 46

Resistance to change

Answer 46

This refers to the opposition, reluctance, or hesitation shown by individuals or group of employees towards adopting new ideas or proposals that move away from established practices and cultural norms.

Question 47

Flexible-working contract

Answer 47

This is an employment agreement that provides employees with more control over the timing and/or arrangements of their employment. An example is SVT’s proposal for employees to change to new shifts (working hours) every six months.

Question 48

Recruitment

Answer 48

This is a process of hiring suitable workers for job roles within an Organization. it starts with identifying the need for a new employee, followed by defining the job roles within an Organization. It starts with identifying the need for a new employee, followed by defining the job and the appropriate person for it, attracting a number of suitable candidates, interviewing them,and selecting the best person for the job.

Question 49

Vacancies

Answer 49

A job vacancy exists when a job position becomes available, often due to resignations on growth of an Organization.

Question 50

Appoint

Answer 50

This refers to the process of hiring/recruiting suitable workers. The appointment process helps decision makers to select the best person for the job vacancy.

Question 51

Team (teamworking)

Answer 51

A team is a group of co-workers who work together to achieve a common goal. Teamwork is a form of non- financial reward, which occurs when employees work with fellow colleagues to achieve organisational goals.

Question 52

Advertise

Answer 52

This refers to the hr function of promoting job openings in order to attract and recruit suitable candidates for job vacancies at the business, e.g., company websites, social media platforms, newspaper, recruitment agencies, and professional networking sites (such as LinkedIn)

Question 53

Innovative (innovation)

Answer 53

Innovation is the commercial development, adoption, and exploration of an invention or creative ideal that appeals to customers in a profitable way for the business. Innovative technologies are new on advanced devices, processes, or computerized systems that are designed to improve efficiency, productivity, and quality output.

Question 54

Quality

Answer 54

Quality refers to the extent to which a product is fit for its purpose, i.e., whether it meets (or execeds) the needs and wants of the customer by conforming to a certain standard. Aspects of quality include: durability, reliability, customer service, after-sales care and the physical appearance of the products.

Question 55

Induction training

Answer 55

This is a form of training for new staff in order to help acquaint them with the policies, processes, and physical environment of the Organization.

Question 56

Objective

Answer 56

Objectives are the goals of the company, such as expansion and increased market share. Peter Drucker suggested that business objectives should be SMART: specific, measurable, achievable ( or agreed), realistic and time constrained.

Question 57

Labor productivity

Answer 57

This measures the efficiency of labour in the production process expressed in terms of an input-output rectio, such as the output per worker or sales per worker.

Question 58

Unit costs

Answer 58

This refers to the average cost of production. The per whit cost is derived from dividing the total costs of output by the number of units produced. As a firm grows, the per unit costs will lend to fall (economies of scale)

Question 59

Labour turnover

Answer 59

Measures the rate of change of Human Resources within an Organization, per period of time. The more people who leave the Organization per time period, the higher the labor turnover rate.

Question 60

Capacity

Answer 60

Refers to the maximum output of a worker, department, or organisation, per period of time. It is based on the ability of the ability of the business to use its resources to produce goods and services. SVT has increased the capacity of its plants at H4 PLC.

Question 61

Contribution

Answer 61

Refers to the surplus earned on the sale of individual products. It is used to calculate how many items need to be sold to cover all the firm’s costs (both variable and fixed costs). It enables managers to see the surplus (contribution) that a firm earns from each unit of product sold and whether that return is sufficient to allow it to earn profit overall, after deducting its fixed costs.

Question 62

Profit

Answer 62

Profit is the surplus from sales revenue after all production costs have been deducted. it is a fundamental objective of most private sector orgonizatious. In its most simplistic form, profit=sales revenue - total costs.

Question 63

Dividends

Answer 63

The share of the net profits that a company pays to its shareholders. Preference shares usually carry a fixed dividend while ordinary shares a variable dividend depending on the profitability of the company.

Question 64

Market share

Answer 64

Market share is the percentage of all sales in a market that is held by one brand on a business. lt can be measured in terms of the volume (units sold) or value (revenue generated). Most businesses aim to gain high market share.

Question 65

Aims

Answer 65

An aim is the long-term goal of an Organization. It helps to give the Organization and its personnel a sense of purpose and strategic direction. Aims are used to formulate onganizational objectives.

Question 66

Brand leader

Answer 66

A brand leader is the bestselling product in a particular market, i.e., it has the highest market share in the industry. it can also refer to the most highly regarded (respected) product or brand in the market.

Question 67

Marketing budget

Answer 67

A marketing budget is a financial plan of expected revenue and expenditure for the marketing department within an Organization, for given time period. The budget includes expenses related to marketing activities, such as market research, product development, advertising, public relations, and sales promotions.

Question 68

CSR

Answer 68

CSR is the conscience of a business with consideration of the organization’s actions on its various stakeholder groups and the natural environment. It also involves organizations monitoring and ensuring their compliance with the ethical standards of society.

Question 69

Cost

Answer 69

Costs are items of expenditure by a business when producing goods and/or services. Examples include the cost of salaries, rent, raw materials, advertising,and taxes.

Question 70

Training

Answer 70

The process of developing knowledge and skills of workers in order to enhance their confidence and competence in me workplace, e.g., induction for new staff on skills training such as teaching people in a LEDCs to dig wells.

Question 71

Charities

Answer 71

Non-profit organizations set up to provide help and raise money or aid for those in need.

Question 72

NGO

Answer 72

An NGO is a type of non-profit social enterprise that operates in private sector but does not primarily aim to make profit. NGOs are established to benefit others in society by focusing on advocacy, research, or social services.

Question 73

Low-cost

Answer 73

Low-cost products, sure SVT’s WF15 water purifiers, ove goods that are sold of a lower price than other similar products available on the market. They are typically of lower qualify than higher priced but are still functional and meeting minimum quality standards set by the industry.

Question 74

Research (market research)

Answer 74

The process of gathering and interpreting information regarding customers, markets, or products. It involves collecting primary and/or secondary data, which may be of a quantitative or qualitative nature to inform business decision making.

Question 75

Entrepreneurs

Answer 75

An entrepreneur bears the financial risks of starting and managing a new business or a commercial venture. Entrepreneurs can develop new products or service ideas or find a way of offering an existing product.

Question 76

Needs

Answer 76

These are the physiological requirements that are essential to all human beings. They must have these in order to survive, e.g., food, clothing, and shelter. Needs appear at the bottom of Maslow’s hierarchy of needs.

Question 77

Pricing strategies

Answer 77

This refers to the pricing methods that a business uses to sell its products. Examples include cost-plus, penetration, psychological, loss leader pricing.

Question 78

Not-for-profit operation

Answer 78

An aspect of an organization’s operations or division that is not run primarily for financial gain. Instead, the not-for-profit business reuses any financial surplus to achieve its organizational goals, rather than distributing profit as dividends to its owners.

Question 79

Subsidize/subsidies

Answer 79

Subsidies, in the context of SVT, are financial payments typically provided by the company to support specific business operations or division that benefit local or wider community. Whilst subsidies will help to reduce the price of the WF15 water purifiers, this comes of the opportunity cost of lower profitability.

Question 80

Profitability

Answer 80

The measure of an organization’s ability to earn revenues above its expenditures. It is used to measure how efficiently a business has used its resources to generate profits for the owners.

Question 81

Stakeholders

Answer 81

Individuals and/or other organizations that have direct interest in the operations of a business. They include internal stakeholders (such as employees, managers, directors, and shareholders) and external stakeholders (such as customers, suppliers, the local community, and governments)

Question 82

Consumer products

Answer 82

These are goods or services purchased for personal use by consumers (such as SVT’s WF15 water purifiers), rather than for commercial use (in which case the products are called producer goods).

Question 83

Distribution channels

Answer 83

This describes how the final good or service passed from the producer to consumers (the end users). The end user may be a consumer or another business. SVT is unsure about how to best distribute their water purifiers.

Question 84

Marketing department

Answer 84

The marketing department of an Organization has overall responsibility for identifying and satisfying customer wants and needs. It is in change of ensuring that the firm’s products sell. This is done through a series of marketing activities such as market research, advertising, and brand development

Question 85

Secondary market research

Answer 85

Also known as desk research, this refers to information collected from second-hand sources (which already exist), e.g., government statistics, the news media and independent market research reports, all of which are easily accessible to the public.

Question 86

Social media.

Answer 86

Social media refers to any form of online platform (such as websites and applications) that enable users to create and share interactive content or to participate in online social networking. Social media technologies facilitate the creation and communication of information, ideas, and opinions.

Question 87

Family - owned business

Answer 87

A business where one or more members of a family are directly involved in the management and ownership of the business. They are typically run with the intention of keeping the business for future generations of the family. H4 PLC was originally a family-owned business.

Question 88

Share price

Answer 88

This is the price of a single share of a limited liability company. It is determined by the demand for and supply of the shares of the company on the listed stock market. A company share price is typically based on the firms profitability and earnings potential.

Question 89

Above - the -line promotion (television, newspapers, magazines)

Answer 89

promotion that is undertaken by a business by paying for communication with consumers, e.g. advertising

Question 90

Below-the-line promotion (social media, sales promotions):

Answer 90

promotion that is not a directly paid-for means of communication but based on short-term incentives to purchase, e.g. sales promotion techniques

Question 91

Financial methods of Motivation

Answer 91

Salaries
Wages
Commissions - Getting a certain percentage of what YOU as the employee sold
Performance related pay - depending on how you perform you get paid
Profit-related pay
Fringe payments - bonus payments
One time incentive payments
Employee Share-ownership schemes

Question 92

Non-financial methods of Motivation

Answer 92

Job Enrichment: Employees have full control over their jobs with little supervision
Job Empowerment - when an employee performs well they get recognition and can have more say in decisions etc, may also get promotions
Job Rotations: Employers work in different divisions of the business
Job Enlargement: Employees have more tasks to do
Teamwork - everyone working together allows for encouragement

Question 93

One-Time Incentive Pay:

Answer 93

A bonus or a form of compensation for employees in exchange for going above and beyond their normal duties

Question 94

Pricing strategies include:

Answer 94

Cost-plus pricing
Price discrimination
Skimming pricing
Penetration pricing
Loss leading pricing
Predatory pricing (illegal do not use)
Psychological pricing

Question 95

Product life cycle

Answer 95

The product life cycle refers to the stages that a product goes through from its introduction to the market to its eventual decline and removal from the market. It helps businesses develop strategies for each stage to maximize profitability and longevity. The stages are: introduction, growth, maturity, decline.