Summer Key terms Flashcards
Market
all of the buyers and sellers that trade a particular type of product in a particular place
Market size
the total value of sales in a market over a period of time
the total number of consumers in that market
Competition
the contest between organisations that provide similar or the same products/services
Risk
When the potential outcomes of a decision are known
Complimentary goods
products which are bought and used together
External shocks
an unexpected change which takes place outside of a business and affects the economy
Seasonality
where the levels of business activity varies based on the time of year
Substitute
a product that can be used to replace another because customers see them as being very similar products
Indirect taxes
tax on goods and services rather than profit e.g. VAT
Government subsidies
any form of government support offered to producers (and occasionally consumers)
Equilibrium
when there is a balance between supply and demand, making the price stable
Price inelastic of demand
demand for the product isn’t very dependent on price
Price elastic of demand
demand for the product is very dependent on price
Inferior goods
a product that has a negative income elasticity of demand
Necessity
products/services that consumers buy regardless of the changes in their income levels
Luxury goods
demand increases more than what is proportional as income rises
Product/ service design
The process of creating a new product that will be sold by the business
Resource depletion
when natural resources are used quicker than the rate of replenishment
Recycling
the conversion of waste into renewable material
Re-use
using an item, whether for its original purpose or to fulfill a different function
Viral marketing
the use of social networks to rapidly raise awareness of a new product/service
Emotional branding
seeks to create a bond between the consumer and product by provoking an emotional response to advertisement
Price
the amount of money that is paid for a product/service
Predatory pricing
deliberately lowering prices to force another business out of the market
Psychological pricing
when a firm sets a price for the product in order to entice the customer
Manufacturer
a person/company that produces finished goods and raw materials by using various equipment and resources
then sells them to consumers, wholesalers, distributors and retailers
Wholesaler
a business that buys goods from manufacturers in bulk and sells them in smaller quantities to retailers
Retailer
a business or person that sells goods to the consumers
Intermediaries
individuals or companies that behave as middlemen between parties
(organisations involved in each stage of distribution)
Cash cow
a product that has a high market share and a low market growth
Problem child/question mark
a product that has a small market share and a high market growth
Star
a product that has a high market share and a high market growth
Business 2 Consumer marketing
the marketing of a business’ product to a consumer
Where businesses sell directly to consumers.
Multiskilling
where staff are allowed to carry out a variety of tasks rather than specialise
Flexible hrs
where staff vary the hrs they work to meet both the needs of the business and to some extent their own
Home working
involves employees carrying out all/ part of their job at home without the need to attend the business’ premises
Outsourcing
when a business has one or more of its activities carried out by another business
Dismissal
When an employer ends an employee’s contract of employment due to misconduct or for breaching company rules
Redundancy
When an employee loses their job because their job role is no longer required due to a lack of business/ restructuring
Employer/employee relationships
The working connection between employees and employers in the workplace
Individual bargaining
When a single employee negotiates work-related issues with their employer
Trade unions
A group that acts on behalf of a group of employees in negotiations with employers
Recruitment process
The process of finding and hiring a person for a specific job role that needs filling within a business
Person specification
Describes the personal attributes desired in a potential employer
(The skills and experience required to succeed in a specified job application.)
Job description
A summary of a job role, including working hrs, salaries, and duties
Selection process
The process of deciding which applicant for a job a business should accept
Training
The process of increasing the knowledge and skills of the workforce to enable them to perform their jobs successfully
Induction training
Training provided to new employees to introduce them to the business and their job role
Hierarchy
The series of levels in a business organised by the amount of authority and responsibility that workers have
Span of control
The number of employees a manager is responsible for
Chain of command
The path of communication and authority up and down the hierarchy of a business
Piecework
when workers are paid per unit produced
Commission
an amount of money paid to an employee that is based on a percentage of the sales they have achieved
Bonus
workers are paid extra on top of their salary once an agreed target has been met
Profit share
a scheme that pays employees an additional amount based on the yrs profit
Performance related pay
workers are paid based on their performance or the performance of the business
Delegation
allocating a task to someone who would not normally be responsible for it
Team working
puts workers into small groups and lets them organise their own work
Job enrichment
when workers are given more challenging work and training they need to do it
Job rotation
when workers are moved between different tasks
Job enlargement
when workers are given a greater range of work at the same level
Leadership
the functions of ruling, guiding and inspiring others
a person who has a vision that they share with others, whilst pushing them in the right direction
Management
the planning, organising, directing and controlling all or part of a business
(a person who makes decisions that affect day to day running of a business)
Laissez faire leadership
where the leader may offer coaching and support to employees, but will rarely interfere in the running of the business
Intrapreneur
when an employee of a business shows entrepreneurial skills within the business
Profit satisficing
when a business is making enough profit so that the owner has a desirable quality of life, or shareholders are paid satisfactory dividends
Limited liability
owners are legally responsible for all business debts
Unlimited liability
owners are only liable for the money they have invested in the business
Shareholders
an individual that owns shares in a business
Owners capital
money the owner(s) invest into the business, often from their personal savings
External finance
money that comes from outside the business e.g. banks, business angels
Peer to peer funding
where individuals lend money to other individuals/businesses without having to use the traditional banking sector
Business angels
wealthy individuals who invest money into new or innovative businesses that they think have the potential to be successful
Overdraft
when a bank allows a business to have a negative bank balance
Grant
a fixed sum of money given to a business by a government
Sales revenue
the amount of money a firm has earned in a given time period
Variable costs
costs that change when output change e.g. raw materials
Contribution
the difference between the selling price and the variable costs of a product
Adverse variance
when a firm is performing worse than expected
Favourable variance
when a firm is performing better than expected
Gross profit
the difference between total revenue and cost of sales
Overheads (indirect costs)
costs such as rent that dont directly relate to the production/sale of goods/services
Operating profit
the difference between gross profit and operating expenses
how much profit has been made in total from the trading activities of the business before any account is taken of how the business is financed.
Net profit (PFTY)
the difference between operating profit and interest
what is left after all the costs of a business have been taken from its sales revenue.
Statement of financial position
a snapshot of a firms finances at a particular time
Non current assets
an asset that the business is likely to keep for more than a yr
Current assets
an asset that the business is likely to EXCHANGE for cash within the accounting yr
Current liabilities
a debt which NEEDS to be paid off within a yr
Non current liabilities
a debt that the business will pay off over SEVERAL yrs
Working capital
the amount of cash that the business has available to pay its day to day debts
Job production
a production method in which one off items are made
Cell production
an assembly line is divided into sets of tasks, each of which is completed by a work group
Average costs
the cost per unit manufactured in a production run
Capacity
the maximum output that it can produce in a given period
Under utilisation
not using machines or resources to the fullest
Usage rate
the quantity of a product/service consumed by a user in a given period
Lead time
how long it takes from an order being placed with the supplier and the items arriving
Reorder level
the level of stocks at which orders need to be placed
Reorder quantity
the amount the business orders from its suppliers
Quality
the extent to which a good/service meets customer requirements
(how “fit for purpose” a good is)
Quality circles
a meeting of a group of employees to discuss quality
Consumer price index (CPI)
an index that tracks the changes in the average cost of a “basket” of goods and services that an average household regularly buys
Exchange rate appreciation
when the value of currency increases relative to that of another
Gross domestic product (GDP)
the total market value of goods and services produced within a nation over a period of time (usually a yr)
Recession
a temporary decline in a country’s economic activity
Environmental legislation
legislation designed to protect the environment against negative impacts caused by business’s production
Competition policy
aims to protect the interests of consumers and businesses as well as aiming to restrict anti-competitive practices such as abusing market power
