Theme 1 Flashcards
Added value
The difference between the cost of the materials taken to make a product and the price
that is charged for the product.
Aims and objectives
The goals of a business. These may be financial or non‐financial.
Breakeven
The number of products a business must sell so that its total revenue is the same as its
total costs. At this point the business will make no profit or loss.
Business plan
A plan for the development of a business, giving details such as the products to be
made, resources needed, and financial forecasts.
Business success
A measure which could be sales, market share or profit related.
Cash flow
The flow of money into and out of a business over a period of time.
Cash inflow (Receipts)
Money coming into the business. E.g. Revenue, a loan or another source of
finance.
Cash outflow (Payments)
Money leaving the business. E.g. Wages, suppliers, loan repayments or
advertising.
Choice
A range of products aimed at differing needs and segments.
Closing balance
The amount of money left at the end of the current time period.
Competition
When companies produce comparable products or services within the same market.
Competitive advantage
The advantage one company has over another, or several others.
Competitive environment
A market which has many competitors.
Consumer
The person who uses the product.
Consumer income
The amount a person or household has to spend, after paying tax.
Consumer rights
What the consumer is entitled to by law.
Crowdfunding
Where a large number of individuals invest into a business project on internet sites
such as Kickstarter.
Customer
The person who buys the product.
Customer needs
What the customer wants, these can change over time. E.g. Price, quality, choice or
convenience.
Customer service
Having a clear understanding of customer expectations and delivering.
Demographics
The characteristics of the population in terms of age and gender.
Digital communication
Communicating with customers electronically through things such as a
website, social media and email.
Discrimination
Judging someone based on their age, gender, race, religion or disability.
Dynamic business
Businesses responding to what consumers want.
e‐commerce
The use of online systems to sell goods and services.
Economic climate
The broad performance of the UK economy, as measured by GDP growth.
Enterprise
The skills shown by an entrepreneur.
Entrepreneur
A person who organises resources, makes decisions and takes risks in business, in order
to benefit from the potential future rewards.
Exchange rate
The price of one currency in terms of another. E.g. £1=$2
Export
Goods or services that a firm produces in its home market, but sells in a foreign market.
Financial aim
Aims and objectives that relate to the money. E.g. Survival, profit, sales, market share.
Financial aim
Aims and objectives that relate to the money. E.g. Survival, profit, sales, market share.Fixed cost
Fixed cost
Costs which do not change with output. E.g. Rent or salaries.
Focus group
Where a number of customers are invited to attend a discussion about a product.
Forecast
A prediction of future finances. E.g. Sales, cash flow or profits.
Franchise
The right given by one business to another to sell goods or services using its name.
Franchisee
A business that buys the rights to a franchise.
Franchisor
The person who owns the rights to the franchise.
Gap in the market
An area of the market, with no products currently being provided.
Good
Physical items a business sells. E.g. Bikes, laptops & pens.
Import
Goods and services that are bought into one country from another.
Inflation
A general and persistent rise in prices which reduces purchasing power.
Insolvency
When a business can no longer afford to pay its debts.
Interest
The cost of borrowing and the reward of saving. Can be fixed or variable.
Legislation
Laws passed by Acts of Parliament.
Limited liability
Where a business and its owners have separate legal identities, meaning shareholders
can only lose the original amount they invested into a business.
Location
Where a business locates.
Margin of safety
The amount of products a firm sells over and above the breakeven point.
Marketing mix
The elements of marketing that are designed to meet the needs of the customer. The
elements are product, price, place and promotion.
Market mapping
A method of evaluating business ideas by setting out the features of a market and
plotting on current products being provided. Normally these are used to find a gap in the market.
Market research
Collecting and analysing data from customers, competitors and the market in
general.
Market segments
An identifiable group of people with the similar characteristics. This could be split by
location, demographics, lifestyle or income.
Net cash flow
The difference between cash inflows and cash outflows over a period of time.
Non‐financial aim
Aims and objectives that relate to areas other than finance. E.g. Social objectives,
personal satisfaction, challenge and control.
Obsolete
A product which is out of date and no longer used.
Opening balance
The amount of money the business has at the start of the current time period.
Overdraft
With agreement from your bank, taking more out of your account than you actually have,
leaving a negative bank balance.
Partnership
A business organisation that is usually owned by 2‐20 people, who have unlimited
liability.
Payment systems
The variety of ways in which customers can pay for a product. Includes contactless
payments, apple & android pay, PayPal and more traditional methods.
Place
How the product passes from the producer to the consumer.
Pressure group
A group with a common interest/goal who work collectively to further the cause.
Price
The amount charged to the customer for the product.
Primary research
Research which is being collected for the first time.
Private limited company (Ltd)
An incorporated business, with Ltd after its name that can sell shares to
family and friends. The shareholders have limited liability.
Product
The good or service a business is selling.
Product portfolio
The range of products a business sells.
Profit
The amount left from revenue after costs have been paid.
Promotion
An attempt to obtain and retain customers by drawing their attention to a business or its
products. E.g. Sales promotions, advertising and public relations.
Qualitative data
Data which is detailed and contains information about people’s feelings and opinions.
Quantitative data
Data which is limited in detail, but can easily be put into graphs and charts for
analysis.
Resource
The land, labour and capital used by entrepreneurs. E.g. Buildings, equipment & staff.
Retained profit
Profit that is ‘ploughed back’ into the business.
Revenue
The money made from selling a product.
Reward
The return for taking a risk and making it a success.
Risk
A situation or decision that has exposure business failure, financial loss or lack of security.
Secondary research
The collection of data that already exists but is then used for a business’s own
requirements.
Selling assets
When a person or business sells assets it owns, such as equipment or vehicles it no
longer uses, in order to raise finance.
Service
Non‐physical items a business sells. E.g. Hairdressing, public transport & music streaming.
Share capital
A way of raising finance through sale of shares.
Shareholder
A person who owns a ‘share’ in a business.
Sole trader
A business with a single owner, who has unlimited liability.
Stakeholder
Those with an interest in the activities of a business. These can be internal or external.
E.g. Shareholders, managers, customers and the local community.
Stakeholder conflict
When different stakeholder groups have different aims and objectives, which can
be difficult for a business to satisfy at the same time.
Target market
The segments of the market you are aiming your product at.
Taxation
Charges from the government.
Technology
Hardware and software that businesses may use.
Trade credit
A period of time given to a customer between receiving the goods and payment being
due.
Unemployment
The number of people who are looking for work but unable to find any.
Unique selling point
A characteristic of the product that makes it different from other similar products
being sold in the market.
Unlimited liability
Where a business and its owners are one and the same, meaning the owners are
responsible for all business debts.
Variable cost
A cost which rises as output rises. E.g. Raw materials or packaging.
Venture capital
An experienced business person provides funds for small or medium sized companies
that may be considered too risky for other investors, in return for equity.
