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A-level Business Edexcel: Key Terms > Theme 3 > Flashcards

Theme 3 Flashcards

1
Q

PESTLE Analysis

A

Assessing the likely impact of the PESTLE factors in the external environment of a business

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2
Q

Monopoly

A

A single producer within a market in theory but in practice one with less than 25% market share

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3
Q

Business Cycle

A

Patterns of ups and downs in demand and output within the economy

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4
Q

Boom

A

Higher levels of customer demand, business confidence, profits, and investment

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5
Q

Recession

A

Falling levels of customer demand, business confidence, profits, and little investment

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6
Q

Slump

A

Very low levels of customer demand, business confidence, profits, and investment

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7
Q

Recovery

A

Slowly rising levels of customer demand, business confidence, profits, and investment

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8
Q

GDP

A

Total value of a country’s output over one year

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9
Q

GNP

A

Total value of a country’s output over one year plus net income from abroad. Used more

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10
Q

Interest rate

A

The cost of borrowing money and the return for lending money. Set by the Monetary Policy Committee

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11
Q

Exchange rate

A

The price of one country’s currency is expressed in another currency.

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12
Q

Inflation

A

An increase in the general level of prices of goods within an economy. Fall in the purchasing power of money

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13
Q

Deflation

A

A decrease in the general level of prices of goods within an economy. Rise in the purchasing power of money

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14
Q

Cost-Push inflation

A

Occurs when there is an increase in the costs of production forcing prices up

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15
Q

Demand-Pull inflation

A

Where prices rise because there is excess demand in the economy

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16
Q

Social Responsibility

A

The duties of a company towards employees, customers, society, and the environment

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17
Q

Ethical Behaviour

A

Actions and decision that are seen to be morally correct

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18
Q

Technological change

A

Adapting new applications of practical or mechanical sciences to industry and commerce

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19
Q

Franchise

A

When a business (franchisor) gives the right to supply its products to another business (franchisee). Involves licensing of trademarks and methods of doing business

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20
Q

Patent

A

An official document granting the holder to the right to be the only producer or user of the product or process

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21
Q

Incorporated business

A

Has a legal identity that is separate from the individual owners. The business can own assets, owe money, and enter into contracts

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22
Q

Unincorporated business

A

No distinction in law between the individual owner of the business or the company itself.

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23
Q

Unlimited liability

A

Owners of the business are liable for all the debts that the business may incur

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24
Q

Limited liability

A

Where the owners of the business are liable for the share capital they invested into the firm and nothing else

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25
Q

Sole Trader

A

A business owned by one person

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26
Q

Private Limited Company (Ltd)

A

A small to medium-sized company usually run by a small group of individuals who own it

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27
Q

Public Limited Company (PLC)

A

A business with limited liability, a share capital of over £50,000, and generally, a wide spread of shareholders

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28
Q

Business Plan

A

A report describing the marketing strategy, operational issues, and financial implications of a business start-up

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29
Q

Corporate Aims

A

The long-term intention of a business

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30
Q

Stakeholder

A

An individual or group with a direct interest in the activities and performance of an organisation

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31
Q

SWOT Analysis

A

A technique that allows the company to assess its overall position.
Internal audit (strengths and weaknesses): represents the PRESENT position of the product or company.
External audit (opportunities and threats): represents the FUTURE potential of the company.

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32
Q

Mission Statement

A

Catch summary of reasons why a business exists

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33
Q

Aim

A

Outlines what the business wants to achieve in long-term

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34
Q

Mission

A

Outlines the purpose of the business

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35
Q

Objectives

A

Specific outcomes of a business wants to achieve

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36
Q

Strategy

A

Medium to long-term plan to achieve corporate objectives

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37
Q

Porter’s strategic matrix

A

finds a way to achieve sustainable competitive advantage over other competitive products and firms in the market

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38
Q

Differentiation strategy

A

Superior product quality, finding the unique selling point

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39
Q

Low-cost strategy

A

low-cost operator

40
Q

Ansoff’s matrix

A

helps identify new market of potential marketing strategies for a business

41
Q

Porter’s Five Forces

A

Buyers
Suppliers
Substitutes
New Entrants
Existing rivals

42
Q

Profitability

A

The quality or state to be profitable, the capacity to make a profit

43
Q

Economies of Scale

A

This happens when unit costs fall as output rises

44
Q

Mergers

A

Combination of two separate businesses that have agreed to form a new firm

45
Q

Takeover

A

Acquiring control over another business

46
Q

Organic growth

A

Expansion within the business

47
Q

Inorganic growth

A

Expansion beyond the business

48
Q

Quantitative Sales Forecast

A

based on historical sales data, that allows businesses to predict future revenue, make informed decisions, and plan future sales strategies

49
Q

Extrapolation

A

Using trends established from historical data to forecast the future.

50
Q

Correlation

A

Looks at the strength of the relationship between two variables

51
Q

Investment appraisal

A

The process of analysing whether investment projects are worthwhile

52
Q

Payment Method

A

The time it takes for a project to repay its initial investment

53
Q

Annual Average Return (ARR)

A

Annual percentage return on an investment project based on average returns earned by the project.

54
Q

Net Present Value (NPV)

A

Calculates the current monetary value of the project’s future cash flows

55
Q

Decision Trees

A

Helps decide whether the net gain is worthwhile

56
Q

Probabilities

A

The chances of an outcome happening

57
Q

Expected Values

A

Financial value of an outcome

58
Q

Net gain

A

Value to be gained from taking a decision and calculating expected values and deducting the costs associated with the decision

59
Q

Critical Path Analysis

A

A project analysis and planning method that allows a project to be completed in the shortest possible time

60
Q

Corporate influences

A

internal factors affecting business decisions.

61
Q

Short-termism

A

A business prioritises short-term decisions

62
Q

Long-termism

A

short-termism possibly occurs at the expense of long-term performance measures

63
Q

Mittelstand

A

Germany’s small-medium sized companies, the strongest driver of innovation and tech in the country, renowned across the world

64
Q

Corporate Culture

A

Sums up the spirit, attitudes, behaviors, and ethos of an organization

65
Q

Power culture

A

control from the centre

66
Q

Role Culture

A

clearly delegated authorities with highly defined structures

67
Q

Task Culture

A

Teams are formed to solve particular problems

68
Q

Person Culture

A

People believe in themselves to be superior to the business

69
Q

Ethics

A

Moral guidelines which govern acceptable behaviour

70
Q

Income Statement

A

Difference between the total income and costs of the firm showing the profit or loss made by the business

71
Q

Balance Sheet

A

Snapshot of business assets (owed and owned) and liabilities (owes) on a particular day

72
Q

Non-current assets

A

assets and property owned by a business that are not easily converted to cash within a year

73
Q

Current Assets

A

cash and other assets that are expected to be converted to cash within a year.

74
Q

Non-current liabilities

A

the debts a business owes, but isn’t due to pay for at least 12 months

75
Q

Current liabilities

A

amounts due to be paid to creditors within twelve months.

76
Q

Ratio Analysis

A

quantitative method of gaining insight into a company’s liquidity, operational efficiency, and profitability by studying its financial statements

77
Q

Return on capital employed (ROCE)

A

a financial ratio that is used to measure the profitability of a company and the efficiency with which it uses its capita

78
Q

Gearing Ratio

A

a group of financial metrics that compare shareholders’ equity to company debt in various ways to assess the company’s amount of leverage and financial stability

79
Q

Human Resources

A

the department within a business or organization responsible for managing its employees

80
Q

Labour Turnover

A

the net departure of employees over a defined period of time

81
Q

Labour Productivity

A

the measure of how much output is produced per unit of labour input

82
Q

Absenteeism

A

when an employee consistently doesn’t appear for work at their scheduled time.

83
Q

Financial Rewards

A

Commission, bonuses, piece-rate payments

84
Q

Employee Share Ownership

A

Employees are given a percentage of shares as part of their contract

85
Q

Employee Empowerment

A

giving employees power to do their job and authority to make decisions

86
Q

Consultation Strategies

A

A way for employees to provide opinion for business to feel more included

87
Q

Change management

A

involves the process that ensures a business responds to the environment it operates in.

88
Q

Step change

A

significant changes that occur rapidly

89
Q

Incremental change

A

occurs over a period of time, small changes

90
Q

Factors of Change

A

Time and speed, resistance to change, size of organisation , performance, external shocks

91
Q

Mitigating risks

A

taking action that will reduce and minimise risk

92
Q

Business Continuity

A

Planning on how to restore things to normal following a setback or disaster

93
Q

Succession planning

A

Thinking and planning ahead for when a leader leaves and needs to be replaced

94
Q

Contingency planning

A

a course of action designed to help an organization respond to an event that may or may not happen

95
Q

Risk management

A

Identifying and dealing with the risks threatening the firm

96
Q

Scenario Planning

A

Always expect the unexpected

97
Q

Crisis management

A

dangerous events (earthquakes)

A-level Business Edexcel: Key Terms (2 decks)

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