Topic 1 - Business In The Real World Flashcards
Consumer
Someone who uses a product
Customer
Someone who buys a product
Goods and an example
A physical product like a car
Product
General term for goods and services
Service and an example
An intangible product like a haircut
Entrepreneur
Someome who is willing to tape the risk involved in starting a business
Entrepeneurship
Refers to the ability to be an entrepeneur-to take risks and to develop business ideas
Profit
It meausres rhe difference between the value of a business revenue(from sales) and it’s total costs
Social enterprise
A business that is set up to help society rather than to make a profit
Resources
The inputs that business use to provide their goods or services
Interest
The money paid by banks as a reward to attract people to save with them
Opportunity cost
What is given up as a concequence of a particular decision
Exchange rate
The price of one currency expressed in terms of another
GDP(Gross domestic product)
Measueess all the income earned in a countrys economy in a year
Inflation
Refers ro the rate at which prices increasing in percentage
Interest rate
The cost of borrowing money or the reward for saving money expressed as a percentage
Sole trader
Someone who set up a business by themself
Unlimited liability
The personal possesions of a business are at risk if they go into debt and can’t pay back
Partnership
Occurs when two or more people join together in a business enterprise to pursue profit
Deed of partnership
An agreement between partners which sets out the rules of the partnership such as how profits will be divided
Limited liability
Exists when a business and it’s owners are seperate meaning the owners personal possesions can’t be taken
Company
A business that has it’s own legal identity it can own money can sue or be sued
Shareholder
A person or orga organisation that owns a part of a company
Flotation
When a LTD becomes a PLC and has it’ shares listed on the stock exchange
Not for profit organisation
An organisation that is set up to achieve it’s objectives other than profit. Like a charity
Aim
A general goal for a business
Objective
A specific target that is set to a business to achieve
Sales
Refers to the number of products sold by a business
Marketshare
Measures the percentage of sales in a particular market recorded by a business
Profit maximisation
Occurs when a business aims to make the highest possible profits from it’s activities
Customer satisfaction
Measures whether the products supplied by a business match or exceed the customers expectations
Dividends
The financial rewards paid out to shareholders each year
Stakeholders
Individuals and business what are affected and can affect a business
Competition
This exists when more that one business is trying to attract the same customers
Costs
The expenditure that is necessary to set up and run a business
Globalisation
The trend for markets to become worldwide in scope
Business plan
A documenr setting out what a business does and what it hopes to achieve in the future
Fixed costs
Costs that do not change when a business increases it’s output
Revenue
The income that a firm recieves from selling it’s goods and services
Total costs
Fixed costs + variable costs
Variable costs
Those costs that vary directly with a business’s level of output
External growth(intergration)
When a business gets bigger by joining with or buying other business
Internal growth(organic growth)
Occurs when a business gets bigger by selling more of it’s products
Networth
The value of a business by calculating the total value of the business assets(what it owns) and subtracting by what it owes
Franchise
Occues when a franchisor sells the right’s to it’s products to a franchisee in return of a fee or a percentage turnover
Franchisee
A person who buys a franchise in return for a feee or a percentage of turnover
Franchisor
Usually sells a franchise in return for a fee and a percentage turnover
E-commerce(electronic commerce)
The act of buying or selling using an elctronic system like the internet
Outsourcing
Occurs when a business uses another business to produce for it
Merger
Occurs when two or more business join together to form a new one
Takeover
Occurs when one business buys control of another business
Average unit cost
The cost of producing a single unit of production. It’s calculated by diving the total costs by the number of units of output produced
Disconomies of scale
Occur when the cost per unit increases as a business expands
Economies of scale
Occue when a business unit costs of production falls as it’s output rises and the business expands
Total costs equations
Total costs = fixed costs + variable costs
Sales revenue equation
Sales revenue = price of goods x quantity sold
Gross profit equation
Gross profit = sales revenue - variable costs
Net profit equation
Net profit = sales revenue - (fixed costs + variable costs)
What are fixed costs
The costs that do not vary with the level of business could be rent or insurance
What are variable costs
Costs that do vary with the level of trade
Could be the more hats you sell the more you buy to replace them
What is sales revenue
It’s the money into your business through sales
