Topic one Flashcards
whats a good?
a physical product, such as a car.
what’s a service
intangible product (something you cant touch) such as a delivery service
what is advertising?
a method of communicating infomation about the product; the business pays for advertising time/space
what is aim
the intention to reach a goal
what is air pollution
the presence or introduction of harmful substances into the air causing disease, allergies or damage to humans, animals, plants or the built environment
what is an asset
something the business owns; it has a value
what is an average rate of return
the average profit for the year as a percentage of the original investment, average rate or return = average return per year x 100
what is a boston martix
A tool for analysing the contribution made by each product in a business’ product portfolio. It plots each product’s position according to its market share and the rate of growth of the market.
what is brand image
The consumers’ perception of the brand; its character, qualities and shortcomings. It is developed over time and operates as a consistent theme through advertising campaigns.
what is a break even chart
A diagrammatic representation of the costs and revenue for a product; it plots total costs against total sales revenue, showing the break-even point where they cross.
what is break-even output
The point at which the business’ total sales equals the total costs. There is neither profit nor loss.
what is buffer stock
A stock of raw materials held in reserve to protect the production process from unforeseen shortages.
what is a business plan
A detailed statement of how the business intends to operate, either at start-up or during a given period of time. Business plans are based on forecasts and so cover only a short time.
what is cash
money that the business has in cash or at the bank
what is cash flow forecast
A financial planning tool that estimates the money coming into and going out of the business on a month-by-month basis; it allows the business to predict times when additional finance may be needed to maintain liquidity.
what is cash inflow
Money received by the business from its operations or investments.
what is cashoutflow
Money paid out by the business to fund its operations or investment activities.
what is centralisation
Maintaining control by keeping authority at the senior levels of the organisation.
what is chain of command
The line through the hierarchy that shows who is responsible for whom from top to bottom of an organisation.
what is channels of distribution
The route the ownership of the product transfers from the seller to the buyer; it may be a single transaction or pass through others such as wholesalers, distributors, agents and retailers.
what is closing balance
the amount that remains in the account at the end of accounting period
what is commission
An amount of money paid to an employee that is based on a percentage of the sales he/she achieved; paid in addition to a basic salary.
what is competition
The rivalry between businesses looking to sell their goods/services in the same market.
competive pricing
Setting the price of a product so that it is in line with competitors’ prices.
what is consumer law
Laws designed to ensure that businesses make products that are safe and of good quality, and that they deal with customers honestly and fairly.
consumer spending
the money spent by households on goods and services to satisfy their needs and wants
contracts of employment
A legal document that sets out the terms and conditions of the job for the employer and the employee.
cost
The money spent by a business on goods and services.
cost plus pricing
Setting the price of a good or service at an amount higher than the cost of producing it so that a profit is made.
customer
Individuals, businesses or organisations that purchase goods/services and make decisions about which supplier to choose.
customer engagement
The relationship between the business and the customer that puts the customer’s requirements at the centre of the operation to build brand loyalty.
customer loyalty
The relationship between the business and the customer that puts the customer’s requirements at the centre of the operation to build brand loyalty.
customer satisfaction
Whether customers are pleased with the goods/services they receive; whether they would purchase again.
decentralisation
where authority is spread throughout the organisation.
delaying
the reorganisation of the organisation’s employees so that there are fewer levels of management
delegation
allocating a task to someone who would not normally be responsible for it
demand
the quantity of a particular product that will be bought at particular price over a specific time
directors
the people who are elected by the shareholders to run the business on their behalf
diseconomies of scale
when a business grows too large, leading to a possible increase in unit cost.
disposal of waste
the removal, storage or destruction of unwanted material. Methods include recycling, burning and landfill sites.
Dividend
A portion of the after-tax profit that is paid to shareholders according to the number of shares they own.
E-commerce
Business transactions carried out electronically on the internet.
economies of scale
The cost advantage of producing on a large scale. As output increases the unit cost decreases
Employees
Individuals who work full time or part time for the business; they have a contract of employment detaling their duties and rights
Employment law
Rulings that relate to the rights and responsibilites of people who work for a business; they affect the recruitment and selection process and how the business deals with its workers
Enterprise
The ability to identify business ideas and opportunities to bring them to fruiton and to take risks where appropriate
Entrepreneur
A person who has the vison to use initiative to make business ideas happen, managing the resources and risks.
Equality act (2010)
Protects people from discrimination in the workplace and in wider society. It sets out the different ways in which it is unlawful to treat someone.
Ethical objectives
A business’ goals that relate to fair business practice or moral guidelines and make a positive contribution to the business’ reputation
Ethics
The moral principles that guide how a business operates
Exchange rates
The price of one currency based on another or the cost of buying one currency from another, for example £1 = 1.21
Expansion
The process of increasing a business’ size
Export
Good/service sold to a customer in another country
Extension strategies
Methods that can be used to prolong the life of a product; could include price reductions, modifications to the product or relaunch
External growth
The growth of a business by joining with another by merger or takeover
External sources of finance
Obtaining funds from sources that are part of the business; possibilities include bank loan, mortgage, overdraft, additional partner or share issue.
Factors of production
The elements that combine in the production process: land, labour, capital and enterprise
Fixed costs
The costs that stay largely the same, regardless of the business’ output.
Flat organisational structure
An organisational structure with a wide span of control and few levels of hierarchy (a short chain of command).
Flow production
Using a production line to make goods continuously and in large numbers.
Focus groups
A small number of people from the target market brought together to discuss a particular product; produces qualitative data about their preferences and opinions.
Franchising
The sale of the rights to use/sell a product by a franchisor to a franchisee. A fixed fee and/or a percentage is paid in return. The franchiser specifies the standards and provides training and support.
Fringe benefits
Additional ‘perks’ that are in addition to a wage/salary; they are liable to income tax.
full time
Working all the usual hours required of an employee; usually 35 hours or more.
Gap in the market
An opportunity for a new business (or expansion) which may meet a need that is not being met, or a group of potential customers who are not yet purchasing a particular good/service.
gap in the market
An opportunity for a new business (or expansion) which may meet a need that is not being met, or a group of potential customers who are not yet purchasing a particular good/service.
Global warming
The steady increase in the earth’s temperature due to emissions and the build- up of greenhouse gases, resulting in climate changes.
Globalisation
The trend for large businesses to operate on a worldwide scale; money, goods and services can be transferred across national borders.
goods
Items that are produced from raw materials for sale to businesses or consumers.
Government grants
Money available from the government to fund projects that it wants to support; the money is not repaid, but there are conditions and often progress reports are required.
growth
A business’ increase in size. Methods include: asset value, employees, market share, markets, profits and sales.
Health and Safety at Work Act (1974)
Sets out the duties and responsibilities of both employers and employees for health and safety in the workplace.
Hierarchy
The management structure of a business/organisation showing the levels of responsibility. It is often shown as an organisation chart.
Hire purchase
Buying items by making a small initial payment and paying the remaining amount in instalments over an agreed period of time.
ImportGood/service bought from a supplier in another country.
Good/service bought from a supplier in another country.
Income statement
A summary of the revenue and expenses over an accounting period that lead to a profit or loss position.
Induction
Training given to a new employee when they start a new job; it provides information about the business, its operation and working practices.
Inspection
Testing/examining items to check that materials or items conform to the specified requirements/standards.
Integration
Two or more businesses join together.
Interest rates
The rate charged for borrowing money over a period of time, or the reward for saving money.