Unit 1 - What is business - Keywords

Question 1

mission

Answer 1

an organisation’s aims or long-term intentions
it is the ultimate purpose of the business
is also the same as corporate aims

Question 2

mission statement

Answer 2

a qualitative statement of the organisations aims that uses language to motivate employees and convince customers of the firms sincerity and commitment

Question 3

business objectives

Answer 3

goals that must be achieved in order to realise the stated aims of an organisation, department or individual team.
they tend to be medium to long term
they can be corporate or functional objectives

Question 4

corporate objectives

Answer 4

goals of the whole organisation.
they are set in order to co-ordinate the activities of, give a sense of direction to, guide the actions of the whole organisation. they are dictated by the mission or corporate aims.

Question 5

functional objectives

Answer 5

goals of each of the functional areas.
they are designed to ensure that the business achieves its corporate objectives.
they are set in order to co-ordinate the activities of, give a sense of direction to and guide the actions of a division or department

Question 6

strategy

Answer 6

the medium to long term plans through which an organisation intends to achieve its objectives

Question 7

cash flow

Answer 7

the amounts of money flowing into and out of a business over a period of time

Question 8

price

Answer 8

the amount paid by a consumer to purchase one unit of a product

Question 9

total revenue

Answer 9

(turnover or sales revenue) - the income received from an organisation’s activities
total revenue=price per unit x quantity of units sold

Question 10

fixed costs

Answer 10

costs that do not vary directly with output in the short run (rent)

Question 11

variable costs

Answer 11

costs that vary directly with output in the short run (raw materials)

Question 12

total costs (TC)

Answer 12

the sum of fixed costs and variable costs

Question 13

profit

Answer 13

the difference between the income of a business and its total costs

Question 14

private sector organisations

Answer 14

they are owned, financed and run by private individuals.
they range from small sole traders to huge organisations. most businesses sim to make a profit but some don’t like non-profit organisations

Question 15

public sector

Answer 15

owned and run by the government. they aim to provide services to the public rather than make a profit.
they are funded by the UK tax system

Question 16

unincorporated business

Answer 16

there is no distinction in law between the individual owner and the business itself. The identity of the business and the owner is the same. Such businesses tend to be sole traders or partnerships

Question 17

incorporated business

Answer 17

this has a legal identity that is separate from the individual owners. these organisations can own their own assets, owe money and enter into contracts in their own right.

Question 18

unlimited liability

Answer 18

a situation in which the owners of a business are liable for all the debts that the business may incur.

Question 19

limited liability

Answer 19

a situation in which the liability of the owners of a business is limited to the fully paid up value of the share capital.

Question 20

sole trader

Answer 20

a business owned by one person. The owner may operate on his or her own or may employ other people

Question 21

private limited company

Answer 21

a small to medium sized business that is usually run by the family or the small group of individuals who own it

Question 22

public limited company

Answer 22

a business with limited liability. they are traded on the stock exchange which enables these businesses to raise finance more easily.

Question 23

ordinary share capital

Answer 23

money given to a company by shareholders in return for a share certificate that gives them part ownership of the company
ordinary share capital is permanent, so a business will never be required to repay that value these shares to their owners

Question 24

dividend

Answer 24

a payment made by a company to its shareholders out of profits earned. when a company earns a profit or surplus, it can either reinvest it in the business or it can distribute it to shareholders or allocate a proportion to reinvestment and a proportion as dividends. they are fixed amounts per share

Question 25

market capitalisation

Answer 25

the value of outstanding shares in a public limited company. outstanding shares are the total of ordinary shares issued and fully paid.
total outstanding share x the current market price of an individual share

Question 26

shareholder

Answer 26

the owner of a limited company - a shareholder must own at least one share in that company

Question 27

share price

Answer 27

the price of a single share in a company, share prices are usually determined by the supply and demand for shares

Question 28

demand

Answer 28

the amount of a product (good or service) that consumers are willing and able to buy at any given price over a period of time

Question 29

interest rates

Answer 29

the cost of borrowing money and the return for lending money

Question 30

demographics

Answer 30

the characteristics of human populations and population groups; it includes analyses of a range of elements including migration trends, birth and death rates, trends in age, ethnicity and gender, levels of education, marital status and size of family.