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Business > Unit 3 Keywords > Flashcards

Unit 3 Keywords Flashcards

1
Q

Market analysis

A

The process of collecting information about the market the business is operating in, in order to create effective objectives to ensure success.

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2
Q

Price elasticity of demand (PED)

A

Measures the responsiveness of demand after a change in price

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3
Q

Income elasticity of demand

A

Measures the responsiveness of demand after a change in customer income

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4
Q

Normal goods

A

These have a positive income elasticity of demand and there is a shift to the left in the demand curve. This means as incomes rise, so does the demand at each price (e.g clothing, household appliances)

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5
Q

Recession

A

A fall in real GDP for two consecutive periods of 6 months. There is a large decline in economic activity across an economy (e.g. real income goes down as does retail sales and industrial output)

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6
Q

Income tax

A

A percentage of their earnings a person pays to the government to fund public service such as education.

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7
Q

Sales forecast

A

A prediction of sales revenue based on the historical number of sales made and current market research and trends

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8
Q

Sales forecasting

A

The process of predicting what a business’s future sales will be.

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9
Q

Budget

A

An estimate of income and expenditure for a business covering a set period of time

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10
Q

Moving average

A

One of a succession of averages of data, where each average is calculated by successfully shifting the interval by the same period of time

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11
Q

Line of best fit

A

A line that goes roughly through the middle of all the scatter points on a scatter graph. The closer the points are to the line of best fit, the stronger the correlation.

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12
Q

Time-series analysis

A

A method that allows a business to predict future levels of sales from past figures.

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13
Q

Budget

A

An estimate of income and expenditure for a business covering a set period of time.

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14
Q

Variances

A

The difference between the budgeted amount and the actual amount for each item in a budget.

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15
Q

Current assets

A

Cash or other assets that can be converted into cash within 12 months.

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16
Q

Working capital

A

The cash needed to pay for the day to day operation of the business.

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17
Q

Current liabilities

A

The amounts due to be paid out within 12 months

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18
Q

Working capital cycle

A

The period of time between the point at which cash is first spent on the production of a product and the collection of cash from the customer.

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19
Q

Capital employed

A

Money that is invested into the business e.g. the share capital, retained earnings and long term borrowings of a business.

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20
Q

Depreciation

A

An amount deducted from the original cost of and asset to take into account the wear and tear in it’s use over time

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21
Q

Liquidity

A

A measure of the extent to which a business has cash to meet it’s immediate and short term obligations, or assets that can be quickly converted into cash to do this

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22
Q

Return on capital employed (ROCE)

A

A financial ratio measuring what returns (profits) the business has made on the resources available to it

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23
Q

Operating profit

A

How much profit in total the business has made from its trading activities before any account is taken of how the business is financed.

24
Q

Capital employed = ( For Companies with Shareholders )

A

Shareholder funds + long-term liabilities.
It is the amount of share capital and dept that a company has and uses.
Shareholder funds = share capital + reserves

25
Q

Non-current liabilities

A

Depts payable by a business after 12 months, such as a mortgage or a bank loan.

26
Q

Gearing

A

The proportion of finance that is provided by dept relative to all the long term finance within the business (share capital)

27
Q

Business objective

A

A goal set by a business, usually in the medium to long term.

28
Q

Functional objective

A

A target for an individual department such as marketing, so that all staff can ensure that the corporate objective is achieved.

29
Q

Vision statement

A

Sets out what the business desires in the long term and the key activities that will achieve this.

30
Q

Mission statement

A

A short statement of a business’s vision and values which helps to set its aims and objectives.

31
Q

Aim

A

A generalised statement of what the business plans to achieve in the longer term

32
Q

Corporate strategy

A

Defines the overall purpose and scope of the business to meet stakeholder expectations.

33
Q

Tactics

A

The smaller steps and shorter term goals that help achieve the strategy of the business.

34
Q

SWOT analysis

A

A method for analysing a businesses, its resources and its environment. It is used to identify a businesses internal strengths and weaknesses and its external opportunities and threats.

35
Q

Porter’s five forces framework

A

A model for analysing the nature of competition within an industry or market. It considers the threat of new entrants to a market , the bargaining power of suppliers and buyers, the threat of substitute products or services and the rivalry among existing competitors.

36
Q

Barrier to entry

A

A cost related to a business wanting to enter a market which is not incurred currently by those businesses already in the market

37
Q

Ansoff’s matrix

A

A strategic marketing planning tool that links a businesses marketing strategy to its general strategic direction.

38
Q

Organic growth

A

The growth in revenues and profits that arises when a business expands its existing operations rather than completing a merger or takeover.

39
Q

External growth

A

Where the business attempts to grow by completing a merger or takeover

40
Q

Merger

A

The combination of two separate businesses into a new business.

41
Q

Takeover

A

Where one business acquires a controlling interest in another business.

42
Q

Horizontal integration

A

Where two businesses operating in the same industry and at the same stage in the supply chain become one business.

43
Q

Vertical integration

A

Where a business acquires another business in the same market but at a different stage in the supply chain.

44
Q

Rationalisation

A

When a business reorganises its production in order to increase its productivity and efficiency.

45
Q

Outsourcing

A

A business gets another business to do its work for it, in the same or different country

46
Q

Decision tree

A

A mathematical model that uses estimates and probabilities to calculate likely outcomes in order to help a business decide weather a net gain from a decision is worthwhile.

47
Q

Critical path analysis (CPA)

A

A technique that is used to find the cheapest or fastest way to complete a task.

48
Q

Float time

A

The amount of time in a CPA network that a task can be delayed without causing a delay to the following tasks, i.e. it is spare time.

49
Q

Cost benefit analysis (CBA)

A

A method for measuring the financial feasibility of a project by quantifying costs and benefits including external costs and benefits.

50
Q

Payback

A

The amount of time it takes for a business to recover the initial amount invested

51
Q

Average rate of return (ARR)

A

The average annual return on an investment for a project expressed as a percentage.

52
Q

Discounted cash flow (DCF)

A

The process of calculating the present value of an investment’s future cash flows in order to arrive at the current value of the investment, known as the net present value.

53
Q

Net present value (NPV)

A

The present value of all the money coming in from a project in the future set against the money invested today.

54
Q

Special order

A

A one-off order requested specially by a customer.

55
Q

Contribution

A

The difference between the selling price and the variable costs of production.

56
Q

Data analysis

A

The process of transforming raw data into usable information, in order to present, interpret and analyse a business situation

57
Q

Franchise

A

The legal right to use the brand name, products and business style of an existing business.

Business (34 decks)

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