Unit one definitions Flashcards
What are consumer goods?
Physical and tangible goods sold to the general public, including durable goods like cars and non-durable goods like food
Durable goods can be used multiple times, while non-durable goods are typically consumed once.
What are consumer services?
Non-tangible products sold to the general public, including hotel accommodation and insurance services
Define ‘consumer’.
Individual who buys goods and services for their own use
Define ‘customer’.
Individual, group of individuals or organization who purchase goods and services from a business
What is a ‘factor of production’?
Resources required by business to commence production of goods and services
What are capital goods?
Physical goods used to aid in producing other goods and services, such as machines and commercial vehicles
What does ‘adding value’ mean?
Increasing the difference between the cost of purchasing bought-in materials and the price the finished goods are sold for
What is ‘opportunity cost’?
The benefit of the next most desired option given up
Who is an entrepreneur?
Someone who takes the financial risk of starting and managing a new venture
What is ‘branding’?
Process of differentiating or making a product unique relative to competitors by developing a symbol, name, image or trademark
Define ‘multinational business (MNC)’.
A business firm with its head office in one nation, but with operating branches or factories in other countries
What is an intrapreneur?
Employee of the business who takes direct responsibility for turning an innovative idea into a profitable product or business venture
What is a business plan?
Written document that describes a business, its objectives, strategies, financial forecast and the market it operates in
What activities are included in the primary sector?
Firms engaged in farming, fishing, oil extraction and other industries that extract natural resources
What does the tertiary sector involve?
Firms that provide services to consumers and other businesses, such as retailing and transport
What characterizes a mixed economy?
Economic resources are owned and controlled by both private and public sectors
What is a sole trader?
A business in which one person provides the permanent finance and has full control of the business
Define ‘partnership’.
A business formed by two or more people to carry on a business together, with shared capital investment
What is limited liability?
The only liability a shareholder has if the company fails is the amount invested in the company
What is a public limited company?
A limited company with the legal right to sell shares to the general public, often large businesses
What is a cooperative?
Jointly owned business whose members operate it considering their mutual benefits
What is a franchise?
A business that uses the name, logo and trading systems of an existing successful business
Define ‘joint venture’.
When two or more firms agree to work closely together on a particular project
What is a social enterprise?
A business with mainly social objectives that injects most of its profit back into the business
What does ‘triple bottom line’ refer to?
Three objectives of social enterprise: Economic, Social, and Environmental
What is revenue?
Total value of sales made during a certain time period of business operation
What is market capitalisation?
Total value of issued shares of the business firm
What defines a small business?
A business with a limited scale of operations, fewer employees, and lower revenue compared to large enterprises
What is organic growth?
Expansion of a business by establishing new plants, stores, or factories
What is a merger?
Agreement by owners and managers of two businesses to unite them into a new combined business
Define ‘horizontal merger’.
Integration with a business in the same industry at the same stage of production
What is synergy?
“The whole is greater than the sum of parts”; combined businesses are assumed to be more successful
What are SMART objectives?
Aims that are specific, measurable, achievable, realistic, and time-limited
What is an annual company report?
Document containing details of a firm’s activities over a year, including its financial accounts
What is the purpose of a business strategy?
A long-term plan consisting of steps of action to achieve a specific objective
What is the difference between tactics and strategy?
Tactics are short-term plans of action, while strategy is a long-term plan
Define ‘stakeholders’.
Individuals or groups who can be affected by, and have an interest in, any action taken by an organisation
What is human resource management (HRM)?
The strategic approach to managing employees so they help the business succeed
What is recruitment?
Finding and attracting people to fill a job position
What is redundancy?
When a job is no longer needed, and the employee is let go
What is employee morale?
The overall mood and satisfaction of employees at work
What does ‘work-life balance’ mean?
Managing time and effort between work and personal life
What is training in a workplace context?
Work-related education to improve skills and efficiency
What is job rotation?
A system where employees switch between different jobs
Define ‘industrial action’.
Workers taking action to pressure management during a dispute
What is motivation in the workplace?
The internal and external factors that stimulate the desire in workers to perform well
What is performance-related pay?
A bonus scheme that rewards employees for above-average work performance
What is job enrichment?
Using the full capabilities of workers by giving them more challenging tasks
What is an employee appraisal?
Evaluating an employee’s performance based on set goals
What is a trade union?
Organizations of working people with the objective of improving pay and working conditions
What are external stakeholders?
Individuals or groups who are separate from the business but are affected by or interested in its operations
What is an employment contract?
A legal document outlining the terms of a worker’s job
What does ‘dismissal’ mean?
Being fired from a job due to poor performance or breaking rules
What is a reference in the context of job applications?
A recommendation or comment about an applicant’s character or past work performance
What is diversity policy?
Policies to create a diverse workforce and value differences
What is the purpose of an induction training?
Training to introduce new employees to the company and its systems
What does ‘external recruitment’ refer to?
Hiring someone from outside the company for a job
What is job redesign?
Restructuring a job to make it more interesting, satisfying, and challenging
What is empowerment in a workplace context?
Providing employees with the skills, resources, authority, and opportunities to make decisions
What is a quality circle (QC)?
A voluntary group of workers who meet regularly to discuss and solve work-related problems
What is democratic management?
A style that encourages workers to actively participate in decision-making
What is the difference between theory X and theory Y?
Theory X believes employees are lazy and need supervision; Theory Y believes employees are self-motivated and enjoy work
What are marketing objectives?
Goals set for the marketing department to help the business achieve its overall company objectives
What is market segmentation?
Dividing a market into distinct customer groups with common needs
What does ‘mass marketing’ mean?
Selling standardized products to the entire market without differentiation
What is ‘niche marketing’?
Identifying a small segment of a larger market and offering products tailored specifically to that segment
Define ‘market growth’.
The percentage increase in the total market size over a given period
What is a brand leader?
The brand with the largest market share
What is Market Growth?
The percentage increase in the total market size (by volume or value) over a given period.
Define Brand Leader.
The brand with the largest market share.
What are Consumer Products?
Goods or services sold directly to end users.
What are Industrial Products?
Goods or services sold to other businesses.
What is Mass Marketing?
Selling standardized products to the entire market without differentiation.
What is Niche Marketing?
Identifying a small segment of a larger market and offering products tailored specifically to that segment.
What is Market Segmentation?
Dividing a market into distinct customer groups with common needs and marketing different products to each group.
What is a Consumer Profile?
A detailed picture of a business’s consumers, showing their age, income, location, gender, and social class.
Define Customer Relationship Marketing (CRM).
Using marketing strategies to build strong relationships with customers, ensuring loyalty and repeat business.
What is Market Research?
The process of gathering, recording, and analyzing information about customers, competitors, and the market.
What is Primary Research?
Collecting original, first-hand data directly related to the business’s needs.
What is Secondary Research?
Using existing data that was collected for a different purpose.
Define Qualitative Data.
Non-numerical data that gives insight into the motivations and behaviors of consumers.
Define Quantitative Data.
Numerical data from research that can be analyzed statistically.
What is Sampling?
Selecting a group of respondents from a larger population for research purposes.
What is a Sample?
A selected group of people participating in market research, representing the broader target market.
What is Sampling Bias?
When the chosen sample doesn’t accurately represent the entire population, giving some people a higher chance of being selected.
What is Arithmetic Mean?
The average value calculated by adding up all the data points and dividing by the number of points.
What is Mode?
The value that appears most frequently in a data set.
What is Median?
The middle value in an ordered set of data, dividing it into two equal halves.
What is Range?
The difference between the highest and lowest values in a data set.
What is Coding in market research?
The process of labelling and organising qualitative data to identify the main themes and the links between them.
What is the Marketing Mix?
The four key decisions—product, price, promotion, and place—that ensure effective marketing of a product.
Define Product.
Goods or services created during the production process and sold to meet customer needs.
What are Goods?
Physical products like cars or soap bars.
What are Services?
Non-physical products that fulfill customer needs, like teaching, plumbing, or banking.
What is a Brand?
A unique name, symbol, or trademark that distinguishes a product from its competitors.
What are Intangible Attributes?
Qualities of a product that are based on customer opinions and are difficult to measure or compare.
What are Tangible Attributes?
Measurable features of a product that can easily be compared with others.
What is a Unique Selling Point (USP)?
A distinctive feature of a product that sets it apart from competitors.
What is Product Differentiation?
The unique qualities of a product that make it stand out from competitors.
What is Product Positioning?
How consumers perceive a product compared to its competitors.
What is Product Portfolio Analysis?
Reviewing a business’s range of products to decide how best to allocate resources.
What is the Product Life Cycle?
The stages of a product’s sales from launch to withdrawal from the market.
What is a Consumer Durable?
A product designed for reuse with a long lifespan, like a car or washing machine.
What is an Extension Strategy?
A plan to extend the maturity phase of a product’s life before launching a new one.
What is the Boston Matrix?
A tool for analyzing a company’s product range in terms of market share and growth.
What is Mark-Up Pricing?
Adding a fixed profit margin to the cost of a product to set its price.
What is Cost-Plus Pricing?
Setting a price by calculating the unit cost and adding a set profit margin.
What is Contribution-Cost Pricing?
Pricing based on variable costs to contribute to fixed costs and profit.
What is Competitive Pricing?
Setting prices based on what competitors are charging.
What is Price Discrimination?
Charging different prices to different customer groups for the same product or service.
What is Dynamic Pricing?
Adjusting prices based on demand and customers’ willingness to pay.
What is Penetration Pricing?
Setting a low price to encourage high sales volume.
What is Price/Market Skimming?
Charging a high price for a new product with low price sensitivity due to uniqueness.
What is Psychological Pricing?
Setting prices to align with customers’ perceived value of a product.
What is Promotion?
The use of various methods like advertising, sales promotions, personal selling, direct mail, trade fairs, sponsorships, and public relations to inform and persuade consumers to make a purchase.
What is Advertising?
Paid communication using platforms such as TV, newspapers, and cinemas to inform and convince customers.
What is Direct Promotion?
A variety of promotional efforts targeting specific consumers directly, often referred to as direct marketing.
What is Sales Promotion?
Offering special deals and incentives to consumers or retailers to boost short-term sales and encourage repeat purchases.
What is the Promotion Mix?
The blend of promotional strategies a company uses to market its products.
What is Digital Promotion?
Marketing and promoting products using digital platforms, primarily on the internet but also via mobile devices.
What is E-commerce?
Conducting transactions for buying and selling goods and services through online platforms.
What is Channel of Distribution?
The network of intermediaries that a product goes through from the producer to the final consumer.
What is Online Marketing (E-commerce)?
Using the internet, email, and mobile communications for selling and marketing products directly through electronic commerce.
What is Digital Distribution?
The delivery of digital media content such as music, videos, software, and games over the internet.
What is Physical Distribution?
The processes involved in moving finished products efficiently from the production facility to the consumer.
What is Integrated Marketing Mix?
Ensuring that all marketing decisions and strategies align with one another to deliver a clear and consistent message to consumers about the product.
What is Intellectual Capital?
The intangible assets of a business, including human capital, structural capital, and relational capital.
What is the Transformational Process?
Activities that convert inputs into outputs, adding value during the process to produce goods or services for customers.
What is Productivity?
The measure of output generated from a given set of inputs, such as output per worker over a specific time period.
What is Level of Production?
The total number of units produced within a certain time frame.
Define Production.
The process of turning inputs, like raw materials and labor, into finished products or services.
What is Efficiency?
The ability to produce outputs at the highest ratio of output to input.
What is Effectiveness?
Achieving business goals by utilizing inputs in a way that meets customer needs and business objectives.
What is Sustainability of Operations?
Maintaining business practices over the long term by ensuring environmental protection and preserving the quality of life for future generations.
What is Labour Intensive?
A production process that requires a high amount of labor compared to the use of capital equipment.
What is Capital Intensive?
A production process that relies heavily on machinery and equipment rather than labor input.
What is Job Production?
The creation of a unique product that is specifically designed to meet an individual customer’s needs.
What is Batch Production?
Producing a set of identical items in groups, where each product passes through stages of production simultaneously.
What is Flow Production?
Continuous production where products are made in an ongoing process without interruption.
What is Mass Customisation?
The use of advanced, flexible technology in production lines to create personalized products according to individual customer preferences.
What is Inventory?
Materials and goods that a business keeps on hand to enable production and meet customer demand.
What is Inventory Management?
The process of managing the ordering, storage, and use of a company’s inventory.
What is Economic Order Quantity?
The most cost-effective quantity of stock to reorder, balancing delivery and storage costs.
What is Buffer Inventory?
The minimum amount of stock that must be kept to ensure uninterrupted production in case of supply delays or sudden increases in demand.
What is Re-order Quantity?
The number of units ordered every time a new stock order is placed.
What is Lead Time?
The duration between placing an order for supplies and receiving the delivery.
What is Re-order Level?
The inventory level at which a new order is triggered to avoid running out of stock.
What is a Supply Chain?
The interconnected system of businesses and activities involved in the production and distribution of a product, from raw materials to the final delivery to the customer.
What is Supply Chain Management?
Managing the entire process from sourcing raw materials to delivering the finished product, aiming to minimize costs while improving customer service.
What is Just-in-Time (JIT) Inventory Management?
A strategy that avoids holding stock by ensuring materials arrive just as needed for production and that finished goods are made to order.
What is Just-in-Case (JIC) Inventory Management?
A strategy that reduces the risk of stock shortages by maintaining higher levels of buffer inventory.
What is Maximum (Full) Capacity?
The highest level of output a business can consistently achieve over time.
What is Capacity Utilisation?
The percentage of the maximum output capacity that is currently being used.
What is Outsourcing?
Hiring another business to handle part of the production process instead of doing it in-house with the company’s employees.
What is Excess Capacity?
It occurs when current output levels are lower than the business’s full production capacity, also called spare capacity.
What is Rationalisation?
The process of cutting capacity by shutting down factories or production units.
What is Capacity Shortage?
When the demand for a company’s products surpasses its production capacity.
What is Business Process Outsourcing (BPO)?
A type of outsourcing where specialized contractors manage specific business functions like human resources or finance.
What is Start-up Capital?
The initial capital required by an entrepreneur to establish a business.
What is Working Capital?
Funds needed to cover raw materials, day-to-day expenses, and credit extended to customers.
What is Short-term Finance?
Finance needed for periods of up to one year.
What is Long-term Finance?
Finance required for periods longer than one year.
Define Profit.
The surplus remaining after all costs have been subtracted from total revenue.
What is Liquidity?
The ability of a business to meet its short-term financial obligations.
What is Administration?
When external administrators manage a business that cannot pay its debts, with the intention of selling it as a going concern.
What is Bankruptcy?
A legal procedure that involves liquidating a business or property to pay off debts.
What is Liquidation?
When a business stops trading and sells its assets to pay creditors.
What are Current Assets?
Assets that are cash or can be converted to cash within a year, such as inventory or trade receivables.
What are Current Liabilities?
Debts or obligations that are due to be paid within one year.
What is Capital Expenditure?
The purchase of long-term assets, like machinery or buildings, expected to last for more than one year.
What is Revenue Expenditure?
Spending on operational costs and short-term assets, such as wages and inventory.
What are Retained Earnings?
Profit kept in the business after taxes, rather than being paid out as dividends.
What are Internal Sources of finance?
Finance raised from within the business, such as from retained earnings or the sale of assets.
What are External Sources of finance?
Finance raised from outside the business, such as loans or investments from banks.
What are Non-current Assets?
Long-term assets held and used by the business for more than one year.
What is an Overdraft?
A pre-arranged credit limit with a bank that allows a business to borrow money as needed.
What is Factoring?
Selling accounts receivable to a third party in exchange for immediate cash.
What is Hire Purchase?
A method of buying an asset with fixed payments over time, with ownership transferred after the final payment.
What is Leasing?
Renting an asset for a fixed period, avoiding the need for long-term capital to purchase the asset outright.
What are Long-term Loans?
Loans that do not need to be repaid for at least one year.
What are Debentures?
Long-term bonds issued by companies to raise finance, often with a fixed interest rate.
What is Share (Equity) Capital?
Permanent finance raised by selling shares in the business.
What are Business Mortgages?
Long-term loans secured against a property used for business purposes.
What is Venture Capital?
Risk capital invested in start-ups or small businesses with high growth potential.
What is Collateral Security?
An asset pledged to a lender that may be sold to repay a loan if the borrower defaults.
What is a Rights Issue?
An offer to existing shareholders to purchase additional shares at a discounted price.
What is Microfinance?
Financial services provided to individuals or small businesses who lack access to traditional banking services.
What is Crowd Funding?
Raising small amounts of capital from a large number of people to finance a new business or project.
What is Cash Flow?
The net balance of cash moving into and out of a business.
What does it mean to be Insolvent?
When a business cannot meet its short-term debts.
What is a Cash Flow Forecast?
An estimate of future cash inflows and outflows.
What is Cash Inflow?
Money in form of note received by a business.
What is Cash Outflow?
Money in form of cash spent by a business.
What is Net Cash Flow?
The difference between cash inflows and outflows over a given period.
What is Opening Cash Balance?
The amount of cash a business holds at the beginning of a period.
What is Closing Cash Balance?
The amount of cash held at the end of a period, which becomes the opening balance for the next period.
What is Credit Control?
Monitoring customer debts to ensure they are paid within the agreed time frame.
What is Bad Debt?
Unpaid bills that are unlikely to be collected.
What is Overtrading?
Expanding a business too quickly without sufficient finance, leading to cash flow problems.
What is a Cost Centre?
A department or section of a business that incurs costs but does not generate revenue.
What are Direct Costs?
Costs directly linked to the production of goods and services.
What are Indirect Costs?
Costs that cannot be directly allocated to a specific unit of production.
What are Fixed Costs?
Costs that remain unchanged regardless of output in the short term.
What are Variable Costs?
Costs that vary depending on the level of output.
What is Total Cost?
The sum of fixed and variable costs.
What is a Profit Centre?
A division of a business to which both revenues and costs are assigned, allowing profit calculation.
What is Average Cost?
The total cost divided by the number of units produced.
What is Full Costing?
A costing method that assigns all direct and indirect costs to products or divisions.
What is Contribution Per Unit?
The price of a product minus its variable costs.
What is Break-even Point?
The output level at which total revenue equals total costs, resulting in neither profit nor loss.
What is Break-even Analysis?
The process of calculating the break-even point using cost and revenue data.
What is Margin of Safety?
The difference between actual output and the break-even output level.
What is Budgeting?
Planning future financial activities by setting performance targets.
What is a Budget Holder?
The individual responsible for setting and managing a budget.
What is Variance Analysis?
The process of comparing actual results to the budgeted figures and analyzing the differences.
What are Delegated Budgets?
Budgets for which junior managers are given responsibility for setting and achieving targets.
What is Incremental Budgeting?
A budgeting method that uses the previous year’s budget as a starting point, with adjustments for the current year.
What is Zero Budgeting?
A budgeting method where every expense must be justified, and no funds are allocated automatically.
What is a Favourable Variance?
A change from the budget that results in higher-than-expected profit.
What is Flexible Budgeting?
A budgeting approach that allows for cost adjustments if sales or output levels change.
What is an Adverse Variance?
A change from the budget that results in lower-than-expected profit.
