Year 11 business Flashcards
Advertising
A method of communicating information about the product; the business pays for advertising time/space.
Aim
The intention to reach a goal.
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.
Asset
Something the business owns; it has a value.
Average rate of return
The average profit for the year as a percentage of the original investment. Average rate or return = average return per annum / initial 100
Boston matrix
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.
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.
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.
Break even output
The point at which the business’ total sales equals the total costs. There is neither profit nor loss.
Buffer stock
A stock of raw materials held in reserve to protect the production process from unforeseen shortages.
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.
Cash
Money that the business has in cash or at the bank.
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.
Cash inflow
Money received by the business from its operations or investments.
Cash outflow
Money paid out by the business to fund its operations or investment activities.
Centralisation
Maintaining control by keeping authority at the senior levels of the organisation.
Chain of command
The line through the hierarchy that shows who is responsible for whom from top to bottom of an organisation.
Channels of distrubition
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.
Closing balance
The amount that remains in the account at the end of an accounting period.
Commision
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.
Competition
The rivalry between businesses looking to sell their goods/services in the same market.
Competitive pricing
Setting the price of a product so that it is in line with competitors’ prices.
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 likelihood that past customers will continue to buy from the business, enhanced by high quality customer service and/or reward programmes.
Customer satisfaction
Whether customers are pleased with the goods/services they receive; whether they would purchase again.
Decentralisation
Where authority is spread widely through the organisation.
Delayering
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 detailing their duties and rights.
Employment law
Rulings that relate to the rights and responsibilities 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 fruition and to take risks where appropriate.
Entrepeneur
A person who has the vision to use initiative to make business ideas happen, managing the resources and risks.
Equality act
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 not 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.
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
Sets out the duties and responsibilities of both employers and employees for health and safety in the workplace.
Hierachy
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.
Import
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.
Job analysis
The process of determining what the job entails, including responsibilities and tasks.
Job description
A summary of what the job entails, including job title, duties and who they are responsible for/to.
Job production
A method of creating a single product to meet an individual order.
Job share
A system where two employees choose to share a full time job; they receive the salary and benefits on a pro rata basis according to the proportion of the full time hours that each works.
Just in case
Organising procurement to ensure that the production process never runs out of stock, reducing the number of sales lost due to insufficient raw materials.
Just in time
Organising the ordering of raw materials and components to be delivered just before they will be used, reducing the need for storage.
Lean production
Continually working to reduce the resources used to create products: raw materials, labour, machines and premises.
Level employment
The percentage of the population of working age that are employed.
Liability
The extent of the owner’s/owners’ responsibility for the debts of the business.
Limited liability
The owners are not responsible for the debts of the business. The limit of their liability for the business’ debts is the amount they invested.
Loans
A fixed sum of money borrowed for a specified period of time at an agreed rate of interest; repaid in instalments.
Local community
The individuals, other businesses and organisations that are located close to the business. The business interacts with these groups.
Location
The site of a business and the reasoning behind the choice of site.
Logistics
Managing the movement of supplies and products to ensure the timely delivery of supplies to the production process and finished products to customers.
Loss
Where expenditure is greater than income.
Loss leader
A good or service sold at below cost price to bring customers into the shop with the intention that, once there, they may purchase full-priced items too.
Management
Organising and coordinating business activities in order to fulfil production and meet the business’ objectives.
Margin of safety
The amount by which current sales exceed the break-even level of output.
Market
Collecting information about the customers’ needs, wants and preferences that will help the business to make design, production and marketing decisions.
Market share
The proportion of the whole market for a product that is held by the business.
Marketing
The coordination of activities that ensure that customers get what they want, in the amounts they want, when they want it and at a price that suits them.
Marketing mix
The combination of four areas of marketing activities (price, product, promotion and place) to make sure that customers’ needs and wants are met while generating optimum revenue.
M-commerce
Business transactions are carried out electronically by mobile phone.
Mergers
When two or more businesses agree to join together.
Mortgage
A method of borrowing to purchase property, using the property as security.
