Year 11 Words 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 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 x 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 recieved 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 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
Closing balance
The amount that remains in the account at the end of an accounting period
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
Competition
Ravalry between businesses
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
ndividuals, 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
Devidend
A portion of the after-tax profit that is paid to shareholders according to the number of shares they ow
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
Entrepreneur
A person who has the vision 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 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 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
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 (JIC)
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 (JIT)
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 of 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
Where those wishing to buy goods/services make contact with those who have them to sell
Market research
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
Motivation
The reasons people are interested in and committed to their job
National minimum wage
The lowest hourly rate that can legally be paid by an employer to an employee
Needs
The human wants that are essential to survival; clothing, food, shelter, warmth or water
Net cash flow
The difference between cash inflows and cash outflows. Net cash flow = cash inflows – cash outflows
Noise pollution
A type and level of noise that is excessive and disturbing to people or animals
Not-for-profit organisations
Associations, charities, co-operatives or voluntary organisations set up to further non-monetary ideals such as cultural, educational, religious and public service. Profits/losses are retained/absorbed
Objective
A specific statement that defines a precise goal that can be measured and delivered within a given time
Off-the-job training
Employees are trained away from their job, at a college, training provider or the business’ training centre
On-the-job training
Employees learn alongside experienced colleagues while they are doing the job
Opening balance
The amount brought forward from the end of the preceding accounting period so that it is the starting figure for the new one
Opportunity cost
The cost of making one choice concerning the use of limited resources at the expense of an alternative choice
Organic growth
A business grows by increasing its output, by increasing its customer base or by developing new product(s).
Organisational structures
The way in which the organisation is divided into levels of management, functions and responsibilities
Outsourcing
Contracting another business to carry out some of the business’ activities, often to reduce costs
Overdraft
Borrowing from a bank by drawing from a current account so that the balance becomes less than zero
Owners
Individuals who own the business or own a share(s) in it, in return for the rights to decision making and profits, balanced with the risks involved
Part time
Working only a proportion of the full time hours
Partnerships
A business that is owned and operated by a group of between 2 or more people
Person specification
Identifies the requirements of the job holder, including qualifications, experience and skills
Point of sale
Opportunities to communicate information about the product in the place where it is sold (retail outlet); window displays, hanging signs or shelf signs
Post-sales servicing
Maintenance or repair of equipment by the manufacturer or supplier during or after the warranty
PR
Managing the relations with groups such as consumers, the media, pressure groups or investors to present a favourable impression and generate interest
Price penetration
Fixing a low price when a new product is first introduced (into an established market) so that the product gains market share quickly. Once the product is established, the price is then raised so that profit is increased
Price skimming
Setting a very high price when a product (often technology item) is first introduced to the market in relatively small numbers; only those who can afford to pay high prices to own the latest models will be able to purchase the product. The price is later reduced so that others can afford to buy
Primary industry
A business that extracts the earth’s natural resources
Primary research
Collecting information first-hand direct from the public; field research including surveys, questionnaires and testing designed specifically for the market/product
Private limited company (ltd)
A business that is owned by shareholders; the shares are not available to the general public. Shareholders have limited liability
Procurement
The process of buying goods and services including dealing with:
demand
selection of suppliers
analysing and negotiating prices
making the purchase
managing payments
Product differentiation
Developing the features that set a product apart from others in the market (such as benefits, style, price) and using that as part of advertising and promotion
Product knowledge
An in-depth understanding of the features, use and application of the good/service that will enable the person selling it to provide any information that the purchaser wants before committing to buy
Product life cycle
The stages through which a product travels during its journey from being an idea to being old and dated: research and development, introduction, growth, maturity, decline
Product portfolio
The range of products offered by one producer
Product recalls
The withdrawal from sale by the manufacturer of a defective or contaminated item
Productivity
The amount produced by a worker/machine/factory in a given time; the ability to produce more output with fewer resources
Profit
The difference between the money received from the sale of a good/service and the amount it cost; the amount that remains after all the costs have been paid.
Profit = total revenue – total cost
Profit maximisation
A business’ ability to make maximum profit with low operating expenses
Profit sharing
A scheme that pays employees an additional amount based on the year’s profits
Promotion
Communicating information about the product to:
make consumers aware of a product
remind customers about a product
persuade customers to buy
Proximity to market
Proximity to market
Businesses that serve their customers directly must be located close to those customers
Public limited company (plc)
A business that is owned by shareholders. Anyone can buy shares in the business. Shareholders have limited liability
Purchasing
The business buys the goods and services that it needs for producing the goods it sells or for delivering the services it sells
Qualitative market research
Collecting information about potential customers’ opinions and preferences about the attributes/characteristics/properties of a product; open questions allow respondents to express their own views by not limiting their responses
Quantitive market research
Using sampling techniques such as surveys where the findings are expressed numerically; closed questions allow a limited choice of responses and are easy to turn into statistics for analysis
Raising finance
Getting the money to pay for starting the business or for developing it
Raw materials
Businesses that use raw materials that are heavy and/or bulky choose to locate close to their suppliers to reduce the cost of transport or storage
Recruitment
The process of hiring a new employee
Recycling
The conversion of waste into reusable material
Retailer
A business or person that sells goods to the consumer
Retained profit
An internal source of finance; a portion of the year’s profit is kept back to fund projects
Revenue
The income generated from the sale of goods/services
Risk
The possibility that the return on investment will be lower than expected
Salary
A method of paying employees for their work; based on a fixed annual amount, normally paid monthly
Scarce resources
When the raw materials that are available are not sufficient to meet needs.
Secondary industry
A business that uses raw materials to manufacture goods or construct items
Secondary research
Examining information from published sources; desk research using information that has been collected for other purposes
Segmentation
Breaking the whole market for a product into different groups or types of consumers with similar needs/wants/characteristics; enables the marketing mix to be designed to meet their needs more precisely
Selection
The process of choosing which applicant to employ
Service
An action that is carried out to fulfil a need or demand in return for payment
Share(s)
The units of the business that are available for sale to investors
Share issue
New shares in a business made available for the public to buy.
Shareholder(s)
Those people who own shares in a limited company; each shareholder is a part owner of the business
Shareholder value
The value that a shareholder is able to get for the money invested in the business: capital gains, dividend payments, pay-outs to shareholders or proceeds from buyback programmes
Sicial objectives
A business’ goals that relate to fair treatment of the people concerned: customers, investors, suppliers or workers
Sole traders
A business that is owned and operated by one person
Sources of finance
Ways of obtaining the funds the business needs; money may be needed to meet short or long term needs
Span of control
The number of people for whom a manager is directly responsible
Staff retention
Keeping staff once they have been employed
Stakeholders
Those with an interest in the way that a business operates
Statement of financial position
Reports the assets, liability and equity of a business on a specific date; formerly known as the balance sheet
Styles of management
The methods used by those in leadership roles to achieve the most effective outcomes from the employees for whom they are responsible
Supplier
A business that provides goods/services
Supply chain
The network of organisations, people, activities, information and resources that take the product/service from supplier to customer
Survival
The capacity of a business to stay in business. It is dependent on the business selling sufficient amounts of its goods/services to cover all its costs
Sustainability
The process of operating without damaging the environment or depleting natural resources
Takeover
One business takes control of another
Tall organisational structure
An organisational structure with a narrow span of control and many levels of hierarchy (a long chain of command
Target market
The particular group of customers to which a business aims to sell its product; a particular market segment
Technical economies of scale
The benefits that large businesses gain from having the funds to invest in expensive machinery that brings cost savings
Telesales
Attempting to sell a good/service by making the initial contact by telephone
Tertiary industry
A business that provides services to consumers or other businesses
Total costs
All the costs involved in producing goods/services. Total costs = fixed costs + variable costs
Total quality management (TQM)
A philosophy that involves everyone in the business in the quest for continual improvement in the attitudes, practices, structures and systems that combine to create a top-quality product
Trade credit
The process of buying items from a supplier and paying for them later; for example, 30 days after invoice date
Trade descriptions
Protecting customers from false or misleading descriptions about products or their prices
Traffic congestion
The effects of overuse of transport networks, for example slower speeds, traffic queues and longer journey times
Training
Employees learn the skills and techniques needed to do the job or to prepare for a new role
Unique selling point (USP)
The key benefit of a good/service; it differentiates the product from others and will be the focus of advertising and promotion
Unit cost
The average cost of each unit. Unit cost = total cost ÷ quantity
Unlimited liability
When the owner(s) are responsible for all the debts of the business. Their personal funds would be used to settle the business’ debts if the business’ funds were insufficient
Variable costs
The costs that change as the business’ output changes
Wage
A method of paying employees for their work based on an hourly, weekly or piece of work basis, usually paid weekly or monthly
Wants
Things that people would like to have; not limited to the things they need to survive
Waste
The unwanted material left over from the production process; it may have little or no value and the business may have to pay for its disposal
Wholesaler
A business or person that buys goods in large quantities from producers, stores them in warehouses and sells them on to retailers.
Word of mouth
Personal recommendations from satisfied customers to prospective customers
Zero-hour contract
A contract of employment where the employer is not obliged to provide any minimum hours of work; the employee is not obliged to accept any work that is offered
