Business Definitions C1 and other topics

Question 1

define goods

Answer 1

items produced by the conversion of raw materials into finished products by the secondary sector

They are tangible/physical products, e.g. a car

Question 2

define services

Answer 2

intangible, a task performed in return for payment

this includes personal/direct services, e.g. hairdresser/haircut, and commercial services, e.g. banking and insurance services

Question 3

define aims

Answer 3

The long-term intentions that provide a focus for setting objectives
They are usually expressed qualitatively, sometimes in the form of a mission statement

Question 4

define objectives

Answer 4

medium to long-term targets that give a sense of direction to manager, department or whole organisation e.g. boost market share from 8% to 10% within the next 3 years

Question 5

what are the aims of the public sector?

Answer 5

• provide universal service to all UK
  households wherever located
• provide a service that private sector may not be willing to provide as it may not be profitable to do so
• make a trading surplus if possible
• provision of merit goods to raise society’s standard of living
• ensure effective provision of public goods

Question 6

what are the aims of the private sector?

Answer 6

• survival
• profit maximisation
• maximizing growth
• gaining market share
• maximising sales revenue
• maximising shareholder value
• diversifying into new products/new markets
• social aims
• ethical aims
• improving reputation
• improved quality
• environmental
• increased efficiea2ncy
• competitiveness

Question 7

define public goods

Answer 7

goods that would not be provided in a free market system because businesses would not be able to charge for them

Question 8

define non-rivalry

Answer 8

the consumption of the good by one individual does not reduce the amount available for others, e.g. social
services

Question 9

define non-excludability

Answer 9

it is impossible to exclude others from benefiting from their use, i.e. people who use the street will benefit
from the street lighting provided

Question 10

define merit goods

Answer 10

Merit goods are goods that could be provided by the free market but policy makers recognise that they would be under-consumed

Question 11

define distribution channels

Answer 11

the path taken by a product as it passes from producer to final consumer

the more distribution channels a business has means they have the ability to reach a wider potential market

Question 12

define agent

Answer 12

not employed by a business bu represent it and try to gain sales

they do not take ownership of goods

Question 13

define promotion

Answer 13

the attempt, through various forms of media, to draw attention to a product and thereby gain and retain customers

Question 14

define above-the-line promotion

Answer 14

promotion through independent, mass media, which is indirect and allows a business to reach a wide audience

Question 15

define below-the-line promotion

Answer 15

offers a wide range of alternative promotional strategies

often used to support above-the-line promotion

targets consumers directly

Question 16

define penetration pricing

Answer 16

the objective is to gain market share

it involves pricing a product at a low level so that retailers and consumers are encouraged to purchase the product in large quantities

Question 17

define price skimming

Answer 17

market skimming involves charging a high price for a product that has a USP for a limited period

involves selling a product to the most profitable segment of the market before it is sold to a wider market at a lower price

Question 18

destroyer/predatory pricing

Answer 18

involves setting a price low enough to drive competitors out of the market

can be used by large businesses on a national scale or small battles between local businesses

often seen as anti-competitive and illegal

Question 19

define marketing mix

Answer 19

price place promotion and product

no element is more important than the other

Question 20

define quota sampling

Answer 20

population is segmented into a number of groups that share specific characteristics

Question 21

define qualitative research

Answer 21

Involves collection of data about attitudes, beliefs and intentions

Focus groups, participant observation and interviews are common methods used

Question 22

define quantitative research

Answer 22

Involves collection of data that can be measured

means collection of statistical data such as sales figures and market share

Surveys and use of government publications/existing statistics are common methods

Question 23

define R&D

Answer 23

R&D is essential for businesses to compete in a
dynamic marketplace

involves the identification of new ideas and turning them into products, services and processes

Businesses who invest in R&D considered to be
innovative and always looking to bring new ideas and
products to the market