Definitions Flashcards
(201 cards)
1
Q
Brand image
A
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.
2
Q
Break even chart
A
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.
3
Q
Break even output
A
The point at which the business’ total sales equals the total costs. There is
neither profit nor loss.
4
Q
Buffer stock
A
A stock of raw materials held in reserve to protect the production process from
unforeseen shortages.
5
Q
Business plan
A
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.
6
Q
Cash
A
Money that the business has in cash or at the bank.
7
Q
Cash flow forecast
A
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.
8
Q
Cash inflow
A
Money received by the business from its operations or investments.
9
Q
Cash outflow
A
Money paid out by the business to fund its operations or investment activities.
10
Q
Centralisation
A
Maintaining control by keeping authority at the senior levels of the organisation.
11
Q
Chain of command
A
The line through the hierarchy that shows who is responsible for whom from top
to bottom of an organisation.
12
Q
Channels of distribution
A
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
13
Q
Closing balance
A
The amount that remains in the account at the end of an accounting period.
14
Q
Comission
A
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.
15
Q
Competition
A
The rivalry between businesses looking to sell their goods/services in the same
market.
16
Q
Competative pricing
A
Setting the price of a product so that it is in line with competitors’ prices.
17
Q
Consumer law
A
Laws designed to ensure that businesses make products that are safe and of
good quality, and that they deal with customers honestly and fairly.
18
Q
Consumer spending
A
The money spent by households on goods and services to satisfy their needs and
wants.
19
Q
Contracts of employment
A
A legal document that sets out the terms and conditions of the job for the
employer and the employee.
20
Q
Costs
A
The money spent by a business on goods and services.
21
Q
Costs plus pricing
A
Setting the price of a good or service at an amount higher than the cost of
producing it so that a profit is made.
22
Q
Customer
A
Individuals, businesses or organisations that purchase goods/services and make
decisions about which supplier to choose.
23
Q
Customer engagement
A
The relationship between the business and the customer that puts the
customer’s requirements at the centre of the operation to build brand loyalty.
24
Q
Customer loyalty
A
The likelihood that past customers will continue to buy from the business,
enhanced by high quality customer service and/or reward programmes.
25
Customer satisfaction
Whether customers are pleased with the goods/services they receive; whether
they would purchase again.
26
Decentralisation
Where authority is spread widely through the organisation.
27
Delayering
The reorganisation of the organisation’s employees so that there are fewer levels
of management.
28
Delegation
Allocating a task to someone who would not normally be responsible for it.
29
Demand
The quantity of a particular product that will be bought at particular price over a
specific time.
30
Directors
The people who are elected by the shareholders to run the business on their
behalf.
31
Diseconomies of scale
When a business grows too large, leading to a possible increase in unit cost.
32
Disposal of waste
The removal, storage or destruction of unwanted material. Methods include
recycling, burning and landfill sites.
33
Dividend
A portion of the after-tax profit that is paid to shareholders according to the
number of shares they own.
34
E-commerce
Business transactions carried out electronically on the internet.
35
Economies of scale
The cost advantage of producing on a large scale. As output increases the unit
cost decreases.
36
Emplayees
Individuals who work full time or part time for the business; they have a contract
of employment detailing their duties and rights.
37
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.
38
Enterprise
The ability to identify business ideas and opportunities to bring them to fruition
and to take risks where appropriate.
39
Entrepreneur
A person who has the vision to use initiative to make business ideas happen,
managing the resources and risks.
40
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.
41
Ethical objectives
A business’ goals that relate to fair business practice or moral guidelines and
make a positive contribution to the business’ reputation.
42
Ethics
The moral principles that guide how a business operates.
43
Exchange rates
The price of one currency based on another or the cost of buying one currency
from another, for example £1 = $1.21.
44
Expansion
The process of increasing a business’ size.
45
Export
Good/service sold to a customer in another country.
46
Extension strategies
Methods that can be used to prolong the life of a product; could include price
reductions, modifications to the product or relaunch.
47
External growth
The growth of a business by joining with another by merger or takeover.
48
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.
49
Factors of production
The elements that combine in the production process: land, labour, capital and
enterprise.
50
Fixed costs
The costs that stay largely the same, regardless of the business’ output.
51
Flat orginistaion structure
An organisational structure with a wide span of control and few levels of
hierarchy (a short chain of command).
52
Flow production
Using a production line to make goods continuously and in large numbers.
53
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.
54
Franshising
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.
55
Fringe benefits
Additional ‘perks’ that are in addition to a wage/salary; they are liable to income
tax.
56
Full time
Working all the usual hours required of an employee; usually 35 hours or more.
57
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.
58
Global warming
The steady increase in the earth’s temperature due to emissions and the build-
up of greenhouse gases, resulting in climate changes.
59
Globalisation
The trend for large businesses to operate on a worldwide scale; money, goods
and services can be transferred across national borders.
60
Goods
Items that are produced from raw materials for sale to businesses or
consumers.
61
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.
62
Growth
A business’ increase in size. Methods include: asset value, employees, market
share, markets, profits and sales.
63
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.
64
Hieratchy
The management structure of a business/organisation showing the levels of
responsibility. It is often shown as an organisation chart.
65
Hire purchase
Buying items by making a small initial payment and paying the remaining
amount in instalments over an agreed period of time.
66
Import
Good/service bought from a supplier in another country.
67
Income statment
A summary of the revenue and expenses over an accounting period that lead to
a profit or loss position.
68
Induction
Training given to a new employee when they start a new job; it provides
information about the business, its operation and working practices.
69
Inspection
Testing/examining items to check that materials or items conform to the
specified requirements/standards.
70
Integration
Two or more businesses join together.
71
Intrest rates
The rate charged for borrowing money over a period of time, or the reward for
saving money.
72
Job analysis
The process of determining what the job entails, including responsibilities and
tasks.
73
Job description
A summary of what the job entails, including job title, duties and who they are
responsible for/to
74
Job production
A method of creating a single product to meet an individual order.
75
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.
76
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.
77
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.
78
Lean production
Continually working to reduce the resources used to create products: raw
materials, labour, machines and premises.
79
Level of enployment
The percentage of the population of working age that are employed.
80
Liability
The extent of the owner’s/owners’ responsibility for the debts of the business.
81
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.
82
Loans
A fixed sum of money borrowed for a specified period of time at an agreed rate
of interest; repaid in instalments.
83
Local community
The individuals, other businesses and organisations that are located close to the
business. The business interacts with these groups.
84
Location
The site of a business and the reasoning behind the choice of site.
85
Logistics
Managing the movement of supplies and products to ensure the timely delivery
of supplies to the production process and finished products to customers.
86
Loss
Where expenditure is greater than income.
87
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.
88
Management
Organising and coordinating business activities in order to fulfil production and
meet the business’ objectives.
89
Margin safety
The amount by which current sales exceed the break-even level of output.
90
Market
Where those wishing to buy goods/services make contact with those who have
them to sell.
91
Market research
Collecting information about the customers’ needs, wants and preferences that
will help the business to make design, production and marketing decisions.
92
Market share
The proportion of the whole market for a product that is held by the business.
93
Market share
The proportion of the whole market for a product that is held by the business.
94
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.
95
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.
96
M-commerce
Business transactions are carried out electronically by mobile phone.
97
Mergers
When two or more businesses agree to join together.
98
Mortgage
A method of borrowing to purchase property, using the property as security.
99
Mitivation
The reasons people are interested in and committed to their job.
100
National minimum wage/living wage
The lowest hourly rate that can legally be paid by an employer to an employee
101
Needs
The human wants that are essential to survival; clothing, food, shelter, warmth
or water.
102
Net cash flow
The difference between cash inflows and cash outflows.
Net cash flow = cash inflows – cash outflows
103
Noise polluiton
A type and level of noise that is excessive and disturbing to people or animals.
104
Not-for-profit orginisation
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.
105
Objective
A specific statement that defines a precise goal that can be measured and
delivered within a given time.
106
Off the job training
Employees are trained away from their job, at a college, training provider or the
business’ training centre.
107
On the job training
Employees learn alongside experienced colleagues while they are doing the job.
108
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.
109
Opportunity cost
The cost of making one choice concerning the use of limited resources at the
expense of an alternative choice.
110
Organic growth
A business grows by increasing its output, by increasing its customer base or by
developing new product(s).
111
Organisational structures
The way in which the organisation is divided into levels of management,
functions and responsibilities.
112
Outsourcing
Contracting another business to carry out some of the business’ activities, often
to reduce costs.
113
Overdraft
Borrowing from a bank by drawing from a current account so that the balance
becomes less than zero.
114
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.
115
Part time
Working only a proportion of the full time hours.
116
Partnerships
A business that is owned and operated by a group of between 2 or more people.
117
Person specifications
Identifies the requirements of the job holder, including qualifications, experience
and skills.
118
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.
119
Post sales servicing
Maintenance or repair of equipment by the manufacturer or supplier during or
after the warranty.
120
PR
Managing the relations with groups such as consumers, the media, pressure
groups or investors to present a favourable impression and generate interest.
121
Price penitration
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.
122
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.
123
Primary industry
A business that extracts the earth's natural resources.
124
Primary research
Collecting information first-hand direct from the public; field research including
surveys, questionnaires and testing designed specifically for the market/product.
125
Private limited company (ltd)
A business that is owned by shareholders; the shares are not available to the
general public. Shareholders have limited liability.
126
Procurement
The process of buying goods and services including dealing with:
demand
selection of suppliers
analysing and negotiating prices
making the purchase
managing payments.
127
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.
128
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.
129
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.
130
Product porfolio
The range of products offered by one producer.
131
Product recalls
The withdrawal from sale by the manufacturer of a defective or contaminated
item
132
Productivity
The amount produced by a worker/machine/factory in a given time; the ability to
produce more output with fewer resources.
133
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
134
Profit maximisation
A business’ ability to make maximum profit with low operating expenses.
135
Profit sharing
A scheme that pays employees an additional amount based on the year’s profits.
136
Promotion
Communicating information about the product to:
make consumers aware of a product
remind customers about a product
persuade customers to buy.
137
Proximity to market
Businesses that serve their customers directly must be located close to those
customers.
138
Public limited company (plc)
A business that is owned by shareholders. Anyone can buy shares in the
business. Shareholders have limited liability.
139
Purchasing
The business buys the goods and services that it needs for producing the goods
it sells or for delivering the services it sells.
140
Qualitive 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.
141
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.
142
Raising finance
Getting the money to pay for starting the business or for developing it.
143
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.
144
Recruitment
The process of hiring a new employee.
145
Recycling
The conversion of waste into reusable material.
146
Retailer
A business or person that sells goods to the consumer.
147
Retained profit
An internal source of finance; a portion of the year’s profit is kept back to fund
projects.
148
Revenue
The income generated from the sale of goods/services.
149
Risk
The possibility that the return on investment will be lower than expected.
150
Salary
A method of paying employees for their work; based on a fixed annual amount,
normally paid monthly.
151
Scarce resources
When the raw materials that are available are not sufficient to meet needs.
152
Secondary industry
A business that uses raw materials to manufacture goods or construct items.
153
Secondary research
Examining information from published sources; desk research using information
that has been collected for other purposes.
154
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.
155
Selection
The process of choosing which applicant to employ.
156
Service
An action that is carried out to fulfil a need or demand in return for payment.
157
Shares
The units of the business that are available for sale to investors.
158
Share issue
New shares in a business made available for the public to buy.
159
Shareholders
Those people who own shares in a limited company; each shareholder is a part
owner of the business.
160
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.
161
Social objectives
A business’ goals that relate to fair treatment of the people concerned:
customers, investors, suppliers or workers.
162
Sole traders
A business that is owned and operated by one person.
163
Sources of finance
Ways of obtaining the funds the business needs; money may be needed to meet
short or long term needs.
164
Span of control
The number of people for whom a manager is directly responsible.
165
Staff retention
Keeping staff once they have been employed.
Stakeholders
Those with an interest in the way that a business ope
166
Staff retention
Keeping staff once they have been employed.
167
Stakeholders
Those with an interest in the way that a business operates.
168
Statement of financial position
Reports the assets, liability and equity of a business on a specific date; formerly
known as the balance sheet.
169
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.
170
Supplier
A business that provides goods/services.
171
Supply chain
The network of organisations, people, activities, information and resources that
take the product/service from supplier to customer.
172
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
173
Sustainability
The process of operating without damaging the environment or depleting
natural resources.
174
Takeover
One business takes control of another.
175
Tall orginisational sturcture
An organisational structure with a narrow span of control and many levels of
hierarchy (a long chain of command).
176
Target market
The particular group of customers to which a business aims to sell its product; a
particular market segment.
177
Technical economies of scale
The benefits that large businesses gain from having the funds to invest in
expensive machinery that brings cost savings
178
Telesales
Attempting to sell a good/service by making the initial contact by telephone.
179
Tertiary industry
A business that provides services to consumers or other businesses.
180
Total costs
All the costs involved in producing goods/services.
Total costs = fixed costs + variable costs
181
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.
182
Trade credit
The process of buying items from a supplier and paying for them later; for
example, 30 days after invoice date.
183
Trade descriptions
Protecting customers from false or misleading descriptions about products or
their prices.
184
Traffic congestion
The effects of overuse of transport networks, for example slower speeds, traffic
queues and longer journey times.
185
Training
Employees learn the skills and techniques needed to do the job or to prepare for
a new role.
186
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.
187
Unit cost
The average cost of each unit.
Unit cost = total cost ÷ quantity
188
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.
189
Variable costs
The costs that change as the business' output changes.
190
Wage
A method of paying employees for their work based on an hourly, weekly or
piece of work basis, usually paid weekly or monthly
191
Wants
Things that people would like to have; not limited to the things they need to
survive.
192
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
193
Wholester
A business or person that buys goods in large quantities from producers, stores
them in warehouses and sells them on to retailers.
194
Word of mouth
Personal recommendations from satisfied customers to prospective customers.
195
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.
196
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.
197
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
198
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.
199
Asset
Something the business owns; it has a value.
200
Aim
The intention to reach a goal.
201
Aim
The intention to reach a goal.
