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Business Management > Unit 1 > Flashcards

Unit 1 Flashcards

1
Q

Needs

A

Basic necessities that a person must have to survive, e.g. food and water

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2
Q

Wants

A

Person’s desires i.e. things they would like to have

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3
Q

Consumers

A

People or organisations who actually use product

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4
Q

Customers

A

People or organisations who buy the product

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5
Q

Entrepreneurs

A

Owners or operators of an organisation who manage, organise, and plan the other three factors of production. They are risk-takers who exploit business opportunities in return for profits

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6
Q

Business

A

Organisation involved in the production of good and/or provision of services

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7
Q

Business plan

A

Document that sets out the business idea, it’s goals and objectives and other details of how the business will operate (marketing, operations and finance)

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8
Q

Product

A

Refers to both goods and services. A good is a physical product (e.g. books) and a service is an intangible product (e.g. health care)

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9
Q

Primary sector

A

Refers to the business involved in the cultivation or extraction of natural resources, e.g. farming and mining

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10
Q

Secondary sector

A

Refers to the section of the economy where business activity is concerned with the construction and manufacturing of products

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11
Q

Tertiary sector

A

Refers to the section of the economy where business activity is concerned with the provision of services to customers

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12
Q

Quaternary sector

A

Is a subcategory if the tertiary sector, where businesses are involved in intellectual, knowledge-based activities that generate and share information, e.g. research organisations

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13
Q

Company

A

Refers to a business that is owned by shareholders. It has been issued a certificate of incorporation, giving it a separate legal identity from its owners.

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14
Q

Cooperatives

A

Are for-profit social enterprises set up, run and owned by their members, who might be employees and/or customers

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15
Q

Incorporation

A

Means that there is a legal difference between the owners of the company and the business itself. This ensures that the owners are protected by limited liability.

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16
Q

Limited liability

A

Is a restriction on the amount of money that owners can lose if their business goes bankrupt, i.e. shareholders cannot lose more than they invested in the company

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17
Q

Unlimited liability

A

Is a feature of sole traders and partnerships who are legally liable for all money owned to its creditors

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18
Q

Sole traders

A

Self-employed people who run and control business and is held for its success or failure (unlimited liability)

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19
Q

Partnerships

A

Are a type of private sector business owned by 2-20 people. They share the responsibilities and burdens of running and owning the business

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20
Q

Private sector

A

Refers to the part of the economy run by private individuals and businesses, e.g. sole traders, partnerships, companies and cooperatives

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21
Q

Deed of partnerships

A

Is the legal contract signed by the owners of the company. The formal deed specify the name and the responsibilities of each partner and their share of any profits and losses

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22
Q

Micro finance

A

A type of financial service aimed at entrepreneurs of small businesses, especially aimed at females and those of low income

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23
Q

Charities

A

Are non-profit social enterprises that provide voluntary support for good causes, such as protection if children and the environment

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24
Q

Non-governmental organisations (NGO)

A

Private sector non-for-profit social enterprises that operate for the benefit of others rather than primarily aiming to make profit, e.g. Oxfam

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25
Q

Social enterprises

A

Are revenue-generating businesses with social objectives at the core of their operations. They can be for-profit or non-profit businesses, but all profits or surpluses are re-invested for that social purpose rather than being distributed to shareholders and owners.

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26
Q

State-owned enterprises

A

Organisations wholly owned by the government

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27
Q

Stock exchange

A

A market place for trading stocks and shares of public limited companies

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28
Q

Initial public offering (IPO)

A

Occurs when a business sells all or part of its business to shareholders on a stock exchange for the first time

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29
Q

Private limited company

A

Is a business owned by shareholders with limited liability but whose shares cannot be bought by or sold to the general public

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30
Q

Public limited company

A

Is an incorporated business that allows the general public to buy and sell shares in the company via a stock exchange. All shareholders enjoy limited liability

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31
Q

Public-private partnerships

A

Occur when the government works together with the private sector to jointly provide certain goods or services

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32
Q

Aims

A

Long-term goals of a business, often expressed in a firm’s mission statement. They are a general statement of a firm’s purpose or intentions and tend to be qualitative in nature.

33
Q

Objectives

A

Are the relatively short-term targets of an organisation and are often expressed as SMART objectives

34
Q

SMART objectives

A

Specific, measurable, attainable, realistic and time constrained

35
Q

Strategies

A

Plans of action that businesses use to achieve their targets i.e. the long-term plans of the whole organisation

36
Q

Tactics

A

Short-term plans of action that firms use to achieve their objectives

37
Q

Mission statement

A

Refers to the declaration of an organisation’s overall purpose. It forms the formation of setting the objectives of a business

38
Q

Vision statement

A

Organisation’s long-term aspirations i.e. where it ultimately wants to be

39
Q

Ethics

A

Moral principles that guide decision-making and strategy. Morals are concerned with what is considered to be right and wrong, from society’s point of view

40
Q

Ethical code of practice

A

Documented beliefs and philosophies of an organisation

41
Q

Corporate social responsibility (CSR)

A

Conscientious consideration of ethical and environmental practices related to business activity. A business that adopts CSR acts morally towards its various stakeholder groups and well-being of society as a whole

42
Q

Ansoff matrix

A

Analytical tool used to devise various product and market growth strategies, depending on whether businesses want to market new or existing products in either new or existing markets

43
Q

SWOT analysis

A

Analytical tool used to asses the internal strengths and weaknesses and the external opportunities and threats of a business decision, issue or problem

44
Q

Stakeholders

A

Individuals or organisations with a direct interest in the activities and performance of a business e.g. shareholders and employees

45
Q

Internal stakeholders

A

Members of the organisation e.g. employees, managers and shareholders of an organisation

46
Q

External stakeholders

A

Individuals and organisations that are not part of the organisation but have a direct interest in its activities and performance, e.g. the government, customers, suppliers and pressure groups

47
Q

Conflict

A

Refers to situations where stakeholders have disagreements on certain matters due to differences in their opinions. This can lead to arguments and tension between the various stakeholders

48
Q

Shareholders

A

Owners of limited liability company. Shares in a company can be held by individuals and other organisations

49
Q

Economic growth

A

Measures changes of real GDP (gross domestic product) of a country over time. It occurs when there is an increase of GDP for two consecutive quarters

50
Q

Inflation

A

Refers to a sustained in the general price level - general increase in prices and fall in the purchasing value of money

51
Q

Business cycle

A

Refers to the fluctuation in the level of business activity over time. There are four stages in the business cycle: peak, trough, contraction/recession and expansion

52
Q

Interest rate

A

A measure of the price of money in terms of the amount charged for borrowed funds or how much is offered on money that is saved

53
Q

Exchange rate

A

The value of the country’s currency in terms of other currencies

54
Q

Deregulation

A

The removal of government rules and regulations which constrain an industry to enhance efficiency and encourage more competition within the industry

55
Q

Protectionist measures

A

Any measures taken by government to safeguard its industries from overseas competitors. They are a threat to businesses trying to operate in a foreign market

56
Q

Unemployment

A

Refers to the people of working age who are actively looking for a job but who are not employed

57
Q

STEEPLE analysis

A

Analytical framework used to examine the opportunities and threats of the external environment (social, technological, economic, environmental, political and ethical environment) on a business activity

58
Q

External growth

A

Occurs when a business grows by collaborating with, buying up or merging with another firm

59
Q

Internal growth

A

Occurs when a business grows using its own capabilities and resources to increase the scale of its operations and sales revenue

60
Q

Globalisation

A

Is the growing integration and interdependence of the world’s economies, causing consumers around the world to have increasingly similar habits and tastes

61
Q

Economies of scale

A

Refer to lower average costs of production as a firm operates on a larger scale due to gains in productive efficiency, e.g. easier and cheaper access to finance

62
Q

Diseconomies of scale

A

Are the cost disadvantages of growth. Unit costs are likely to eventually increase as a firm grows due to lack of control, coordination and communication

63
Q

Optimal level of input

A

Is the most efficient scale of operation for a business which occurs at the level of output where average costs of production are minimised

64
Q

Diversification

A

High risk growth strategy that involves selling new products in new markets, i.e. spreading the risks over a diverse variety of products and markets

65
Q

Conglomerates

A

Businesses that provide a diversified range of products and operate in an array of different industries

66
Q

Franchise

A

Refers to an agreement between a franchisor selling its rights to other businesses to allow them to sell products under its name in return for a fee and regular royalty payments

67
Q

Joint venture

A

Growth strategy that combines the contributions and responsibilities of two organisations in a shared project by forming a separate legal enterprise

68
Q

Merger

A

Form of external growth whereby two or more firms agree to form a new organisation, thereby loosing their original identities

69
Q

Multinational company (MNC)

A

An organisation that operates in two or more countries, with its head office usually based in the home country

70
Q

Forward vertical integration

A

Growth strategy that occurs with the amalgamation (the action of uniting) of a firm operating at a later stage in the production process, e.g. a book publisher merges with a book retailer

71
Q

Backward vertical integration

A

Occurs when a business amalgamates with a firm operating in an earlier stage of production, e.g. a car manufacturer acquires a supplier of tires and other components

72
Q

Lateral integration

A

Refers to M&A’s (mergers and acquisitions) between firms that have similar operations but do not directly compete with each other, e.g. PepsiCo acquiring Quaker Oats Company

73
Q

Horizontal integration

A

External growth strategy that occurs when a business amalgamates with a firm operating in the same stage of production

74
Q

Organisational planning tools

A

Various methods that businesses use to aid their decision-making, e.g. decision trees, fishbone diagrams, Gantt charts and force field analyses

75
Q

Decision trees

A

Quantitative organisational planning tool that calculates the probable values of different options, helping managers to minimise the risks in decision-making

76
Q

Force field analysis

A

Deals with the forces for and against change. Driving forces are the benefits of change (such as reduced costs) whilst the restraining forces are causes of resistance to change

77
Q

Fishbone diagram

A

Organisational planning tool based on identifying and dealing with the root causes of a problem or issue facing a business

78
Q

Gantt charts

A

Visual representation of all the tasks taken in particular project against a timescale. As a planning and scheduling tool, it allows managers to monitor project.

Business Management (7 decks)

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