Flashcards in Unit 2: Growing as a Business Deck (82):
An agreement between business owners to combine two businesses owners and operate as a larger one
Purchasing another business from it's owner
Joining two businesses in the same industry and stage of production (e.g two hairdressing business)
Vertical backward integration
Joining two businesses in the same industry but a different stage or production, towards the supplier (e.g a computer manufacturers takeover of a 'chip' maker)
Joining two businesses in different industries (e.g an insurance company merges with a publishing business)
Vertical forward integration
Joining two businesses in the same industry but a different stage of production, towards the customer (e.g a farmer's takeover a butcher's shop)
A business recognised as a legal unit that offers investors (shareholders) limited liability
Private limited company (ltd)
A company that cannot sell shares to the general public. It is not listed on the Stock Exchange
Public limited company (PLC)
A company able to sell shares to the general public by being listed on the Stock Exchange
Investors (shareholders) in a limited company can only lose their investment in the business if it fails; they cannot be forced to sell assets to pay off firm's debts
Part owners of a limited company - they own shares in it
Payment made to shareholders from company profits - usually made annually
Divorce between ownership and control
When directors control public limited company and thousands of shareholders own it, but the two groups may have different objectives
A business aim to 'do the right thing' according to the values and beliefs of managers, even if this is not the most profitable way (e.g. pay workers in low-wage countries above average rates)
A business aim to protect the environment during its operations (e.g. to recycle waste water). This will reduce social costs
The costs of business activity, including both financial and costs paid by the firm and the costs on society (e.g. factory pollution)
The benefits of a business activity, not just to the firm but to society (e.g. new jobs created by business expansion)
Increasing trend for goods to be traded internationally and or companies to locate abroad
Making products or parts of products in other countries. Services can be offshored too, as with telephone call centres moving to India
A business with operations in more than one country
The range of products sold by a business
The group of consumers aimed at by the business
Spreading risk by selling in different markets
Product Life Cycle
The lifespan of a product, recorded in sales from launch to being taken off the market
Steps taken to extend the life cycle or the product
Setting a price for a product based on prices charged by competitors
Setting a price at a high level to create a high-quality and exclusive image
Cost Plus Pricing
Setting a price by adding a profit mark up
Loss Leader Pricing
Setting a price below cost hoping to gain other profitable sales
All the ways a business communicates to consumers with the aim of selling products
Communication to consumers using a television and other media encouraging them to buy a product
Activities to attract consumer to a product to increase sales
A business pays for an activity or an event to gain publicity
Middleman or distributor that buys in a bulk
Selling through a telephone contact alone
Direct marketing through mail shots
Profit kept in the business after tax and dividends have been paid.
Sale and Leaseback
Selling an asset, such as a building, to a leasing company and paying an annual leasing charge so that the asset can still be used.
Profit and Loss Account
This shows whether the business made a profit or loss over the last period. It is also known as the income statement.
The value of goods sold.
Cost of Sales
The cost to the business of the goods sold.
The difference between sales revenue and cost of making the products sold.
Expenses of the business that are not directly part of the production process.
The difference between sales revenue and the total costs of the business.
Gross Profit Margin
The percentage of sales revenue that is gross profit.
Net Profit Margin
The percentage of sales revenue that is net profit.
This lists the value of a company's assets and liabilities.
Item of value owned by a business.
Debts owned by a business.
How easy it is for a business to pay it's short-term debts.
The internal links between managers and workers showing lines of authority
Layers of management
The number of different levels of management and responsibility in a structure
Span of control
The number of junior employees each manager is directly responsible for
Senior managers take all important decisions
Decision-making power is spread to managers in branches and divisions of the business
Attracting people to apply for job vacancy
Identifying the tasks and skills needed to perform a job well
A profile of the type of person likely to make a good applicant
Appointing an existing employee of the business to fill a vacancy
Appointing an employee of another business to fill a vacancy
Initial training to familiarise new recruits with the systems of a new business
Takes place when an employees receive training as they are working at the place of work
Takes place away from the job at another place (e.g. the business's training centre or college)
Assessing how effectively an employee is working
The will to work due to the enjoyment of the work itself
Keeping existing staff in business, which cuts down the cost of recruitment, selection and training
Managers who believe in taking all decisions and just passing instructions to workers
Managers who involve the workers and less senior managers in decision-making
Large-scale production where each stage of production is carried out one after the other, continuously, on a production line
Work is divided into separate tasks or jobs that allow workers to become skilled at one of them
Division of Labour
Breaking a job down into small, repetitive tasks that can be done quickly by workers or machines specialised in this one task
A production approach that aims to use fewer resources by using them more efficiently
Just-in-time manufacturing (JIT)
Ordering supplies so that they arrive just when they are needed and making goods only when ordered by customers
Producing new designs as quickly as possible
Economies of Scale
The reasons why production costs of each item fall as a firm expands
Diseconomies of Scale
The reasons why production costs of each item rises as a firm expands
Goods or service that meets customers' expectations and is there 'fit for purpose'
Using the businesses to make all or part of a product or provide an aspect of the customer care
The expectations of customers expressed in terms of the minimum acceptable production or service standards
Setting and trying to meet quality standards throughout the business