Unit 2: Growing as a Business Flashcards Preview

GCSE AQA Business Studies Unit 1 and Unit 2 > Unit 2: Growing as a Business > Flashcards

Flashcards in Unit 2: Growing as a Business Deck (82):
1

Merger

An agreement between business owners to combine two businesses owners and operate as a larger one

2

Takeover

Purchasing another business from it's owner

3

Horizontal integration

Joining two businesses in the same industry and stage of production (e.g two hairdressing business)

4

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)

5

Diversification

Joining two businesses in different industries (e.g an insurance company merges with a publishing business)

6

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)

7

Limited company

A business recognised as a legal unit that offers investors (shareholders) limited liability

8

Private limited company (ltd)

A company that cannot sell shares to the general public. It is not listed on the Stock Exchange

9

Public limited company (PLC)

A company able to sell shares to the general public by being listed on the Stock Exchange

10

Limited liability

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

11

Shareholders

Part owners of a limited company - they own shares in it

12

Dividend

Payment made to shareholders from company profits - usually made annually

13

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

14

Ethical objective

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)

15

Environmental objective

A business aim to protect the environment during its operations (e.g. to recycle waste water). This will reduce social costs

16

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)

17

Social benefits

The benefits of a business activity, not just to the firm but to society (e.g. new jobs created by business expansion)

18

Globalisation

Increasing trend for goods to be traded internationally and or companies to locate abroad

19

Offshoring

Making products or parts of products in other countries. Services can be offshored too, as with telephone call centres moving to India

20

Multinational

A business with operations in more than one country

21

Product portfolio

The range of products sold by a business

22

Target Market

The group of consumers aimed at by the business

23

Diversify

Spreading risk by selling in different markets

24

Product Life Cycle

The lifespan of a product, recorded in sales from launch to being taken off the market

25

Extension Strategies

Steps taken to extend the life cycle or the product

26

Competitive Pricing

Setting a price for a product based on prices charged by competitors

27

Price Skimming

Setting a price at a high level to create a high-quality and exclusive image

28

Cost Plus Pricing

Setting a price by adding a profit mark up

29

Loss Leader Pricing

Setting a price below cost hoping to gain other profitable sales

30

Promotion

All the ways a business communicates to consumers with the aim of selling products

31

Advertising

Communication to consumers using a television and other media encouraging them to buy a product

32

Sales Promotion

Activities to attract consumer to a product to increase sales

33

Sponsorship

A business pays for an activity or an event to gain publicity

34

Wholesaler

Middleman or distributor that buys in a bulk

35

Telesales

Selling through a telephone contact alone

36

Mail Order

Direct marketing through mail shots

37

Retained profit

Profit kept in the business after tax and dividends have been paid.

38

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.

39

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.

40

Sales Revenue

The value of goods sold.

41

Cost of Sales

The cost to the business of the goods sold.

42

Gross Profit

The difference between sales revenue and cost of making the products sold.

43

Overheads

Expenses of the business that are not directly part of the production process.

44

Net profit

The difference between sales revenue and the total costs of the business.

45

Gross Profit Margin

The percentage of sales revenue that is gross profit.

46

Net Profit Margin

The percentage of sales revenue that is net profit.

47

Balance Sheet

This lists the value of a company's assets and liabilities.

48

Assets

Item of value owned by a business.

49

Liabilities

Debts owned by a business.

50

Liquidity

How easy it is for a business to pay it's short-term debts.

51

Organisational structure

The internal links between managers and workers showing lines of authority

52

Layers of management

The number of different levels of management and responsibility in a structure

53

Span of control

The number of junior employees each manager is directly responsible for

54

Centralisation

Senior managers take all important decisions

55

Decentralisation

Decision-making power is spread to managers in branches and divisions of the business

56

Recruitment

Attracting people to apply for job vacancy

57

Job analysis

Identifying the tasks and skills needed to perform a job well

58

Person specification

A profile of the type of person likely to make a good applicant

59

Internal recruitment

Appointing an existing employee of the business to fill a vacancy

60

External recruitment

Appointing an employee of another business to fill a vacancy

61

Induction training

Initial training to familiarise new recruits with the systems of a new business

62

On-the-job-training

Takes place when an employees receive training as they are working at the place of work

63

Off-the-job-training

Takes place away from the job at another place (e.g. the business's training centre or college)

64

Appraisal

Assessing how effectively an employee is working

65

Motivated

The will to work due to the enjoyment of the work itself

66

Retaining staff

Keeping existing staff in business, which cuts down the cost of recruitment, selection and training

67

Autocratic management

Managers who believe in taking all decisions and just passing instructions to workers

68

Democratic management

Managers who involve the workers and less senior managers in decision-making

69

Flow Production

Large-scale production where each stage of production is carried out one after the other, continuously, on a production line

70

Specialisation

Work is divided into separate tasks or jobs that allow workers to become skilled at one of them

71

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

72

Lean production

A production approach that aims to use fewer resources by using them more efficiently

73

Kaizen

Continuous improvement

74

Just-in-time manufacturing (JIT)

Ordering supplies so that they arrive just when they are needed and making goods only when ordered by customers

75

Lean design

Producing new designs as quickly as possible

76

Economies of Scale

The reasons why production costs of each item fall as a firm expands

77

Diseconomies of Scale

The reasons why production costs of each item rises as a firm expands

78

Quality Product

Goods or service that meets customers' expectations and is there 'fit for purpose'

79

Outsourcing

Using the businesses to make all or part of a product or provide an aspect of the customer care

80

Quality Standards

The expectations of customers expressed in terms of the minimum acceptable production or service standards

81

Quality Assurance

Setting and trying to meet quality standards throughout the business

82

Total Quality Management (TQM)

An approach to quality that aims to involve all employees in the quality improvement process