AQA Business Studies Unit 2 Expanding a Business KEYWORDS

Keywords on Unit 2, expanding a business.

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Unit 2 Expanding a Business ­ Key Words:
The Business Organisation
Economies of scale ­ The reason why average costs or each item fall as a
firm expands
Market Share ­ The proportion of total market sales sold by one business
Organic Growth ­ Expansion from within the business (e.g. by opening
more shop branches)
Inorganic Growth ­ Expansion by merging with or taking over another
Internet Selling ­ Marketing products through the business's website
Franchisee ­ The firm that buys the franchise rights from the existing
Franchisor ­ The existing firm that sells the franchise rights to another
Merger ­ An agreement between business owners to combine two
business and operate as a larger one
Takeover ­ Purchasing another business from its owners
Horizontal Integration ­ Joining two businesses in the same industry and
stage of production.
Vertical backward Integration ­ Joining two businesses in the same
industry but a different stage of production, towards the supplier
Vertical Forward Integration ­ Joining two businesses in the same
industry but a different stage of production, towards the customers
Diversification ­ Joining two businesses in different industries
Limited Company ­ 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
Limited Liability ­ Investors 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 the firm's debts
Shareholders ­ Part owners of limited company
Dividend ­ Payment made to shareholders from company profits ­ usually
made annually
Divorce Between Ownership and Control - When directors control a
public limited company and thousands of shareholders own it, but the two
groups may have different objectives
Ethical Objectives ­ A business aim to `do the right thing'
Environmental Objectives ­ a business aim to protect the environment
during its operations
Social Costs - The costs of business activity, including both financial costs
paid by the firm and the cost on society
Social Benefits ­ The benefits of a business activity, not just to the firm
but to society

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Globalisation ­ Increasing trend for goods to be traded internationally and
for companies to locate abroad
Off-shoring ­ making products or parts of products in other countries.
Services can be off-shored too such as telephone call centres.…read more

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Sales Revenue ­ The value of goods sold (number of goods sold x price =
sales revenue)
Cost of Sales ­ The cost to the business of the goods sold
Gross Profit ­ The different between sales revenue and cost of making the
products sold (sales revenue ­ cost of sales = gross profit)
Overheads ­ The expenses of the business that are not directly part of the
production process (e.g.…read more

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Operations Management
Flow Production ­ large scale production where each stage of production
is carried out one after the other on a production line
Specialisation ­ Work is divided into separate tasks or jobs that allow
workers to become skilled at one of them
Division of Labour ­ Breaking down a job into small repetitive tasks what can
be done quickly by workers or machines specialised in this one task
Lean Production A production approach that aims to use fewer resources by using
them more…read more



This is a long list containing definitions of all the key words required for the final GCSE exam (unit 3 Edexcel). Students will get more from this resource by adapting it for their own use eg produce their own flash cards, poster etc.

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