Business AQA Unit 2: Definitions

Each card has two sides with some terms on the first and the definitions on the second to make printing easier, hope it helps :)

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  • Created by: Rebecca
  • Created on: 25-04-11 15:57

Forms of Growth

  • Organic Growth
  • External Growth
  • Merger
  • Takeover
  • Franchise
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Forms of Growth

  • Expansion through selling more products: slower but more manageable
  • Expansion through joining with another business in a takeover/merger
  • Two or more businesses join to become a new business
  • One business take control of another by getting a majority share
  • When a franchisor sells the right to the product, logo and operating methods of their business to a franchisee
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Economies of Scale and Legal Structure

  • Economies of Scale
  • Diseconomies of Scale
  • Flotation
  • Stock Exchange
  • Private Limited Company
  • Public Limited Company
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Economies of Scale and Legal Structure

  • When the cost per unit decreases as the business grows e.g. bulk buying, financial, managerial and technical
  • When the cost per unit increases as the business grows e.g. poor communication, poor coordination, poor motivation
  • The process by which an LTD becomes a PLC by selling their shares on the Stock Exchange
  • A market on which PLCs can sell shares to any member of the general public, without the permission of other shareholders
  • A business with limited liability who can sell shares only with the permission of other shareholders
  • A business with limited liability who can sell shares to any member of the public without permission from other shareholders
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Protectionist Measures and Growth

  • Market Leader
  • Business Ethics
  • Protectionist Measure
  • Import
  • Quota
  • Tariff
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Protectionist Measures and Growth

  • The biggest business in the market with the biggest market share
  • Whether a business decision is seen as morally right or wrong, can have implications for the reputation of the business
  • A government policy to protect businesses from foreign competition
  • A product brought into a country from abroad
  • A limit on the number of foreign goods imported into a country
  • A tax on foreign goods imported into a country
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Product Portfolio

  • Product Portfolio
  • Cash Cow
  • Question Mark/ Problem child
  • Star
  • Dog
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Product Portfolio

  • The collection of products that a business produces
  • A product with a high share in a low growth market that provides a reliable source of income for the business
  • A product with a low share in a high growth market, needs development and promotion
  • A product with a high share in a high growth market, needs development and promotion to turn into a cash cow
  • A product with a low share in a low growth market, needs disposal or development
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Distribution and Life Cycle

  • Product Life Cycle
  • Extension Strategies
  • Promotional Activities
  • Distribution Channel
  • Wholesalers
  • Retailers
  • Direct Marketing
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Distribution and Life Cycle

  • Graph to show how sales of a product tend to change over time, including development, introduction, growth, maturity and decline
  • A method to prolong the life of a product and prevent its sales going into decline e.g. increasing promotion, redeveloping product
  • The methods a business uses to communicate with and inform customers about different products e.g. sponsorship, adverts
  • The way the product travels from producer to customer, possibly including wholesalers and retailers
  • Buy from producers in large quantities to break bulk and sell in smaller quantities to retailers, for a profit
  • Shops that deal directly with the final customer
  • When the product travel directly from producer to customer with no intermediaries, usually through telesales, online or catalogues
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Sources of Finance

  • Bank Loan
  • Mortgage
  • Retained Profits
  • Asset
  • Interest
  • Collateral
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Sources of Finance

  • Money given from a bank to a business which is repaid in instalments over a set period of time (plus interest)
  • Money given from a bank/building society to a business to buy property that's repaid in instalments over a long period of time e.g. 25yrs (plus interest)
  • Money left over after the business has paid dividends, overheads and costs of production out of the revenue
  • Something that the business owns e.g. vehicle, property
  • Payment on top of a loan in order to borrow money, business pays back more than it originally borrowed
  • An asset held as security for the repayment of a loan e.g. property
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Financial Statements

  • Profit and Loss Account
  • Balance Sheet
  • Liability
  • Gross profit
  • Net profit
  • Revenue
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Financial Statements

  • A financial statement setting out the revenue, costs of production and overheads which equate to the net and gross profit over time.
  • A financial statement showing the fixed and current assets and liabilities that a business has, equating to the total equity and net assets
  • A debt owed by the business to another business or individual
  • [Revenue] - [Costs of Production] over a set period of time, usually a year
  • [Revenue] - [Costs of Production + Overheads] over a set period of time, usually a year
  • The money that comes into that business through sales: volume of sales x price
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Financial Ratios

  • Liquidity
  • Current Assets
  • Fixed Assets
  • Current Liabilities
  • Fixed Liabilities
  • Acid Test Ratio
  • Liquidity Ratio
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Financial Ratios

  • The ease with which an asset can be turned into cash, to cover liabilities
  • Something owned by a business for less than a year e.g. raw materials
  • Something owned by a business for more than a year e.g. vehicles
  • A debt owed by a business that must be repaid within a year e.g. tax
  • A debt owed by a business that must be repaid over a period of time longer than a year e.g. bank loan, mortgage
  • [Current Assets - Stock] : [Current liabilities] should be 1+:1
  • [Current Assets] : [Current Liabilities] should be 1+:1
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