AQA A Level Business Studies - Unit 1 - Key terms

AQA A Level Business Studies - Unit 1

Key terms

Functional objectives - Set for each major business function - designed to ensure that the corporate objectives are met.

Budgets - An agreed ceiling on the monthly spending by any department or manager.

Entrepreneur - A person with the initiative and drive to make a business idea happen.

Business unit strategy - How a business attempts to compete successfully in a particular market.

Aims/goals - generals statements of what a business intends to achieve. Precise details of those intentions are set out in objectives.

Corporate strategy - concerned with the overall purpose and scope of the business activities.

Why might a company aim be better expressed as a mission? If more vibrant, motivating language makes staff care more and work harder, a mission will have paid for itself.

Why do new firms struggle with cash flow? Because retail customers expect generous credit terms (delaying cash inflows) while suppliers demand cash on delivery.

Why would anyone sell goods on credit to a LL Business? Because thy trust that the proprietors will not close the business down and shelter behind limited personal liability.

Why might a growing business turn itself in a plc and then float its share on the stock market? To raise extra capital for expansion - and to allows early stage investors to sell part of their own holding.

Why might 'the divorce of ownership and control' matter to an investor? Senior management are more interested in money or power for themselves.

Bankrupt - When an individual is unable to meet personal liabilities, some or all of which can be as a consequence of b activities.

Monopoly - Where the sales of one b have a dominant share of its marketplace.

Total revenue - the income received from an organisations activities.

Costs - Amounts incurred by a b as a result of its trading operations.

Total costs - Sum of Fixed and Variable costs. Full production costs.

Semi-variable costs - There are costs that combine elements of fixed variable costs.

Shareholders - The owner of a limited company; any person, company or institution that owns at least share in a company.

Competition - Organisations selling products that are substitute goods, targeted at the same groups of consumers.

Fixed interest rate - Is an interest on a liability that remains the same for the entire term.

Variable interest rate - Is an interest rate (on loans) that fluctuates over time.

Discretionary Income - Is DisInc extracted further from bills - incomes available to spend on luxury goods.

Loss - A loos is made when the revenue from sales is not enough to cover all costs of production.

Income - Amount of money received by consumers in exchange for their labour or as a reward for investment (savings, dividends)

Profitability - Measures the amount of profit made in relation to the size. Measures how effective the business at generating profit. Can be measured via the net profit margin.

Corporate objectives -…