A2 Business Studies - Unit 1 - Definitions

Definitions of key words from A2 related sections in my textbook. Unit 1: Business and its environment. CIE syllables.

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  • Created by: Chi
  • Created on: 10-12-12 00:18
Privatisation
Selling state-owned and controlled business organisations to investors in the private sector.
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Public-private partnerships
These are government services or business ventures that are funded and managed through a partnership of government and one or more private-sector companies.
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Free trade
No restrictions or trade barriers exist that might prevent or limit trade between country.
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Tariffs
Taxes imposed on imported goods to make them more expensive than they would otherwise be.
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Quotas
Limits on the physical quantity or value of certain goods that may be imported.
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Voluntary export limits
An exporting country agrees to limit the quantity of certain goods sold to one country (possibly to discourage the setting of tariffs/quotas).
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Protectionism
Using barriers to free trade to protect a country’s own domestic industries.
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Globalisation
The increasing freedom of movement of goods, capital and people around the world.
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Multinational business
Business organisation that has its headquarters in one country but with operating branches, factories, and assembly plants in other countries.
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External growth
Limits on the physical quantity or value of certain goods that may be imported.
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Horizontal integration
Integration with firms in the same industry and at same stage of production.
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Forward vertical integration
Integration with a business in the same industry but a customer of the existing business.
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Backward vertical integration
Integration with a business in the same industry but a supplier of the existing business.
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Conglomerate integration
Integration with a business in a different industry.
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Merger
An agreement by shareholders and managers of two businesses to bring both firms together under a common board of directors with shareholders in both businesses owning shares in the newly merged business.
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Takeover
When a company buys over 50% of the shares of another company and becomes the controlling owner of it. It is often referred to as ‘acquisition’.
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Synergy
Literally means that ‘the whole is greater than the sum parts’, so in integration it is often assumed that the new, larger business will be more successful than the two, formerly separate.
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Monopoly
Theoretically a situation in which there is only one supplier, but this is very rare. A much more flexible and realistic definition is needed for government policy purposes and, in the UK, this is that one has control of at least 25% of the market.
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Information technology
The use of electronic technology to gather, store, process and communicate information.
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Computer-aided design
Using computers and IT when designing products.
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Computer-aided manufacturing
The use of computers and computer-controlled machinery to speed up the production process and make it more flexible.
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Environmental audits
Assess the impact of a business’s activities on the environment.
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Social audit
A report on the impact a business has on society. This can cover pollution levels, health and safety record, sources of supplies, customer satisfaction and contribution to the economy.
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Pressure groups
Organisations created by people with a common interest or aim who put pressure on businesses and governments to change policies so that an objective is reached.
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Gross domestic product (GDP)
The total value of goods and services produced in a country in one year – real GDP has been adjusted for inflation.
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Economic growth
An increase in a country’s productive potential measured by an increase in its real GDP.
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Business investment
Expenditure by businesses on capital equipment, new technology and research and development.
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The business cycle
The regular swings in economic activity, measured by real GDP, that occur in most economies, varying from boom conditions (high demand and rapid growth) to recession when total national output declines.
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Recession
A period of six months or more of declining real GDP.
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Inflation
An increase in the average price level of goods and services. It results in a fall in the value of money.
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Deflation
A fall in the average price level of goods and services.
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Unemployment
This exists when members of the working population are willing and able to work, but are unable to find a job.
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Working population
All those in the population of working age who are willing and able to find work.
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Cyclical unemployment
Unemployment resulting from low demand for goods and services in the economy during a period of slow economic growth or a recession.
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Structural unemployment
Unemployment caused by the decline in important industries, leading to significant job losses in one sector of industry.
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Frictional unemployment
Unemployment resulting from workers losing or leaving jobs and taking a substantial period of time to find alternative employment.
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Balance of payments (current account)
This account records the value of trade in goods and services between one country and the rest of the world. A deficit means that the value of goods and services imported exceeds the value of goods and services exported.
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Imports
Goods and services purchased from other countries.
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Exports
Goods and services sold to consumers and business in other countries.
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Exchange rate
The price of one currency in terms of another.
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Exchange rate depreciation
A fall in the external value of a currency as measured by its exchange rate against other currencies. (If $1 falls in value from €2 to €1.5, the value of the dollar has depreciated in value).
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Exchange rate appreciation
A rise in the external value of a currency as measured by its exchange rate against other currencies. (If $1 rises from €1.5 to €1.8, the value of $ has appreciated).
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Fiscal policy
Is concerned with decisions about government expenditure, tax rates and government borrowing, These operate largely through the government’s annual budget decisions.
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Government budget deficit
The value of government spending exceeds revenue from taxation.
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Government budget surplus
Taxation revenue exceeds the value of government spending.
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Monetary policy
Is concerned with decisions about the rate of interest and the supply of money in the economy.
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Market failure
When markets fail to achieve the most efficient allocation of resources and there is under- or overproduction of certain goods and services.
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External costs
Costs of an economic activity that are no paid for by the producer or consumer, but by the rest of society.
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Income elasticity of demand
Measures the responsiveness of demand for a product after a change in consumer incomes.
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Other cards in this set

Card 2

Front

These are government services or business ventures that are funded and managed through a partnership of government and one or more private-sector companies.

Back

Public-private partnerships

Card 3

Front

No restrictions or trade barriers exist that might prevent or limit trade between country.

Back

Preview of the back of card 3

Card 4

Front

Taxes imposed on imported goods to make them more expensive than they would otherwise be.

Back

Preview of the back of card 4

Card 5

Front

Limits on the physical quantity or value of certain goods that may be imported.

Back

Preview of the back of card 5
View more cards

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