Business definitions

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a physical product
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an intangle item
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Gross domestic product
measures the total value of the production of an economy
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Mission statement
sets out a business's overall purpose to direct and stimulate the entire organisation
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Long term plans of the business from which its corporate objectives are derived
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medium to long term goald
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The surplus of total revenue over total costs
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Cash flow
The amount of money moving into and out of a business
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are individuals or groups with an interest in a business
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are the earnings or incomes generated by trading activities
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Fixed costs
the costs that do not alter when the business alters its level of output
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Variable costs
alter directly with output
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Total costs
fixed costs+ variable costs
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Average costs
total costs of production/ level of production to give the cost of producing a single unit
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Sole trader
a business that is owned and managed by one person
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Unlimited liability
The owner of a business can lose personal assets if the business fails
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organisation thta has its own legal identity and has limited liability
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the process of establishing a business as a seperate legal identity
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An investor in and one of the owners of a company
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Limited liability
The personal belongings are safe
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a share in the profits of a company
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Market capitalisation
current share price x outstanding shares
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occurs when a company buys more than 50% of its share capital
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the process under which the state sells businesses that it has previously owned and managed to private individuals
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Reals incomes
incomes that are adjusted for the rate of inflation
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Market conditions
refers to a number of features of a market such as the level of sales
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indicate the amount of a particular good that consumers want
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Interest rates
the price of borrowed money
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Fair trade
a social movement that exists to promote improved trading terms and living conditions in less developed countries
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Sustainable production
occurs when the supply of a product does not impose on future generations
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includes the functions of ruling, guiding and inspiring other people to pursue organisation objectives
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planning, organising, directing and controlling
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setting objectives
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decide land on which factory will be built
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Motivation and communication
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setting standards using the companys objectives
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Autocratic leadership
one way communication, close supervision, minimal delegation
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Democratic leadership
delegation, employee participation, empowerment
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Laissez- faire leadership
manager is one of subordinates, workforce is self motivated, workforces agrees with objectives
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The power to carry through an action
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the passing down of authority down the organisational structure
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passing authority from the centre of an organisation
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Programmed decision
familiar and routine decisions
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Non programmed decision
less structured and require unique situations
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the chance of incurring misfortune or loss
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the situation in which there is a lack of knowledge
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Oppurtunity cost
the next best alternative foregone
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Scientific decision making
based on data and uses logical, rational approaches
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A decision tree
a model that represents the likely outcomes for a business of of a number of courses of action
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the chance of a particular event occuring
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Expected values
the financial outcomes from a specific course of action adjusted to allow for the probability of it occuring: probability x outcome
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Net gains
expected values- costs
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moral principles which should underpin business decisions
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The external environment
comprises of external forces that can influence a business's actions
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Social responsibility
describes the duties a business has towards stakeholder groups such as employees
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The exchange of information or ideas between two or more parties
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Stakeholder engagement
a process by which managers involve individuals who may be affected by their decisions
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a process by which one groups discovers the views of another one
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Relationship marketing
an approach to marketing in which a company seeks to build long term relationships by providing consistent satisfaction
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Marketing objective
a target set for the marketing department
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Sales value
measures the level of sales in a given period
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Sales volume
the level of sales in a given period in terms of units sold
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Market share
measures the sales of one brand or business as a percentage of total market sales
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Sales growth
the percentage change in sales volume
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Market growth
the percentage change in the total sales in the market
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Internal influences
refer to factors within a business such as employees
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External influences
refers to the factors outside a business such as the state of the economy
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refers to increasing trade between countries and the growing internationalisation of businesses
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Marketing research
involves gathering and analysing data relevant to the marketing process
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measures the extent to which a business offers good value for money relative to competitors
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Primary market research
gathering data first hand
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Secondary marketing research
uses data that already exists
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Target population
all items or people that are relevant to the market research being undertaken
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a sample
a group of people or items selected to represent the target population
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Market mapping
analyses market conditions to identify the position of one product or brand relative to others in terms of criteria
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Confidence level
the probability that the research findings are correct
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Confidence interval
possible range of outcomes for a given confidence level
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a promise of experience and conveys to a consumer a certain assurance
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Protects new inventions
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Trade mark
a sign which can distinguish the goods and services of a business from those of its competitors
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Price elasticity of demand
measures how responsive demand is to changes in the price
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Income elasticity of demand
how responsive demand is to changes in income
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Big data
refers to large and complex data sets
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occurs when similar customer needs are grouped
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Market segments
groups of similar needs and wants within a market
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occurs when a business decides which segment it wants to operate
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Niche marketing
focuses on a particular segment of the market
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Mass market
aims to provide products that meet the needs of a large proportion of the market
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identifies the benefit and price combination of a product relative to competitors
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Marketing mix
the comibination of marketing choices that can be used by a business to influence consumers to buy products
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Consumer products
goods bought for consumption by the general product
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A product life cycle
model shows the sales of a product over its life.
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Product portfolio analysis
examines the market position of all the products of a business
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The boston matrix
analyses all of a firms products in terms of their market share and the growth of the market
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A balanced portfolio
an appropriate mix of products in terms of their market shares and market growth
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Viral marketing
marketing technique that uses social media
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Multichannel distribution
customers can buy the product in several ways
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E- commerce
the buying and selling of products online
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Operations management
describes activities, decisions and repsonsibilities of the managing production and delivery of products
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Labour intensive
relatively high proportion of labour in the production
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Capital intensive
uses relatively high proportion of capital equipment relative to labour
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Supply chain
the series of activities ivolved in taking the initial resources to providing the final product
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Operations objective
a target set for the operations department
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Competitive advantage
a way in which a business offers superior value to its competitors
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Unit costs
total cost/ number of units
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the maximum output of a business given its resources
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Capacity utilisation
existing output/ maximum output x 100
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Labour productivity
the amount of output per employee
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measured by the inputs used to generate output. If it becomes more efficient it uses fewer inputs to produce a given output and unit cost should fall
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Lean production
occurs when managers reduce waste
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measured by the extent to which an operation meets its customer requirements
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Quality assurance
the maintainence of target quality
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Quality control
a system of maintaining standards by testing or inspecting the output against standards
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Mass customisation
the term for producing on a large scale while still enabling preferences to be met
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the stock or goods a company holds
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Vertical integration
the combination of two or more stafes of production normally operated by seperate companies
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when a business uses an outside supplier
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Financial objective
a goal pursued by the financial function
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income statements
record a business's sale revenues over a period and all relevent costs incurred as well as the business's profit
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Gross profit
income received from sales - costs of goods sold
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Direct costs
expenditure thta can clearly be linked to a particular product
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Indirect costs
expenditure that relates to all aspects of a business's activities
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Operating profit
the financial surplus arising from trading activities before taxation
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Profit for the year
measure of a business's profits that takes into account all expenditures
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the purchase of assets such as properties
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Non current assets
items that the business owns and which it expects to retain for more than one year
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Capital structure
refers to the way a business has raised the capital it requires to purchase assets
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financial plans that forecast revenue from sales and expected costs
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Variance analysis
the process of investigating any differences between forecast data and actual figures.
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Favourable variance
exists when the difference between the actual and budgeted figure will result in the business enjoying higher profits
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Adverse variance
occurs when the differenc results in profits being lower than planned
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Cash flow forecast
states the inflows and outflows of cash
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Trade credit
the time given by suppliers before customers have to pay for goods
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Break even output
the level of output or production at which total costs = revenue from sales
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revenue- variable costs
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The margin of safety
measures the amount by which a business's current level of output exceeds break even level
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measure of financial performance that compares profits to other factors
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Profit margin
a ratio that expresses profit as a percentage of its revenue
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Internal source of finance
one that exists within a business
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External source of finance
injection of funds from individuals
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Short term finance
finance needed for a limited time
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Long term finance
needed for a longer period of time
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Bank loan
amount of money provided for a stated purpose
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exists when a business is allowed to spend more than what it holds in its bank
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Venture capital
funds advanced to businesses thought to be high risk in the form of a loan
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Share capital
finance invested in a business as a result of the sale of shares
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Debt factoring
the selling of a debt to get rid of it
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long term loans, repaid of over long periods
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lons with fixed interest rates that are long term
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Crowd funding
a practice of funding a project or venture by raising small amounts of money from a large number of people.
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Other cards in this set

Card 2


an intangle item



Card 3


measures the total value of the production of an economy


Preview of the back of card 3

Card 4


sets out a business's overall purpose to direct and stimulate the entire organisation


Preview of the back of card 4

Card 5


Long term plans of the business from which its corporate objectives are derived


Preview of the back of card 5
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