Business key terms covering unit 1 and unit 3

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Business
A company that provides a good or service
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Entrepreneur
A person who sets up a business that takes on financial risks in hope of profit
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Supplier
A company that provides materials/goods to a business
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Customer
A person who buys or uses the goods/services
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Markets
Different areas where demand and supply operate and buyers and sellers interact
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Customer needs
Problems that customers intend to solve with the purchase of a good or service
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Market research
A specific market is identified and its size and other charateristcs are measured
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Primary (field) research
data that is aquired first-hand rather than being gathered from published sources
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Surveys
to ask aseries of questions to gather information on peoples thoughts and opinions regarding a particular topic
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Respondants
A person who replies to something e.g. supplying infomation for a questionnaire
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Questionnaire
nwers for obtaining statistically useful infomation
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Focus groups
Agroup of people with similar interests participating in a discussion about a product before it is launched or provide feedback on a product
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Secondary (desk) research
the summary and collection of existing research
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Qualitative data
Descriptive data involving opinions and detail
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Quantitative data
Data which involves numbers - easily analysed
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Market segment
Part of the market with common needs and interests
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Price sensitive
A products sales which are greatly influenced by price
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Market map
A study of Businesses/ products positions in the market
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Gap in the market
An unmet customer need or group of potential customers whose wants/needs have not been met
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Product
A tangible product avaliable to purchase
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Brand
Distiguishing symbol, name or logo that identifies a product/business
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Added value
An amount added to the value of the product
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USP
Factor that diffrentiates a product from its competitors
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Franchise
The right granted buy a company to operate under its name and sell its product
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Franchisee
One who purchses a franchise
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Franchisor
The person who owns the whole organisation
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Enterprise
An organisation / difficult project
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Risk
A situation which could end badly
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Goods
Tangible items
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Services
Intangible products
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Creative Thinking
The generation of new ideas, looking at problems from a new perspective
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Competitive advantage
A circumference that puts a company in a favourable position
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Deliberate creativity
Using thinking techniques to spark off new ideas
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Lateral thinking
Asking why, thinking outside the box
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Blue skies thinking
Looking at an oppourtunity with fresh eyes. As many ideas as possible, no ideas are rejected
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Invention
Aunique or novel device or process that had not been thought of before
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Innovation
New idea or more effective device/process
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Patent
Exclusive rights to a process/product/invention that lasts fro 20 years
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Copyright
Legal right that grants the creator exclusive rights for sue and distribution of original, written work
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Trademarks
Asymbol, word, or words legally registered as representing a company or product
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Calculated risk
A risk whose probability of failure has been assesedbefore taking it
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Downsize
Make a company smaller by shedding staff
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Upsides
An advantage or benefit
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Driven
Determined ot achieve
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Mind map
Diagram used to visually organize infomation around a single concept
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Objectives ( financial and non )
A thing aimed at , a goal
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Revenue
Abusiness's incoome
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Turnover
The amount of money taken by a business in a particular period
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Sales volume
The quantity of products/ services sold in a set amount of time
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Fioxed costs
Costs that do not frequently change, are not dependant on other factors
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Total costs
Fixed costs and variable costs
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Variable costs
Costs that are dependant Upon other factors such as sales
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Profit
The surplus remaining after total costs are deduced from total revenue
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Loss
An amount of money lost by a business
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Cash
Money in coins or notes
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Cash flow
The total amount of money being tranferred in and out of a business
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Cash flow forecast
Estimating cash inflow and outflow over a set period of time
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Inflow
Money going in to the business
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Outflow
Money going out of a business
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Net cash flow
Difference between inflows and outflows: Ncf = cash inflows - cash outflows
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Opening balance
Amount of funds in a company's account at the beginning of a new financial period
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Closing balance
Amount remaining in an account at the end of the financial period
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Trade credit
Credit extended to you by suppliers who let you buy now, pay later
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Stock
The goods kept on the premise of a shop that are avaliable for sale/ purchase
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Business plan
Businesses goals and plans on how to achieve them
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Finance
Providing funding for a enterprise
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Long term
7-10 years, occuring over a long period of time
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Short term
Relatively short amount of time less than 12 months
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Share
A unit of ownership that represents an equal rpoportion of the company's profits, gives owner equal claim on profits/obligation for losses
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Personal savings
Current disposable personal income
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Share capital
The part of the capital of a company that comes from the issue of shares
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Shareholders
Owner of a share in a company
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Venture Capitalists
People who invest money and offer advice to a business
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Loan
Money that is borrowed which has to be paid back with interest
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Security
Protection of a person/ building/ item which protects it from crimes
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Mortgage
Alegal agreement by which a bank lends money at interest in exchange for taking title of the debtor's property
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Dividend
A sum of money paid regularly by a company to its shareholders our of its profits
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Retained profits
Percentage of net earnings not paid out as diviends to be reinvested or pay debst
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Leasing
The owner grants a second party rights to its exclusive possesion for a specific period of time in exchange for moeny
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Overdraft
A deficit in a bank account caused by drawing more money than the account holds
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Factoring
Selling business accounts to a third party in order to raise capital
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Marketing mix
Refers to the set of actions to a third party in orde rto raise capital
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Price
The decided amount required as payment for a good ro service
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Product
A tangible item manufactured for sale
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Promotion
The publicizing of a product/service to increase sale sor public awareness
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Place
A particular area/ location/ space
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Sole trader
A person who is the exclusive owner of a business
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Unlimited liability
Extending beyond the firms owners totheir perosnal assets, e.g homes
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Limited liability
Shareholders are legally responsible for the debts, only extent to the value of their shares
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Companies
A comercial buisiness
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Records
A sum of past reciepts of an organisation
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HMRC
Responsible for the collection of =taxes payment of stale support and minimum wage.
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VAT
Tax placed on a product whenever value is added at a stage of production/ final sale
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National insurance contributions
Paymetns made by employees and employers into the UK's national insurance
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Corporation tax
Tax placed on a companies profits
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Customer service
The service provided by a company to its customers
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Customer satisfaction
The degree of satisfaction provided by the goods/service of a company
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Repeat purchases
Ameasure of loyalty to the brand, when a consumer purchases the same brand over and over
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Job aplicant
A person applying for a job
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Job description
A formal account of the employee's responsibilites
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Person specification
Description of qualifications, skills, experience and knowledge a candidate must possess to perform the job duties
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Application form
A form that an applicant must fill out to apply for a particular job
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Curriculum vitae
Abrief account of a person's education, qualifications and previous occupations and achievements
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Motivation
Reasons for acting/behaving in a particular way
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Commodities
A raw material
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Commodities market
Market that trades in the primary sector
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Demand
Something that is wanted by a market
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Supply
To mkae something avaliable to someone
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Shortage
A situation in which a need/demand cannot be met due to insufficient amounts of goods/services avalible
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Surplus
An amount of something left over when requirements have been met
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Goods market
All buying and selling of goods
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Interest rate
The prportion of a loan which is charged as interest to the borrower
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Variable
Able to change, not fixed or consistent
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Fixed
Not able to change, consistent
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Bank of England
Central bank for the UK, Government's banks, wide range of responsibilites
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Exchange rate
The conversion of one currency to another currency
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Export
Send goods/services into a country from abroad
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Import
Bring goods/services into a country from abroad
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Business cycle
A cycle of economic expansion and contraction
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The economy
An entire network of producers, distributors and consumers of goods and services in a local, regional or national community
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Economic growth
An increase in the ammount of goods/services produced per head of the population over a period of time
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Recession
A period of temporary economic decline during which trade is reduced
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Stakeholder
A person with an interest or concern in a business
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Marketing
The management process that is responsible for anticipating, identifying and satisfying customer needs profitably
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Market research
The process of gaining information about customers, competitors and market trends through collecting primary and secondary data
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Primary data
Information that has been gathered for a specific purpose through direct investigation such as observation, surveys and experiments
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Secondary data
Information that already exists such as accounts and sales records, government statistics, newspaper and internet articles and reports from advertising agencies
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Qualitative data
Data about opinions, judgements and attitudes
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Qunatitative data
Data that can be expressed as number and can be statistically analysed
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Surevy
Research involving asking questions of people or organisations
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Respondents
Those who provide data for a survey usually by answering questions
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Market segment
Part of a market that contains a group of buyers with similar buying habits
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Sample
A small group out of the total population which is selected to take part in a survey
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Questionnaire
A list of questions to be answer by respondents, designed to give information about consumers’ tastes
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Product trial
When consumers buy a good for the first time and assess whether or not they want to buy it again
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Public relations
Promotion of a positive image about a product or business through giving information about the product to the general public
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Viral marketing
Getting individuals to spread a message about a product through their social networks like Facebook or their group of friends
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Penetration pricing
Setting an initial low price for a new product so that it is attractive to customers. The price is likely to be raised later as the product gains market share.
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Trade buyers
Buyers of goods which then sell those goods on to consumers or other buyers; they include supermarket chains and wholesalers
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Retailers
Businesses which specialise in selling goods in small quantities to the consumer
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Customer loylaty
The willingness of buyers to make repeated purchases of a product or from a business
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Repeat purchase
When a customer buys a product more than once
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Product life cycle
The stages through which a product passes from its development to being withdrawn from sale; the phases are research and development, launching the product, growth, maturity, saturation and decline
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Research and development
The process of scientific and technological research and then development of the findings of that research before a product is launched
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Extension strategy
Method used to increase the life of a product and prevent it falling into decline
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Product portfolio or product mix
The combination or range of products that a business sells
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Product portfolio analysis
Investigation of the combination of products sold by a business
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Boston Matrix
A model which analyses a product portfolio according to the growth rate of the whole market and the relative market of a product within that market; a product is placed in one of four categories – star, cash cow, problem child or dog
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Brand
A named product which consumers see as being different from other products and which they can associate and identify with
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Generic product
A product made by a number of different businesses in which customers see very little or no difference between the product of one business compared to the product of another business
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Own brand
A product which is sold under the brand name of a supermarket chain or other retailer rather than under the name of the business which manufactures the product
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Product differation
Making one product different from another in some way, for instance through the quality of a product, its design, packaging or advertising
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Premium price
A price which is above average for products of a particular type
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Marketing mix
A combination of factors which help a business to take into account customer needs when selling a product, usually summarised as the 4P’s (price, product, promotion and place)
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Design mix
The range of variables which contribute to successful design; they are function, cost, and appearance
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Stocks
Materials that a business holds. Some could be materials waiting to be used in the production process and some could be finished stock waiting to be delivered to customers.
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Maximum stock levels
The highest amount of stock to be kept by a business
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Re-order level
The amount of stock held by a business at which an order for new stock is placed with suppliers
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Buffer stock or minimum stock level
The lowest amount of stock to be kept by a business
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Just in time (JIT)
A stock management system where stocks are only delivered when they are needed by the production system, and so no stocks are kept by a business
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Quality
Achieving a minimum standard for a product or service, or a production process which meets customers needs
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Quality control
Ensuring that a product or service meets minimum standards, often through testing of sample products once they have been made
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Quality assurance
Ensuring that quality is produced and delivered at every stage of the production process, often through making quality the responsibility of every worker
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Customer service
The experience that a customer gets when dealing with a business and the extent to which that experience meets and exceeds customer needs and expectations
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Innovation
The process of transforming inventions into products that can be sold to customers
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Sale of goods legislation
Gives consumers rights to compensation if a product they buy is not of merchantable quality, not as described or not fit for purpose
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Trade description legislation
Makes businesses liable for prosecution and fines if products are sold in a misleading way
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Cash flow
The flow of cash into and out of a business
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Financial management
Deliberately changing monetary variables like cash flows to achieve financial objectives such as improved cash flow
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De-stocking
Reducing the levels of stocks in a business
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Trade credit
Where a supplier gives a customer a period of time to pay for a bill (or invoice) for goods or services once they have been delivered
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Profit
Occurs when the revenues of a business are greater than its costs over a period of time
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Revenues
The amount of money received from selling goods or services over a period of time
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Break-even point
The level of output where total revenues are equal to total costs; this is where neither a profit nor a loss is being made
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Total revenue
The revenue earned by a business from the sale of a given quantity sold x average price
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Total costs
All the costs of a business; equal to fixed costs plus variable costs
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Fixed costs
Costs which do not vary with the amount produced, such as rent, business rates, advertising costs, administration costs and salaries
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Variable costs
Costs which change directly with the number of products made by a business, such as the cost of buying raw materials
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Break-even chart
A graph which shows total revenue and total cost, allowing the break-even point to be drawn
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Margin of saftey
The amount of output between the actual levels of output where profit is being made and the break-even level of output; if the margin of safety is zero, then production is at or below the break-even level
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Financing a business
How a business obtains money and other financial resources to start up, expand and if necessary pay off losses it has made
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Internal sources of finance
Finance which is obtained within the business such as retained profit or the sale of assets
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External sources of finance
Finance which is obtained from outside the business such as bank loans and cash from the issue of new shares
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Retained profit
Profit which is kept back in the business and used to pay for investment in the company
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Equity or share capital
The monetary value of a business that belongs to the business’ owners. In a company, this would be the value of their shares
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Share
A part ownership in a business; for example a shareholder owning 25% of the shares of a business owns a quarter of the business
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Overdraft
Borrowing money from a bank by drawing more money than is actually in a current account. Interest is charged on the amount overdrawn
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Bonds
A long-term loan where typically interest is paid at regular intervals like a year and the loan is all repaid at the end of the life of the bond. Bonds are traded on stock markets.
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Organisation
The way in which a business in structured for it to achieve its objectives
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Organisation chart
A diagram which shows the internal structure of an organisation
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Hierarchy
Structure of different levels of authority in a business organisation, one on top of the other
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Line manager
Employee who is responsible for overseeing the work of others further down the hierarchy of an organisation
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Function
Tasks or jobs. Organisation by functions means that a business is organised according to tasks that have to be completed, such as production or finance
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Aunthority
The right to decide what to do in a situation and take command of it to be able to make decisions without referring to anyone else
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Subordinate
Workers in the hierarchy who work under the control of a more senior worker
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Chain of command
The path (or chain) down which orders (or commands) are passed. In a company, this goes from the board of directors down to other workers in the organisation
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Delayering
Removing layers of management and workers in a hierarchy so that there are fewer workers in the chain of command
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Empowerment
Giving more responsibility to workers further down the chain of command in a hierarchy
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Downsizing
When a business employs fewer workers to produce the same amount through increases in productivity which can be achieved through delayering
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Span of control
The number of people who report directly to another worker in an organisation
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Delegation
Passing down of authority to work to another worker further down the hierarchy of the organisation
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Centrallisation
A type of business organisation where decisions are made at the centre or core of the organisation and then passed down the chain of command
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Decentrallisation
A type of business organisation where decision-making is pushed down the hierarchy and away from the centre of the organisation
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Motivation
In work, the desire to complete a task
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Hierarchy of needs
Placing needs in an order of importance, starting with basic needs
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Communication
Messages passed between sender and a receiver, through a medium such as a letter or an email
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Feedback
Response to a message by its receiver to the sender
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Internal communication
Communication within the business organisation
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External communication
Communication between the business and an outside individual or organisation like a customer, a supplier or a tax inspector
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Channel of communication
The path taken by a message, such as horizontal communication, vertical communication or grapevine communication
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Formal channels of communication
Channels of communication that are recognised and approved by the business and by employee representatives such as trade unions
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Informal communication or communication through the grapevine
Communication through channels are not formally recognised by the business
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Payment systems
Methods of organising the payment of workers, such as piece rates or salaries
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Manual or blue collar workers
Workers who do mainly physical work like an assembly line worker
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Wages
Tend to be paid to manual workers for working a fixed number of hours per week plus overtime
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Overtime
Time worked over and above the basic working week
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Basic pay
Pay earned for working the basic working week
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Non-manual or white collar workers
Worker who do non-physical work, like an office worker or teacher
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Salary
Pay, usually of non-manual workers, expressed as a yearly figure but paid monthly
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Commision
Payment system usually operated for sales staff where their earnings are determined by how much they sell
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Bonus
Addition to the basic wage or salary, for instance, for achieving a target
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Part-time wokrers
Employees who work only for a fraction of the working week
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Full-time workers
Employees who work the whole of the working week
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Temporary workers
Workers who have no permanent contract of employment with a business and so tend to work only for a short period of time for an employer
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Freelance workers
Workers who tend to be self-employed and do particular pieces of work for a business as a supplier
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Fridge benefits
Payments in kind over and above the wage or salary, such as a company car
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Business ethics
Ideas about what is morally correct or not, applied in a business situation
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Supply chain
The processes that are involved in the route taken by a product from the raw materials needed to create it right through to the final customer
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Developed countries
Countries with a relatively high income per person
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Developing countries
Countries with a lower income per person than developed countries
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Import
An import is the purchase of a good or service from a foreign business that leads to a flow of money out of the UK. The UK buyer will have to change pounds into the seller’s currency to make the transaction
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Export
An export is the sale of a good or service to a foreign buyer that leads to a flow of money into the UK. The foreign buyer will have to change their currency into pounds to complete the purchase
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Protectionist policies
Measures designed to reduce foreign products coming into a country but give an advantage to domestics firms to sell products at home or export products
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Tariffs or customs duties
Taxes put on goods imported into a country which make them more expensive
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Quotas
Limits on the physical number of goods that can be imported over a period
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Export subsidies
Measures that reduce the price of goods sold abroad
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Minimum wages
The lowest payment for hour, day or week that can be given to a worker for their work
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Card 2

Front

A person who sets up a business that takes on financial risks in hope of profit

Back

Entrepreneur

Card 3

Front

A company that provides materials/goods to a business

Back

Preview of the back of card 3

Card 4

Front

A person who buys or uses the goods/services

Back

Preview of the back of card 4

Card 5

Front

Different areas where demand and supply operate and buyers and sellers interact

Back

Preview of the back of card 5
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