Business revision, key words. (Book 1)

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What does is meant by the term, 'add value' and what is the calculation for this?
When a business turns the sum of raw materials into a product/service that is worth more. Value added is calculated as: Selling price of product - Total cost to produce the good
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What are barriers to entry?
The obstacles that stand in the way of businesses and entrepreneurs entering a market, e.g financial requirements and infrastructure.
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What is meant by branding?
This is the image that businesses create for a product or for the company themselves.
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What is centralisation?
This often means that a few top level managers retain decision making powers and responsibility for the whole business. All decisions would, therefore, be made in a central office and then communicated to the business's various outlets/branches.
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What is the chain of command?
This is the route in which power and authority are passed down through the various layers of management.
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What is competition?
When two or more firms offer their products/services to the same market, they enter into competition with one another.
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What is a competitive advantage?
Firms that positively distinguish themselves from other competition in order to have the edge over their rivals and often offer something they don't.
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What is decentralisation?
This often involves the process of delegating authority and decision making power to employees lower down the business's chain of command. It can also refer to the process of allowing business's various branches to make their own decisions.
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What is delayering?
This is the process of removing layers of the organisations management.
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What is delegation?
This is when work and authority is transferred from higher managerial positions to employees in a lower management position. It is the delegation of authority, not responsibility.
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What is demand/supply shift?
More than movement along a demand/supply curve, this is when the entire curve shifts.
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What may cause a shift in demand/supply?
Demand: Changes in consumer taste, consumer demographic, fashion and external shocks as well as seasonal change. Supply: Change in costs of production, technology, transport conditions, government regulations.
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What is differentiation?
This covers the way in which a company gains competitive advantage such as strong product branding, price, marketing and customer service.
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What is a dismissal?
When an employee is removed from their position within a company.
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What are dynamic markets?
Markets that constantly change such as technology. They change for varied factors, such as consumer taste, government regulation, new competition.
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What is meant by external factors?
Influences which occur from outside the company, which changes the way businesses operate.
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Give 2 examples of external factors relating to businesses.
War, government regulations, consumer tastes etc.
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What is hierarchy?
The way in which a business is structured, such as flat, tall or matrix.
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What is loyalty?
Brand loyalty occurs when consumers decide to stay with a business and make repeat purchases.
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What is the market equilibrium?
The point at which consumer demand producer supply are equal. This is where the two curves intersect.
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What is market mapping?
Visual representation of a consumer market, which usually utilises two axes such as price vs quality.
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What is market orientation?
When a business focuses their products/services and the production of them around what the market want rather than what they want.
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What is market segmentation?
When a market is split into groups, such as location, age or language. Businesses use segmentation in order to understand on which section of a market they should concentrate on.
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What is meant by an objective?
Something the business wants to aim for and achieve in a time period.
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What is outsourcing?
When businesses pay workers/businesses from external companies to complete their work or to manufacture their product.
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What is primary data?
Research data that has been gathered first hand, by the business itself. Usually through questionnaires and surveys.
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What is product orientation?
When a business focusses more on its product and production process rather than what the market want or are looking for.
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What is promotion?
This is how businesses build awareness of their products/services through methods such as direct selling or online advertising.
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What is redundancy?
This happens when a employees position no longer exists within the company.
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What is the difference between risk and uncertainty?
Risk is generally something that can be planned for as the risk can be reduced. Uncertainty, however, involves the factors, normally external that are beyond the businesses control.
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What is secondary data?
Data used by businesses which has already been collected and analysed by someone else. Examples can include newspaper articles, government statistics, surveys.
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What is a shortage?
If the market price of a product is low, firms may not want to sell because it is not worth their while. However, consumers will be more interested in lower prices and so demand will rise. Leaving suppliers with more demand.
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What is span of control?
The amount of control that a manager has, e.g a sales manager may be responsible for three sales advisors and so the span of control is three.
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What is sponsorship?
When businesses supports another person/business in exchange for cross promotion, such as sporting events.
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What are stable markets?
Markets that stay the same regardless of changing factors and trends e.g dairy and standard bread markets.
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What is a stakeholder?
Any person who is directly involved with the business in some way. For example, it could be the supplier, staff, customers, owner, shareholders.
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What is the stock exchange?
A place where public limited companies trade shares in their organisations. Individuals and other companies are able to buy shares, which make them part owners in a firm.
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What is surplus?
If the market price of a product is high, suppliers are more willing to sell and so provide more goods. However, consumers may not want to pay higher prices and so buy fewer products. This leaves suppliers with a surplus.
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What is meant by sustainable?
Businesses that are sustainable fulfil their own strategic objectives without compromising the land or society in which they operate.
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What is a trend?
The direction in which most things appear to be moving, e.g there may be a trend for new technology firms to aim at young consumers. Trends are constantly changing.
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What is a USP?
Unique selling point, something which makes a product/service unique and stands out from other products from rivals.
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Card 2

Front

What are barriers to entry?

Back

The obstacles that stand in the way of businesses and entrepreneurs entering a market, e.g financial requirements and infrastructure.

Card 3

Front

What is meant by branding?

Back

Preview of the front of card 3

Card 4

Front

What is centralisation?

Back

Preview of the front of card 4

Card 5

Front

What is the chain of command?

Back

Preview of the front of card 5
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