Business unit 2 Definitions

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economies of scale
reasons why average costs of each item fall as a firm expands
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organic growth
expansion from within the business - branches and franchises
2 of 63
Inorganic growth
expansion by merging or taking over another business
3 of 63
internet selling
marketing products through the businesses website
4 of 63
franchisee
the firm that buys the franchise rights from the existing business
5 of 63
franchisor
the existing firm that sells the franchise rights to another business
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merger
an agreement between business owners to combine two businesses and operate as a larger one
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takeover
purchasing another business from its owners
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horizontal integration
same industry and stage of production
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Vertical backward integration
two businesses in same industry but diff sated of production towards the supplier
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vertical forward integration
same industry diff stage of production towards the customer
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Diversification
joining two businesses in different industries
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monopoly
any business with 25 per cent market share
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limited company
a business recognised as a legal unit that offers shareholders
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private limited company
company that cannot sell shares to the general public. not listed on stock exchange
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PLC
Company that can sell shares to the general public by being listed on the stock exchange
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Dividend
payment made to shareholders from company profits - made annually
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divorce between ownership and control
when directors control aPLC and thousands of shareholders own it but the two groups have different objectives
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Ethical objective
a business aim of doing the right thing according to the values and beliefs of managers even f this isn't the most profitable way
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Environmental objective
a business aim to protect the environment during its operations. this reduces social costs
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Social costs
the costs of business activity including both financial costs paid by the firm and the costs on society
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social benefits
the benefits of a business activity nit just to the firm but to society
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Globalisation
increasing trend for goods to be traded internationally and for companies to locate abroad
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Off - shoring
making products or parts of products in other countries, services can also be off shored like call centres moving to india
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Multinational
a business with operations in more than one country
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diversify
spreading risk by selling in different markets
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product life cycle
the lifespan of a product recorded in sales from launch to being taken off the market
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extension strategies
steps taken to extend the life cycle of a product
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Competitive pricing
setting a price based on prices charged by competitors
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Price skimming
setting a high price to create high quality snd exclusive image
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penetration pricing
setting a price at a low level to gain greater market share
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cost plus pricing
setting the price by adding a profit mark up to the total cost of producing s product
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loss leader pricing
setting a price below cost hoping to gain other profitable sales
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Direct marketing
using direct means to contact consumers to increase sales (e-mail, telemarketing)
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sponsorship
a business pays for an activity or an event to gain publicity
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wholesaler
middleman or distributer that buys in bulk, holds stock and sells mainly to retailers not consumers
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Telesales
selling to the customer through telephone contact alone
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Retained profit
profit kept in the business after tax and dividends have been paid
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sale and leaseback
selling an asset, such as building to a leasing company and paying an annual leasing chase so that the asset can still be used.
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gross profit
the difference between sales revenue and cost of making the PRODUCTS SOLD
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Overheads
expenses of the business that are not directly part of the production process
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net profit
the difference between sales revenue and TOTAL COSTS of the BUSINESS
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Gross profit margin
percentage of sales revenue that is gross profit 2
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balance sheet
lists the value of a company's assets and liabilities
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Assets
item of value owned by the business
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liabilities
debts owed by a business
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liquidity
how easy it s for a business to pay off its short term debts
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organisational structure
the internal links between managers and workers showing lines of authority
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layers of management
the number of different levels of management and responsibly in a structure
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span of control
the number of junior employees each manager is directly responsible for
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Centralisation
senior managers take all important decisions
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decentralisation
decision making over is spread to mangers in branches and divisions of the business
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job analysis
identifying the tasks and skills needed to perform a job well
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job description
a detailed seamen of the nature of the job and the tasks involved
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person specification
a profile of the type of person likely to make a good applicant
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induction training
initial training to familiarise new recruits wit the systems of a business
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on the job training
takes place when employees receive training as they are working at the place of work
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off the job training
takes lace away from the job at another place
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appraisal
assessing how effectively an employee is working
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Motivated
the will to do work due to the enjoyment of the work itself
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retaining staff
keeping existing staff in the business which cuts down the cost of recruitment selection and training
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autocratic management
managers who believe in taking all decisions and just passing instructions on to workers
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democratic management
managers who involve workers and less senior managers in decision making
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Other cards in this set

Card 2

Front

expansion from within the business - branches and franchises

Back

organic growth

Card 3

Front

expansion by merging or taking over another business

Back

Preview of the back of card 3

Card 4

Front

marketing products through the businesses website

Back

Preview of the back of card 4

Card 5

Front

the firm that buys the franchise rights from the existing business

Back

Preview of the back of card 5
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