Business Unit 2 Definitions

Market share
proportion of total market sales sold by one business
1 of 67
Economies of scale
Reasons why average costs of each item fall as a firm expands.
2 of 67
Organic Growth
Expansion from within the business (opening more branches)
3 of 67
Internet selling
Marketing products through the businesses website
4 of 67
Inorganic growth
expansion through merging or taking over another business
5 of 67
firm that buys the franchise rights from the existing business
6 of 67
The existing firm that sells the franchise rights to another business
7 of 67
agreement between businesses to combine two businesses and operate as a large one
8 of 67
Purchasing another business from its owners
9 of 67
Horizontal integration
Joining two business in the same industry and stage of production
10 of 67
Vertical backward integration
Joining two businesses in the same industry but a diff stage of production towards the supplier
11 of 67
Vertical forward integration
Joining two businesses in the same industry but a diff stage of production towards the customer
12 of 67
joining two businesses in different industries
13 of 67
Any business with more than 25% market share
14 of 67
Limited Company
A business recognised as a legal unit that offers shareholders limited liability
15 of 67
Private limited company
A company that cannot sell its shares to the general public and not being listed on the stock exchange
16 of 67
PLC / Public limited company
Company able to sell its shares to the general public by being listed on the stock exchange
17 of 67
Limited liability
shareholders can only lose their investment if the business fails, cannot be forced to sell their assets to pay off the firms debts
18 of 67
Payment made to shareholders from company profits - made annually
19 of 67
Divorce between ownership and control
when directors in a plc and thousands of shareholders own it but the two groups have different objectives
20 of 67
Ethical objective
a business aim to do the right thing according to the values and beliefs of managers even if its not profitable
21 of 67
Environmental Objective
A business aim to protect the environment during its operations - reduces social costs
22 of 67
Social Costs
Costs of a business activity including both financial costs paid by the firm and costs on society
23 of 67
Social benefits
benefits of a business activity to society
24 of 67
goods traded internationally and companies locating abroad
25 of 67
making products/parts in other countries. or off-shoring services in (india) call centres.
26 of 67
business with operations in more than one country
27 of 67
Spreading risk by selling in different markets
28 of 67
Product portfolio
range of products sold by a business
29 of 67
Product life cycle
Lifespan of a product recorded in sales from launch to being taken off the market
30 of 67
Competitive pricing
Setting a price based on prices charged by competitors
31 of 67
Price skimming
Setting a high price to create a high quality and exclusive image
32 of 67
Penetration pacing
Setting a low price to gain greater market share
33 of 67
Cost-Plus pricing
setting a price by adding a profit mark-up to the total cost of producing a product
34 of 67
Loss leader pricing
setting a price below cost hoping to gain other profitable sales
35 of 67
the ways a business communicates to consumers with the aim of selling product to increase sales
36 of 67
Direct marketing
contact consumers to increase sales (email)
37 of 67
business pays for an activity/event to gain publicity
38 of 67
Promotional mix
Combo of promotional methods used by a business
39 of 67
distributor that buys in bulk, holds stock and sells to retailers NOT CONSUMERS
40 of 67
retained profit
profit kept in the business after tax and dividends ave been paid
41 of 67
Sales and easeback
selling an asset (building) to a leasing company and paying an annual leasing charge so the asset can still be used
42 of 67
Gross profit
difference between sales revenue and cost of making products SOLD
43 of 67
expenses of the business thet are not directly apart of the production process (rents)
44 of 67
Net profit
Difference between sales revenue and TOTAL COSTS OF BUSINESS
45 of 67
Balance sheet
Lists Value of a company assets and liabilities
46 of 67
debts owed by a business
47 of 67
Organisational structure
48 of 67
Layers of management
number of different levels of management and responsibility in a structure
49 of 67
Span of control
number of junior employees each manager is directly responsible for
50 of 67
Senior managers take all important decisions
51 of 67
decision making power is spread to managers in branches ad divisions in the business
52 of 67
assessing how effectively an employee is woking
53 of 67
retained staff
keeping existing staff in the business 9cuts down cost of recruitment and training)
54 of 67
Autocratic management
managers who believe in taking all decisions and passing instructions on to workers
55 of 67
Democratic management
managers who involve workers in decision making
56 of 67
Flow production
large scale production where each stage is carried out continuously one after another on a production line
57 of 67
work is divided into operate tasks or jobs that allow workers to become skilled at one of them
58 of 67
Division of labour
Breaking a job into smalll, repetitive tasks that can age dome quickly by workers or machines specialised in one task
59 of 67
Lean production
a production approach that aims to use fewer resources by using them more efficiently
60 of 67
continous improvement
61 of 67
Ordering supplies so that they arrive when needed and making goods only when ordered by customers
62 of 67
Lean design
producing new designs as quickly as possible
63 of 67
Diseconomies of scale
reasons why average costs per item rises as a firm expands
64 of 67
using the businesses to make all or part of a product or provide an aspect of the customer care
65 of 67
quality assurance
setting and trying to meet quality standards throughout the business
66 of 67
TQM Total quality management
approach to quality that aims to involve all employees in the quality improvement process
67 of 67

Other cards in this set

Card 2


Reasons why average costs of each item fall as a firm expands.


Economies of scale

Card 3


Expansion from within the business (opening more branches)


Preview of the back of card 3

Card 4


Marketing products through the businesses website


Preview of the back of card 4

Card 5


expansion through merging or taking over another business


Preview of the back of card 5
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