Business Definitions

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  • Created by: skyblue97
  • Created on: 14-04-14 15:08
An individual with a business idea willing to invest their own money and take risks to make a profit.
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Adding Value
The ways in which a business creates a product that is worth more then the cost of the inputs that made it.
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Primary Production
Businesses involved in the extraction of raw materials from land or sea.
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Secondary Production
Businesses involved in turning raw materials into finished products.
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Tertiary Production
Businesses that provide a service to customers or to other businesses.
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Unincorporated Business
A business that is not legally separate from its owner.
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Incorporated Business
An organisation with a separate legal identity from its owner.
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Unlimited Liability
Where the business owner can lose personal wealth to pay off business debts.
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Limited Liability
Where a business owner can only lose the amount of money invested into the business if it fails, not their personal wealth.
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The joint owners of a limited company, whose investment entitles them to vote on major decisions and take a share of the profit.
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Becoming a PLC by issuing shares for general sale on the stock market.
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SWOT Analysis
An assessment of the current strengths and weaknesses of an organisation, together with the opportunities and threats facing it from outside.
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Corporate Aims
The overall goals of the business as a whole.
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Groups who have an interest in the running and success of the business.
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Mission Statement
A written expression of a business's corporate aims.
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The specific and measurable targets set to achieve the overall aims.
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Business Strategy
The plan of action to achieve a business's aims and objectives.
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A government grant of ownership rights to a person or business assuring sole rights to make, use and sell a new invention or manufacturing process for a limited period.
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Names or symbols used by businesses to represent a particular good/service that they provide, and to distinguish it from competing manufacturers.
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The legal right to produce copies and to control an original literary, musical or artistic work for a specified time.
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Business Plan
A document that sets out how the business will operate and what it hopes to achieve.
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Cash Flow Crisis
When more money is going out of the business than is coming in, despite monies being owed to the business.
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An approach to business that seeks to identify, anticipate and satisfy changing customer needs in order to add value.
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Unique Selling Point (USP)
A feature of the product, its image, its price, its promotion or its distribution that is different from and superior to the competition.
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Market Research
The process of collecting and interpreting data about customers and competitors.
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Products that are different to those offered by competitors. This may mean adding to or altering features for the product to appeal to specific segments.
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Market Segment
A clearly defined market sections.
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Market Share
The % of total sales a firm achieves in a market.
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Mass Market
A large market containing many customers buying similar products.
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Niche Market
A small and clearly identifiable segment of a market.
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Target Market
The particular market segment at which a business aims its product(s).
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Market Leader
The business with the greatest share of a market.
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Market Challenger
Attempting to appeal to the desire to favour the underdog.
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Market Follower
A business with a small market share that closely follows (and copies) the strategies of the market leaders.
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Marketing Mix
The combination of Product, Price, Promotion and Place used to implement marketing strategy.
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Brand Image
The personality given to a product through marketing activities.
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The use of a name, symbol or design to identify a particular product.
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Price Elastic
Demand for a product is responsive to changes in price.
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Price Inelastic
Demand for a product is not very responsive to changes in price.
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Pricing Strategy
The range of pricing tools used to achieve long-term objectives.
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Above The Line Promotion
Promotion through media such as TV, radio and cinema.
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Below The Line Promotion
Promotion usually led by the firm and not involving payment to independent agencies e.g. PR, personal selling etc.
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Distribution Channel
The method used by a business to get its product(s) to consumers.
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When total revenue exceeds total costs.
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The value of goods and services sold to customers over a specific time period.
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Fixed Costs
Costs that DO NOT vary with output.
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Varialble Costs
Costs that DO vary with output.
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The point in which a business is making neither a profit or a loss, total revenue = total costs.
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The surplus on each unit sold. This contributes towards covering fixed costs and making a profit.
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Margin Of Safety
The number of units that a business is currently producing above the break-even level.
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Items that a business owns.
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Money held by the business in cash form (notes, coins, bank money).
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Cash Flow Forecast
An estimate of anticipated cash movements for a future period of time.
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Debts owed by business to suppliers, banks and other people or organisations.
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An agreed plan that sets targets for revenues and costs over a period of time.
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Historical Budgeting
Setting the budget on the basis of last year's budgeted or actual cost and revenue figures.
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Zero Budgeting
A method that initially sets the budget at zero, with costs being budgeted for after it has been shown why they are needed and what benefit they will bring.
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Adverse Variance
When the performance of a business is financially worse than indicated in the budget.
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Favourable Variance
When the performance of a business is financially better than indicated in the budget.
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Return On Capital Employment (ROCE)
Profit expressed as a % of the funds invested in the business.
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Gross Profit Margin
The proportion of sales turnover left after expenses have been deducted from gross profit.
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Net Profit Margin
The proportion of sales turnover left after expenses have been deducted from gross profit.
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Interest Rate
The cost of borrowing money or the return on money deposited in a bank.
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The removal of one or more levels of hierarchy from an organisation structure.
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Passing authority to complete a task to a subordinate, but responsibility for completion of the task remains with the manager.
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Span Of Control
The number of subordinates reporting to one manager.
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Scientific Management
Taylor's theory that there is a 'best', most efficient way to complete a task, which managers should identify, implement and enforce.
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Piece Rate Pay
A payment method that rewards the worker for each unit of output produced.
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Hierarchy Of Needs
Maslow's idea that human needs can be grouped into five types, shown as building up from the most basic needs of survival to the ultimate need for self-development.
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Hygiene Factors
Issues that can cause job dissatisfaction, such as poor pay or unfair jobs.
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Time Rates
Payment at an agreed rate for the length of time that employees work.
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Fringe Benefits
Payments to workers in ways other than money, such as a company car.
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Payment to a sales person of a percentage of the value of what they have sold.
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Performance-Related Pay
An incentive scheme that links bonus payments to the achievement of agreed targets.
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Job Enlargement
Giving workers more tasks to do of the same type and in the same process.
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Job Enrichment
Extending the role of the worker to include more responsibility and a wider range of activities.
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Giving employees the power to take decisions that affect their working lives.
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Passing down to a subordinate the authority to carry out a set task.
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Labour Turnover
A measure of the rate of change of personnel, including leavers and joiners, within a company's workforce.
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The number of staff who miss work compared to the number of employees required and the skills that they will need.
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Job Description
A summary of what the job involves, such as the the main duties and working conditions.
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Person Specification
An outline of the skills and experience required in the ideal candidate for a job.
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Internal Recruitment
Seeking to fill a vacant post from among current employees.
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External Recruitment
Seeking to attract applicants from outside the business to fill a vacant post.
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Labour Productivity
The average output of each worker over a period of time.
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Unit Cost
The cost of labour needed to produce one unit of output.
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The maximum possible output that can be produced over a period of time.
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Capacity Utilisation
The proportion of capacity that is actually used over a period of time.
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Using the resources of another organisation to help fulfill customer demand.
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Opportunity Cost
The cost of what is given up when a decision is made.
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Quality Control
The inspection of products to check they meet the necessary standards.
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Quality Assurance
Ensuring that quality is guaranteed throughout an organisation and that both the final product and service will meet customer expectations.
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Total Quality Management (TQM)
An approach to business that emphasises the the involvement of everyone in an organisation in getting the product and service right first time.
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Zero Defects
A goal of TQM, to make no errors in production so that product quality is achieved first time around.
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Computer Aided Design (CAD)
The use of computer-generated images to design and test new products.
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Computer Aided Manufacturing (CAM)
The use of computer technology to plan and control the manufacturing process.
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Other cards in this set

Card 2


The ways in which a business creates a product that is worth more then the cost of the inputs that made it.


Adding Value

Card 3


Businesses involved in the extraction of raw materials from land or sea.


Preview of the back of card 3

Card 4


Businesses involved in turning raw materials into finished products.


Preview of the back of card 4

Card 5


Businesses that provide a service to customers or to other businesses.


Preview of the back of card 5
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