Business Key Terms

Key Terms and Definitions of A292.

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Primary sector
First stage of the production process, dealing with raw materials e.g. farming, fishing, mining
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Secondary sector
Second stage of the production process, dealing with making goods e.g. manufacturing cars, tables
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Tertiary sector
Third stage of the production process, dealing with services e.g. shops, hairdressers, ICT
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Chain of production
The three stages of production – primary to tertiary
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Interdependence
When each stage of production depends on another e.g. secondary depends on materials from primary
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De-industrialisation
The decline of the manufacturing industry e.g. closure of Longbridge car plant
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Added value
Making the product more valuable at each stage of production e.g. turning a plank of wood into a table
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Aims
Long term goals that the business wants to achieve e.g. profit, survive
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Objectives
Short term targets to meet aims e.g. make £100 profit in year 1
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SMART
Objectives – specific, measurable, achievable, realistic, timed
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Mission statement
Summarises a business’ aims e.g. aspire, achievement for all
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Private sector
Organisations owned by private individuals with the aim of making a profit e.g. Tesco, Bostin Baps
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Public sector
Organisation owned and controlled by the government with the aim of providing a service e.g. schools, NHS, police
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Stakeholder
Any person or organisation who has an interest in the business e.g. customers, suppliers, competitors, government, employees, owners
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Shareholder
Owners of shares in a business who receive a share of the profits each year (called dividends) e.g. owning 100 £1 shares in Tesco
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Incorporated
A legal process to set up a company. Once completed, the Registrar of Companies will issue a Certificate of Incorporation e.g. Ltd, Plc
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Unincorporated
Businesses that are not ‘incorporated’ do not have to go through the legal process of setting up e.g. sole proprietors, partnerships
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Limited liability
The owners are not personally responsible for the business debts so can only lose the amount that they invested in the business when paying them off e.g. amount invested in shares
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Unlimited liability
The owners are responsible for the business debts so they can lose an unlimited amount of money including personal possessions to pay them off e.g. car, house
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Tax on profits
A percentage of the profit that is paid to HMRC
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Continuity
Continuous operation of the business e.g. the business keeps running
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Sources of finance
Where finance is obtained from e.g. owners funds, bank loan, government grant, selling shares
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Bankruptcy
When a person cannot repay their debts
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Insolvency
When a business cannot repay its debts
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Size
How big the business is depending on profits, number of employees etc e.g. micro, small, medium, large
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Scale
Where the business operates e.g. local, regional, national, global
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Sole trader
Business with unlimited liability, owned and run by one person e.g. window cleaner
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Partnership
Business with unlimited liability, owned and run by 2-20 partners e.g. solicitors
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Private Limited Company Ltd
Limited liability company with private shareholders e.g. friends and family, Dudley Builder Ltd
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Public Limited Company Plc
Limited liability company with shares sold on the stock exchange e.g. sold to the public, Tesco Plc
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Multinational
A public limited company that operates in various countries
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Public sector organisation
An organisation that operates in the public sector e.g. NHS
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Charity or social enterprise
An organisation that tries to do the most good for its chosen cause e.g. Oxfam, Cancer Research
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Franchise
Expansion through selling the right to use a successful business model e.g. McDonalds
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Franchisee
A person who buys a franchise to run as their own
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Franchisor
A person who gives the right to the franchisee to use their business model
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Cooperative
A group that shares in a business to ensure fair deals for members e.g. the Co-op
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Trustees
People who run a charity and act as the directors
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Assets
What you own
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Liabilities
What you owe
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Dividends
A percentage of profits received annually by shareholders in return for their investment
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Recruitment
The procedure a business will go through to replace an employee or take on new staff. They prepare an advert, then advertise the job, then read applications, select candidates, interview then select the best candidate for the job.
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Selection
Selecting candidate that are suitable for a vacant job position
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Application
Applying for a job vacancy – usually via a form
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Candidate
The personnel who has applied for the vacant job position
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Appoint
When the successful candidate for a vacant job position is given the job
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Short list
Selecting a few candidate from many applications
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Job description
A detailed statement about the nature of a job, it should identify the precise tasks and responsibilities that are involved in that job.
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Person specification
A statement listing the characteristics required to do a job successfully.
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Curriculum Vitae (CV)
A summary of a person's career and experience that can be used in the recruitment process.
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On-the-job training
This is the instruction of an employee at their place of work
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Off-the-job training
This method of training involves trainees leaving their normal place of work and attending a session or series of sessions that concentrate on skills, attitudes and theories that relate to work being undertaken.
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Appraisal
A method of measuring the performance of an employee. These are often carried out once a year.
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Induction
The training program that is designed to familiarise new workers with the layout, health and safety and security systems in operation in their new place of employment.
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Life-long learning
Continuous learning throughout your career
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Motivation
This is the will to work due to the enjoyment of the job itself.
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Maslow's hierarchy of needs
A theory of human motivation
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Piece rate
The payment of wages solely on the basis of the number of items each worker produces.
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Commission
A percentage of sales taken as payment as a reward
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Profit Sharing
A percentage of profits given to employees as a reward
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Bonus
A sum of money added to wages as a reward
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Fringe Benefit
Something received by a worker in addition to their wage or salary.
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Physiological needs
Physical requirements to be able to survive
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Self-actualisation
To achieve and realise your full potential
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Job satisfaction
How content and motivated a person is at work
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The 1970 Equal Pay Act
Requires that pay rates are the same for identical or similar jobs.
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The 1970 Sex Discrimination Act
Makes it illegal for people to be discriminated against on the grounds of their sex.
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The 1976 Race Discrimination Act
Outlaws discrimination on the grounds of colour, race, nationality and ethnic origin.
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The National Minimum Wage Act 1988
Gives everyone the right to a minimum amount to be paid depending on their age.
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The 1995 Disability Discrimination Act
Makes it illegal for an employer to treat a disabled person less favourably for a reason which relates to the disabled person’s disability.
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Employment law
The law that protects employees whilst employed
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Trade Union
An organised group of employees who discuss with the management, pay and conditions, on behalf of their members.
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Organisational structure
How an organisation is structured within
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Tall/flat structure
A tall structure has many layers within the hierarchy whereas a flat one doesn’t
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Hierarchy
The different levels of authority in a business. e.g. managing director, finance director, accountant, wages clerk
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Span of control
The number of people in a business who are directly responsible to a particular manager.
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Chain of command
The path that decisions and orders will pass through from the top of a hierarchy to the bottom.
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Delayering
Where layers of hierarchy are removed from the structure of an organisation, in order to make it flatter.
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Function
The job a person performs in a business. Eg personnel manager's function is to recruit new employees and to look after the general welfare of the workforce.
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Specialisation
Where a group of people are experts in a particular field
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Informal/formal structure
A formal structure is how the organisation is planned out and employees are aware of it. Informally employees may mix with others who they do not need to professionally.
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Delegation
Where a manager gives a subordinate the authority to do a job without being supervised.
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Subordinate
An employee who is answerable to a specified manager.
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Internal communication
Between people who work in the same organisation
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External communication
Between people from different organisations
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Vertical communication
Communication between people on different layers of the hierarchy e.g. manager to worker
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Horizontal communication
People at the same level within an organisation communicate e.g. manager to manager
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Two-way communication
A message is sent from sender to receiver who sends a message back to sender
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One-way communication
A message is sent from the sender to the receiver
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Informal communication
When official means of communication are not needed e.g. a chat at break
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Formal communication
When official means of communication are used within an organisation e.g. letter, meetings
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Other cards in this set

Card 2

Front

Second stage of the production process, dealing with making goods e.g. manufacturing cars, tables

Back

Secondary sector

Card 3

Front

Third stage of the production process, dealing with services e.g. shops, hairdressers, ICT

Back

Preview of the back of card 3

Card 4

Front

The three stages of production – primary to tertiary

Back

Preview of the back of card 4

Card 5

Front

When each stage of production depends on another e.g. secondary depends on materials from primary

Back

Preview of the back of card 5
View more cards

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