business key words

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  • Created by: amelia
  • Created on: 09-05-13 12:07
Economies of scale
The reason why average costs or each item fall as a firm expands
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Market Share
The proportion of total market sales sold by one business
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Organic Growth
Expansion from within the business (e.g. by opening more shop branches)
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Inorganic Growth
Expansion by merging with or taking over another business
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Internet Selling
Marketing products through the business’s website
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Franchisee
firm that buys the franchise rights from the existing business
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The Franchisor
existing firm that sells the franchise rights to another business
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The Merger
An agreement between business owners to combine two business and operate as a larger one
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Takeover
Purchasing another business from its owners
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Horizontal Integration
Joining two businesses in the same industry and stage of production.
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Vertical backward Integration
Joining two businesses in the same industry but a different stage of production, towards the supplier
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Vertical Forward Integration
Joining two businesses in the same industry but a different stage of production, towards the customers
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Vertical Forward Integration
Joining two businesses in the same industry but a different stage of production, towards the customers
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Diversification
Joining two businesses in different industries
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Limited Company
a business recognised as a legal unit that offers investors (shareholders) limited liability
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Private Limited Company (Ltd)
A company that cannot sell shares to the general public. It is not listed on the Stock Exchange
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Public Limited Company (plc)
A company able to sell shares to the general public by being listed on the Stock Exchange
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Limited Liability
Investors in a limited company can only lose their investment in the business if it fails; they cannot be forced to sell assets to pay off the firm’s debts
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Shareholders
Part owners of limited company
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Dividend
Payment made to shareholders from company profits – usually made annually
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Divorce Between Ownership and Control
When directors control a public limited company and thousands of shareholders own it, but the two groups may have different objectives
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Ethical Objectives
A business aim to ‘do the right thing’
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Environmental Objectives
a business aim to protect the environment during its operations
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Social Costs
The costs of business activity, including both financial costs paid by the firm and the cost on society
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Social Benefits
The benefits of a business activity, not 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 be off-shored too such as telephone call centres.
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Multinational
business with operations in more than one country
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Product portfolio
The range of products sold be a business
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Target Market
The group of consumers aimed at by the business
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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 for a product based on prices charged by competitors
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Price Skimming
Setting a price at high level to create a high-quality and 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 a price by adding a profit mark up to the total cost of producing a product
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Loss-leader pricing
Setting a price below cost hoping to gain other profitable sales
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Promotion
All the ways a business communicates to consumers with the aims of selling products
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Advertising
Communication to consumers using television and other media to encourage them to buy a product
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Sales Promotion
Activities to attract consumer attention to a product to a product to increase sales
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Direct marketing
Using direct means to contact consumers to increase sales
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Sponsorship
A business pays for an activity or an event to gain publicity
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Promotional Mix
The combination of promotion methods used by a business
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Wholesaler
Middleman or distributor that buys in bulk, holds stocks and sells mainly to retailers not customers
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Telesales
Selling to the customer through telephone contact alone
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Mail Order
Direct marketing through mail shots leading to goods being delivered directly to the customer
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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 a building to a leasing company and paying an annual leasing charge so that asset can be used
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Profit and loss account
This shows whether the business made a profit or loss over the last period. It is also known as the income statement.
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Sales Revenue
The value of goods sold (number of goods sold x price = sales revenue)
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Cost of Sales
The cost to the business of the goods sold
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Gross Profit
The different between sales revenue and cost of making the products sold (sales revenue – cost of sales = gross profit)
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Overheads
The expenses of the business that are not directly part of the production process (e.g. rent and management salaries)
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Net Profit
The difference between sales revenue and total costs of the business (gross profit – overheads = net profit)
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Gross Profit Margin
The percentage of sales revenue that is gross profit (Gross profit margin % = (gross profit/ sales revenue) x 100)
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Balance Sheet
This lists the value of a company assets and liabilities
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Assets
Items of value owned by a business
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Liabilities
Debts owned by a business
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Liquidity
how easy it is for a business to pay 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 responsibility 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 power is spread to managers in branches and divisions of the business
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Recruitment
Attracting people to apply for a job vacancy
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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 statement 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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Internal Recruitment
Appointing an existing employee of the business to fill a vacancy
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External Recruitment
Appointing an employee of another business to fill a vacancy
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Induction Training
Initial training to familiarise new recruits with the systems of the business
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On-the-job Training
Takes place when employees receive training as they are working at their place of work
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Off-the-job Training
Takes place away from the job at another place
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Appraisal
Assessing how effectively an employee is workingv
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Motivatation
The will to 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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Democratic Management
Managers who involve workers and less senior managers in decision-making
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Flow Production
large scale production where each stage of production is carried out one after the other on a production line
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Specialisation
Work is divided into separate tasks or jobs that allow workers to become skilled at one of them
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Division of Labour
Breaking down a job into small repetitive tasks what can be done quickly by workers or machines specialised in this one task
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Lean Production
A production approach that aims to use fewer resources by using them more efficiently
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Kaizen
Continuous improvement
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Just-in-time manufacturing
Ordering supplies so they arrive just when they are needed and making goods only when ordered by customers
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Lean Design
Producing new designs as quickly as possible
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Economies of Scale
the reasons why production costs of each item fall as a firm expands
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Diseconomies of Scale
The reasons why production costs of each item rises as a firm expands
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Quality Product
Goods or service that meets customers expectations and is therefore “fit for purpose”
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Outsourcing
Using the businesses to make all or part of a product or provide an aspect of the customer care
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Quality Standards
The expectations off customers expressed in terms of the minimum acceptable production or service standards
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Total Quality Management
An approach to quality that aims to involve all employees in the quality improvement process
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Other cards in this set

Card 2

Front

Market Share

Back

The proportion of total market sales sold by one business

Card 3

Front

Organic Growth

Back

Preview of the front of card 3

Card 4

Front

Inorganic Growth

Back

Preview of the front of card 4

Card 5

Front

Internet Selling

Back

Preview of the front of card 5
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