Business Studies

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What is meant by Internal Expansion?
Internal expansion is when a business expands their own activities. The firm might expand for economies of scale. There are three main ways: 1)Produce more of its current products 2) Sell its current product into new markets 3) Launch a new product.
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What is meant by external expansion?
Takeovers and mergers are the two ways to achieve external expansion. A merger is when two firms join together to form a new (but larger) firm, and a takeover is when an existing firm expands by buying another firm.
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What is meant by the term 'stakeholders'?
Anyone who is affected by the business. For example, shareholders, employees, government, suppliers, local community and customers.
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What is meant by a Public Limited Company?
A public limited company is formed when a private limited company is 'floated' on the stock market, allowing any member of the public to buy shares in the company. This means that there is much more money available to the company in share capital.
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What is meant by social costs and social benefits?
Businesses play a huge role in our lives, and they can have both positive and negative effects on society. For example, social costs - businesses can damage the environment. Social benefits - businesses provide jobs for millions of people.
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What is meant by a multinational firm?
Sometimes a firm decides to expand overseas, so it has operations in more than one country. These firms are called multinational enterprises (MNEs) or transnational corporations (TNCs).
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What is meant by the product life cycle?
All products go through the same life cycle - but the sales life of some products is longer than others'. There are 5 stages: development, introduction, growth, maturity and decline. The life cycle is linked to the cash flow of the business.
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What is meant by a product portfolio?
A product portfolio is the range of different products that a firm cells. Most large businesses will have products at different stages of the product life-cycle, giving them a balanced portfolio.
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What is meant by market-led pricing?
A firm will use market-led pricing strategy if the price of the product helps consumers decide whether to buy it (most of the time). There are four different methods: penetration pricing, loss leader pricing, price skimming, competitive pricing.
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What is meant by promotion?
Promotion persuades customers to buy a product. There are seven methods: discounts, product trials, free gifts, Buy One Get One Free, competitions, point-of-sale advertising and use of credit.
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What is meant by channel of distribution?
This is how products get from manufacturers to consumers. There are four distribution channels. 1) Manufacturer - Wholesaler - Consumer. 2) Manufacturer - Wholesaler - Retailer - Consumer3) Manufacturer - Retailer - Consumer4) Manufacturer - consumer
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What is meant by re-invested savings?
Large, successful firms may have used retained profit from previous years to build up bank savings or buy stocks and shares. They can use these to get cash quickly if they need it.
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What is meant by the trading account?
The trading account records the firm's gross profit or loss.
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What is meant by the profit and loss account?
It records all of the indirect costs of running the business. It does not include the costs of buying assets such as machinery for the first time - but it does include the costs of using them and replacing them.
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What is meant by gross profit margin?
This is the fraction of every pound spent by customers that doesn't go directly towards making a product. Gross profit margin = gross profit ÷ sales (turnover)
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What is meant by fixed assets, current assets and current liabilities?
Fixed assets will last for more than one year - premises, machinery, vehicles. Current assets last a few months - Stock, debtors, cash(liquidity). Current liabilities is money which has to be paid to someone else soon - Bills the firm has to pay soon
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What is meant by share capital AND retained profit and reserves?
Share capital is the money put into the business when shares were originally issued....Retained profit and reserves shows all the profit that the firm has made over the years that it has decided to retain instead of paying in dividend.
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What is meant by current ratio and acid test ratio?
Current ratio - Should be around 1.5, if the result is below 1, the firm owes more than it has. If the figure is above 2 the firm probably has too much money and should invest more in the business. Acid test ratio - Too much above 1, too much cash.
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What is meant by an organisational structure?
An organisational structure is different levels of hierarchy which show how much authority each person in an organisation has. You can organise by function, product or region.
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What is meant be centralised and decentralised organisational structures?
Centralised - All major decisions are made by one person or a few senior managers at the top of the hierarchy. Decentralised - The authority to make most decisions is shared out - for example, power might be delegated to regional managers.
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What is meant by chain of communication and span of control?
Chain of communication - the chain of people messages travel through to get from one layer of the firm's hierarchy to another. Span of control - the number of workers who report to one manager in a hierarchy.
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What is meant by appraisal?
The appraisal process helps managers keep track of employees' progress and needs. People who meet or beat their targets could be rewarded with a higher pay or promotion. If a worker does not meet their targets, the manager decides how to improve them
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What is meant by remuneration and staff retention?
Remuneration - paying staff for the work they do, or financial reward. Increasing wage or salary can help to motivate staff, it means they have money money to spend on the things they enjoy. Staff retention - keeping hold of good workers.
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What is meant by firms being interdependent?
Firms specialise as well as workers. This makes the whole process more efficient. Firms are interdependent with businesses on the same production chain. If there's a crisis in the cocoa growing industry, the chocolate retailer is in trouble too.
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What is meant by flow production?
Flow production is making lots of things continuously. Flow production enables businesses to make products non-stop. Assembly lines are the classic way to organise flow production. The whole factory is built around a conveyor belt which carries it.
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What is meant by rationalisation?
Reorganising to increase efficiency. Firms use rationalisation when they need to reduce overhead costs in order to reduce their break-even point. Methods include: closing an administrative department and delegating their work elsewhere.
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What is meant by economies of scale?
The reductions in average costs that come from producing on a large scale. Internal economies of scale - Purchasing economies, marketing economies etc...External economies of scale - When a number of large firms locate near to each other.
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What is meant by total quality management?
It aims to make quality the responsibility of every employee in an organisation. Employees are encourages to think about the needs of the customer. This emphasis is on getting things right the first time - this reduces costs by cutting down waste.
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Other cards in this set

Card 2

Front

What is meant by external expansion?

Back

Takeovers and mergers are the two ways to achieve external expansion. A merger is when two firms join together to form a new (but larger) firm, and a takeover is when an existing firm expands by buying another firm.

Card 3

Front

What is meant by the term 'stakeholders'?

Back

Preview of the front of card 3

Card 4

Front

What is meant by a Public Limited Company?

Back

Preview of the front of card 4

Card 5

Front

What is meant by social costs and social benefits?

Back

Preview of the front of card 5
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