"An agreement in which one business buys the rights to sell the goods or services of another business".
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The person/business who buys the rights.
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The person/business who sells the rights.
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7 common business aims (top 3):
SURVIVAL, PROFIT, SUSTAINABLE, ethical, growth, market share, customer satisfaction.
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An individual or group with a direct interest in an organisation's performance.
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Examples of stakeholders:
Owner- wants to succeed. Managers- want to keep their job. Employees- want to keep job and/or get a promotion. Consumers- want quality, good prices, variety, good opening hours, ethical products. Government- get taces, reduce unemployment benefits.
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Business plan definition:
An outline of what a new business will do and how it will do it.
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Sole Trader definition:
A type of business owned by one person.
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Unlimited liability definition:
The personal possessions of the owner are at risk if there are any problems.
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A business with between 2 and 20 owners.
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Private limited company (Ltd) definition:
Sell shares to family and friends.
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Public limited company (Plc) definition:
Sell shares on the stock exchange.
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Own a percentage of the business and get paid dividends every year.
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The collection of information on actual and potential customers.
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Primary research definition and examples:
The collection of first hand information e.g. surveys, focus groups, customer feedback, observation.
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The other name for primary research.
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Secondary research/ desk research definition and examples:
The gathering of existing data e.g. internet, books, newspapers.
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The marketing mix:
The four Ps. Price, product, place, promotion.
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Manufacturer> retailer> consumer.
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Manufacturer> wholesaler> retailer> consumer.
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Creaming/skimming definition and examples of use:
Charging a premium when you first launch a product and dropping the price as time goes on e.g. ipad, playstation (only used with technological products).
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Loss leader definition and examples of use:
Charging a super low price to get people into the store and then charging more for replacements or other products e.g. razors, printers.
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Cost plus definition and examples of use:
Working out cost of making product and adding on a percentage for profit e.g. restaurant food pricing.
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E-commerce definition and examples:
The use of internet for sales e.g. itunes, ebay, tesco.
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To inform customers about products and to persuade them to buy them.
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Above the line promotion definition and examples:
Promotion through mass media that is not personal e.g. tv adverts, radio, newspaper.
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Below the line promotion definition and examples:
Promotion specific to the target market e.g. display boards, packaging, special offers.
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Market share definition:
The proportion of sales by once business in a market compared to the total size of the market.
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Market segment definition
A part of market which contains a group of buyers with similar charteristics e.g. age, income, children, pensioners.
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6 main factors affecting location:
Basic facilities (infrastructure), government policy, market accessibility, availability of labour, location of raw materials, cost of site.
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Importance of recruitment:
Competitive advantage, spread the work load, bring in extra skills, better customer service.
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2 methods of recruitment:
Internal and external.
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The recruitment process:
Identify shortage/ need, write job/ person specification (both separate), advertise (job sites/agenices,notice boards), selection (interview, trial period, psychometric tests) appoint (make a contract of emplyoment, hours, duties, wages).
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The drive and desire to do a job.
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Non-financial methods of motivation:
Job rotation (rotating workers between jobs in the same department), Job enlargement (giving workers more tasks to do), Job enrichment (where workers are given more responsibility).
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Bonus, PRP (performance-related pay), profit sharing (% of firm's profit shared between staff), piece rate, comission, share ownership.
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Fringe benefits definition and examples:
Non-monetary rewards e.g. company car, meal allowance, health insurance.
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The process of organising resources in order to create goods and services.
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Definition of flow production:
The product is made continuously.
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Definition and advantages and disadvantages of batch production:
The product is made in stages and is produced in groups or batches e.g. laptops. +allows manufacturers to be flexible +can benefit from some economies of scale+quick+teamwork -one mistake ruins whole line -requires lots of organisation
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Definition and advantages and disadvantages of job production:
The product is made indiviudally from start to finish e.g. a tailored suit +high quality products +motivational +can use piece rate pay +can charge more -expensive -staff require training -time consuming
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Definition of customer service:
Meeting or exceeding customer's needs and expectations.
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Main elements of customer service and definitions:
The product itself. Product information. After sales service (the meeting of customer's needs after they have purchased a product). Employee/customer care. Premises. Payment terms.
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Benefits of good customer service:
Attracting new customers, customer loyalty, increasing market share, increasing sales revenue and profits, informing customers about the product.
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Sections of a business plan:
Personal details, mission statement (broad aims), objectives, product description, production details, staffing requirements, finance.
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Employment and the law:
The National Minimum Wage Act, the Sex Discrimination Act, the Equal Pay Act, the Race Relations Act, the Disability Discrimination Act.
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Maslow's hierarchy of needs:
Physiological needs (minimum wage) Safety needs, Social needs (team work, good communication, staff parties/meetings), Self esteem needs (praise, love and belonging, training, job enrichment), Self actualisation (ability to realise full potential).
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revenue= price x sales (income earned by a business)
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The expenses paid out to run a business. total costs= direct costs + indirect costs OR total costs= fixed costs+ variable costs
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Direct costs and indirect costs:
Direct costs are directly involved in the making of a product e.g. raw materials. Indirect costs are the general overheads of running a business e.g. salaries, rent.
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Fixed costs and variable costs:
Fixed costs do not vary directly with output e.g. rent. Variable costs increase as the firm expands output e.g. factory labour, raw materials and machinery.
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Profit= revenue - costs
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Sources of finance:
Personal savings, family and friends, bank loans, overdrafts, grants
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Cash flow forecast:
A prediction of how much money will come into and leave the firm each month.
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Net cash flow:
Net cash flow = income - expenditure
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Three main reasons for poor cash flow:
Poor sales, overtrading, poor business decisions.
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How to improve cash flow:
Increase credit period to suppliers, reduce credit period given to customers, destock (sell unsold products).
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Other cards in this set
The person/business who buys the rights.
7 common business aims (top 3):
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