Business Studies Unit 2

Buisness studies, unit two key words and definitions. 

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Variance
The difference between a budgeted figure and the actual figure achieved.
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Variance analysis
Is the comparison by an organisation of its actual performance with its expected budgeted performance over a certain time period.
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Favourable variance
This is a change from budgeted figure that leads to higher than expected profits.
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Adverse variance
This is the change from a budgeted figure that leads to lower than expected profit.
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Creditors
Suppliers owed money by the business - purchases have been made on credit.
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Credit control
The monitoring of debts to ensure that credit periods are not exceeded.
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Bad debt
Unpaid bills that are now very unlikely to ever be paid back.
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Overtrading
Expanding a business rapidly without obtaining all of the necessary finance so that a cash flow shortage develops.
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Profit margin
The profit made as a proportion of sales revenue.
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Gross profit
This is calculated by subtracting total costs from sales revenue.
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Return on capital
The proportion of profit in terms of capital invested.
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Organisation chart
A diagram showing job titles, lines of communication and responsibility within a business.
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Levels of hierarchy
The number of layers of management and supervision existing in an organisation.
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Chain of command
The lines of authority within a business.
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Lines of communication
How information is passed up and down and across and organisation.
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Span of control
The number of subordinates, one job/post holder is responsible for.
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Work load
How much work one employee, department or team have to complete in a given period of time.
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Job role
The tasks involved in particular job
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Delegation
Passing the authority to make specific decisions to somebody further down the organisational hierarchy.
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Communication flows
How information is passed around an organisation including downwards, upwards, sideways and through the grapevine or gossip network.
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Workforce role
The tasks involved in a particular level or grade or job within an organisation
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Workforce performance
Methods of measuring the effectiveness of employees including labour productivity, staff turnover and absenteeism.
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Labour turnover
Percentage of the total workforce who leave in any given period
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Labour productivity
The contribution made by employees to the output of a business.
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Absenteeism
The number of working days lost as a result of an employees deliberate or habitual absence from work.
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Recruitment and selection process
How a business chooses the best candidate for a vacancy it had identified.
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Job description
A summary of the main duties and responsibilities associated with an identified job.
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Person specification
Identifies the skills, knowledge and experience a successful applicant is likely to have.
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Internal recruitment
Candidates from inside the organisation
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External recruitment
Candidates from outside the organisation
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Training
Giving employees the knowledge, skills and techniques necessary to fulfill the requirements of a job.
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Induction training
Is given as an initial preparation upon taking up a post. Its goal is to help new employees reach the level of performance expected from an experienced worker.
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Off-the-job training
Away from the place of work eg. at a training centre or college.
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On-the-job training
Learning by doing the job, under guidance of an experienced member of staff or external trainer.
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Motivation
The factors that inspire an employee to complete a task at work.
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Job design
Changing the nature of the job role in order to increase motivation or reduce dissatisfaction at work.
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Empowerment
Giving employees the power to do their job: trusting them, giving them authority to make decisions and encouraging feedback from them.
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Job rotation
Varying and employee's job on a regular basis.
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Job enlargement
Expanding the number of tasks completed by an employee.
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Job enrichment
Increases the level of responsibility within a job to make work more challenging and rewarding.
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Operational targets
These are specific and usually measurable objectives set for each operations activity of a business.
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Capacity
The maximum output that a firm can produce with existing resources.
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Capacity utilisation
This is the proportion that current output is of full capacity. It is calculated by the formula: Current output/maximum output x 100
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Unit cost
Is the average cost per unit of output. It is calculate by the formula: total costs/output
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Excess capacity
When a business has greater production capacity that is likely to be used in the foreseeable future.
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Overtime
Staff working beyond their contracted hours in exchange for a higher hourly wage
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Temporary staff
Workers employed for a fixed period of time after which the employment contract may not be renewed.
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Part-time
Workers employed on less than full weekly hours contract eg. 15 hours per week.
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sub-contracting
Using a supplier to manufacture part or all of a firm's product of service.
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Stocks
Material or finished good held by a firm as needed to supply customer demand.
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Rationalisation
Reorganising resources to cut costs - often leading to a cut back in capacity.
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Quality product
A product or service that meets customers expectations and is therefore 'fit for purpose',
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Quality Standards
The expectations of customers expressed in terms of the minimum acceptable production or service standards.
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Quality control
This is based on inspection of the product or a sample of products.
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Quality assurance
This is a system of agreeing and meeting quality standards at each stage of production to ensure consumer satisfaction
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ISO 9000
This is an internationally recognised certificate that acknowledges the existance of a quality procedure that meets certain conditions.
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Total quality management (TQM)
An approach to quality that aims to involve all employees in the quality improvement process.
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Internal customers
People within the organisation who depend upon the quality of work being done by others.
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Customer service
The provision of service to customers before, during and after purchase to the standard that meets customer expectations.
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Supplier relationships
These are links with the companies that supply a business with goods or services.
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Service level agreement
Agreements or contracts with suppliers that clearly lay down the service that they must provide.
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Information technology
The use of electronic technology to gather, store, process and communicate information.
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Robot
Computer controlled machine able to perform a physical task.
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Supply chain
All of the stages in the production from obtaining raw materials to selling to the consumer - from point of origin to point of consumption.
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Sustainability
Production systems that prevent waste by using the minimum of non-renewable resources so that levels of production can be sustained in the future.
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Marketing
Identifying and meeting customer needs.
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Niche marketing
Meeting the needs of a relatively small number of potential customers.
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Market
Anyone willing and with the financial ability to buy a product or service.
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Mass marketing
Meeting the needs of a very large number of potential customers.
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Consumer marketing
Creating and delivering products to solve consumer's needs.
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Business marketing
Serving the needs of a business or businesses within one or more industries.
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Marketing mix
The integration of product, place, promotion and pricing designed to achieve the marketing objectives of the business.
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Product development
Changing aspects of goods and services to meet the changing needs of existing customers or to target a different market.
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Product line
A set of related goods or services.
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Product mix
The full range of products offered by a business, also known as product portfolio.
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Unique selling point (USP)
A feature or function that makes it different to any other on the market.
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Product differentiation
Creating a perceived difference for a product in a competitive market.
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Production portfolio analysis
Analysing the existing product mix to help develop a balanced range of goods and services.
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Boston matrix
A method of analysing the products in a firm's portfolio based on relative market share and market growth.
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The product life cycle
The path of a product from its introduction onto the market, to its eventual disappearance from the market.
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Promotion
Bringing a product or range of products to the attention of existing and potential customers.
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Sales promotion
Offers designed to increase sales
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Promotional activities
The ways in which a business can communicate with its potential and existing customers with the aim of increasing sales.
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Direct selling
A way of selling directly to the final consumer without another intermediary.
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Merchandising `
The visual presentation of a product to the consumer at the point of sale.
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Advertising
The use of media to communicate with customers.
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Public relations
Communicating with the media and other interested parties to enhance the image of the business and its products, and thereby increase sales.
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Branding
Creating an identity for a business and its products to differentiate it from rivals in the market.
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Promotional mix
The combination of promotional activities which make up a campaign to communicate with a target market (costs, competitors, target market, the product, the market)
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Pricing strategies
Long-term pricing plans which take into account the objectives of the business and the value associated with the product.
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Price skimming
Entering the market with a high price to attract early adopters and recoup high development costs.
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Penetrating pricing
Below market pricing to gain a foothold in an established and competitive market,
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Price leader
A product that has significant market share and can influence the market price.
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Price taker
A firm which sets its prices at the same or a similar level to those of the dominant firm in the industry.
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Pricing tactics
The manipulation of price to achieve a specific short-term objective.
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Loss leader
Products sold at less than cost to attract customers to a product range.
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Psychological pricing
The use of odd number pricing to increase the vale-for-money appeal of a product.
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Price elasticity of demand
The responsiveness of demand for a product to a change in its price.
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Price elastic demand
The demand for a product is very responsive to to change in prices - value greater than 1
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Price inelastic demand
The demand for the product is very unresponsive to a change in price - value less than 1
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Distribution channel
Method by which a product is sold to the customer.
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Direct sale
Where no intermediaries are used.
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Intermediaries
Organisations involved in the distribution of goods and services on behalf of the other businesses.
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Business to business markets
Companies meeting the needs of other businesses in the market place.
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Business to consumer market
Companies meeting the needs of final consumers of goods and services.
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Degree of competition
The number and size of businesses operating in a given market, be it local, regional, national or international.
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Market conditions
The nature of the product, the needs of the consumers, the number of firms and the ease of entry to the market.
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Competitiveness
Characteristics that permit a firm to compete effectively with other businesses.
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Competitive advantage
Discovering and using methods of competing which are distinct and offer consumers greater perceived value, than those of rivals in the market.
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Overdraft
Arranging a flexible loan on which the business can draw as necessary up to an agreed limit.
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Loan
Fixed amount borrowed for agreed length of time.
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Sales of assets
Cash receipts from selling off redundant assets will boost cash inflow
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Debt factoring
Companies buy the customer bills from a business and offer immediate cash. This reduces risk of bad debts too.
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Card 2

Front

Variance analysis

Back

Is the comparison by an organisation of its actual performance with its expected budgeted performance over a certain time period.

Card 3

Front

Favourable variance

Back

Preview of the front of card 3

Card 4

Front

Adverse variance

Back

Preview of the front of card 4

Card 5

Front

Creditors

Back

Preview of the front of card 5
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