Business studies unit 2 keywords

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Dividend
Payment made to shareholder 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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Limited company
A business recognised as a legal unit that offers investors limited liability.
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Private Limited Company (Ltd)
A company that cannot sell shares on the stock market.
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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
Shareholders in a limited company can only lose their investment in the business if it fails. They are not forced to sell assets to pay off the business' debts.
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Monopoly
Any business with more than 25% market share.
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Market share
The proportion of total market sales sold by one business.
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Franchisee
The firm that buys the franchise rights from the existing business.
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Franchisor
The existing firm that sells the franchise rights to another business.
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Ethical objective
A business aim to 'do the right thing' according to the values and beliefs of the managers, even if this is not the profitable way. (e.g pay workers in low-wage countries above average rates.)
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Environmental Objective
A business aim to protect the environment during its operations. This will reduce social costs.
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Social Costs
The costs of business activity, including both financial costs paid by the firm and the costs on society (e.g pollution)
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Social Benefits
The benefits of a business activity, not just to the firm but to society (e.g jobs).
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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, as with telephone call centres in India.
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Multinational
A business with operations in more than one country.
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Product portfolio/ product mix
The range of products sold by 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 the product.
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Competitive pricing
Setting a price for a product based on what competitors are charging.
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Price Skimming
Setting a price at a 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 the business communicates to consumers with the aim 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 increase sales.
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Direct Marketing
Using direct means to contact consumers to increase sales (e.g e-mail, telemarketing and direct mail).
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Sponsorship
A business pays or an activity or event to gain publicity.
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Promotional mix
The different ways a business promotes itself.
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Wholesaler
Middleman or distributor that buys in bulk, holds stocks and sells mainly to retailers not consumers.
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Telesales
Selling to the consumer through telephone contact alone.
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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 to a leasing company and paying an annual leasing charge so that the asset can still be used.
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Profit and loss account
This shows whether the business has made 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. Sales Revenue = number of goods sold * price
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Gross profit
The difference between sales revenue and and cost of making the products sold.
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Overheads
Expenses of the business that are not directly part of the production process e.g rent and management salaries.
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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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Net profit Margin
The percentage of sales revenue that is net profit. Net Profit Margin % = (net profit/ sales revenue) x 100
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Balance sheet
This lists the value of a company's assets and liabilities.
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Assets
Items of value owned by the business.
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Liabilites
Debts owed by the business
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Liquidity
How easy it is for a business to pay its short term debts.
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Creditors
The value of products supplied by other businesses that have not been paid for yet.
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Debtors
The value of goods sold to customers that have not been paid for yet.
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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 the important decisions
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Decentrilisation
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
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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 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
Recruiting within the business
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External recruitment
Recruiting outside of the business.
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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 the place of work
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Off-the-job training
Takes place away from the business at another business' place e.g College
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Appraisal
Assessing how effectively an employee is working.
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Motivated
The will to work due to the employment 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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Autocratic Management
Managers who believe in taking all decisions and just passing instructions to workers
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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 continuously, on a production line.
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Specialisation
Work is divided into separate tasks or jobs that allows workers to become skilled at one of them.
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Division of labour
Breaking a job down into small repetitive tasks that 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 effectively.
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Kaizen
Continuous improvement.
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Just-in-time manufacturing
Ordering supplies so that 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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Diseconomies
The reasons why production costs of each item rises as a firm expands.
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Quality product
Goods or services that meet the needs of its customer.
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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 of customers expressed in terms of the minimum acceptable production or service standards.
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Quality assurance
Setting and trying to meet quality standards throughout the business.
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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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Other cards in this set

Card 2

Front

Divorce between ownership and control

Back

When directors control a public limited company and thousands of shareholders own it but the two groups may have different objectives.

Card 3

Front

Limited company

Back

Preview of the front of card 3

Card 4

Front

Private Limited Company (Ltd)

Back

Preview of the front of card 4

Card 5

Front

Public Limited Company (PLC)

Back

Preview of the front of card 5
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