BUSS3 Key terms

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Shareholder Value
Where shareholders earn a return from their investment which is greater than their required rate of return
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The present value of a series of future net cash flows that will result from an investment, minus the amount of the original investment
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Profit Centre
A separately-identifiable part of a business for which it is possible to identify revenues and costs and calculate a relevant profit
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Amounts set aside to cover future costs or liabilities (e.g. redundancies, business closures, legal disputes)
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Shareholder Returns
The rewards earned by shareholders = dividends paid to them + any increase in the value of their shares
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Customer Relationship Management CRM
The process of building a long-term, profitable relationship between a business and its customers
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Product Positioning
The way in which the marketing function tries to create an image or identity in the minds of the target market
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Test Marketing
Launching a new product or service in a limited part of the target market in order to gauge the viability of the product and assess the most appropriate marketing mix
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The period of time between an order being placed and being received
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Diseconomies of scale
Factors which result in higher unit costs as production output reaches too high a level When a business is too big
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Industrial Intertia
Where a business decides to stay in its existing location despite potentially better locations being available to it
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Marketing economies
Where marketing costs per unit sold can be lowered by spreading marketing costs over larger output
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Minimum efficient scale
The minimum output a business needs to achieve in order for its to be able to minimise unit costs
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Network Analysis
Breaking a project down into separate activities and their requirements
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Where a business has work done for it overseas
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Part of outsourcing – where another business is used to provide part of the production process
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A tax levied on imports to increase their price compared with domestic goods (form of trade barrier)
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Gap analysis
Analysis of the difference between the workforce needs or a business and its current capabilities
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Card 2




The present value of a series of future net cash flows that will result from an investment, minus the amount of the original investment

Card 3


Profit Centre


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Card 4




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Card 5


Shareholder Returns


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