Business Studies Key Terms- Unit 1

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AQA unit 1 key terms Starting a business Financial Planning

Enterprise

process by which new business are formed and new products and services created and brought to the market. Usually led by and entrepreneur

Enterprise Skills

skillls that allow an individual or organisation to respond effecively to chnging market situations, including problem solving skills, thinking and acting innovatively and creatively, and understanding the importance of risk and uncertainty

Entrepreneurs

individuals who have an idea that they deveop by setting up a new business. They take the risk and the subsequent profits that come with the success or losees that come with failure

Opportunity Cost

the 'real cost' of taking a particular action or the next best alternative foregone i.e. next best thing that you could have done but did not

Franchise

when a business (franchisor) gives another business (franchisee) the right to supply its product or service

Copyright

legal protection against copying for authors, composers and artists

Patent

official document granting the holder the right to be the only user or producer of a newly invented product or process for a specified period

Trademark

signs, logos, symbols or words displayed on a company's products or advertising, including sounds or music, which distinguish its brands from those of its competitors

Factors of Production

four elements- land, labour, capital and enterprise- used in the production of goods and services

Production

process whereby resources (factors of production) are converted into a form that is intended to satisfy the requirements of potential customers

Output

the finished products resulting from the transformation process

Primary sector

those organisations involved in extracting raw materials (e.g. farming, fishing, forestr, mining, quarrying)

Secondary (manufacturing) sector

those organisations involved in processing or refining the raw materials from the primary sectors into finished or semi-finished products (e.g. paper mills, food processors, vehicle manufacturers)

Tertiary sector

those organisations involved in providing services to customers and to other business, public or private. (e.g. education, health, restaurants)

Adding Value

process of increasing the worth of resources by modifying them

Value Added (added value)

sales revenue minus cost of bought-in materials, components and services

USP

feature of a product the allows it to be differentiated from other products

Business Plan

report describing the marketing stratergy, operational issues and financial implications of a business start-up

Marketing

the anticipation and satisfying of customers' wants in a way that delights consumers and also meets the needs of the organisation

Market Research

the systematic and objective collection, analysis and evaluation of information that is intended to assist the marketing process

Primary Market Research

collection of information first-hand for a specific purpose

Secondary Market Research

use of information that has already been collected for a different purpose

Qualitative Market Research

collection of information about the market based on subjective facotrs such as opinions and reasons

Quantitative Market Research

collection of information about the market based on numbers

Random Sample

group of respondents in which each member of the target population has an equal chance of being chosen

Quota Sample

group of respondents compormising several different segments, each sharing a common feature (age, gender). Number of interviewees in each classification is fixed to reflect their percentage in the total population, selected non-randomly

Stratified Sample

group of respondents slected according to particular features (age, gender). However, unlike quota, in stratified sampling the sub-groups and sizes are chosen specifically

Market

place where buyers and sellers come together

Demand

amount of a product or servce that customers are willing and able to buy at any given price over a period of time

Market Segmentation

classification of customers (or potential) into groups or sub-groups (market segments), each of which reponds differently to different products or marketing approaches

Segmentation Analysis

where a firm uses quantitative and qualitative data or information to try to discover the types of consumer who buy its products and why

Market Size

volume of sales of a product (number computer sales) or the value of slaes of a product (revenue form computer sales)

Market Growth

percentage change in sales (volume or value) over a period of time

Market Share

percentage or proportion of the total sales of a product or service achieved by a firm or a specific brand of a product

Unincorporated Business

no distinction in law between indiviudal owner and business itself. Identity of business and owner is the same- sole traders and partnerships

Incorporated Business

a legal identity that is separate from the individual owners. As a result, organisations can own assets, owe money and enter into contracts in their own right- private ltd companies and public ltd companies

Unlimited Liability

situation in which owners of a business are liable for all the debts that the business may incur

Limited Liability

situation in which the liability of the owners of a business is limited to the fully paid-up value of the share capital

Partnership

form of business in which two or more people operate for the common goal of making a profit

Private Ltd Company

small to medium-sized business that is usually run by the family or the small group of individuals who own it

Public Ltd Company

business with limited liability; a share capital of over £50,000; at least two shareholders, two directors, qualified company secretary and usually a wide spread of shareholders.

Ownership

providing finance and therefore taking risks

Control

managing the organisation and making decisions

Stakeholders

any group of individuals with an interest in a business. This incudes employees, customers, shareholders and the local community

Ordinary Share Capital

money given to a company by share-holders in return for a shae certificate that gives them part ownership of the company and entitles them to a share of the profits

Loan Capital

money recieved by an organisation in return for the organisations agreement to pay interest during the period of the loan and to repay the loan within an agreed amount

Bank Loan

sum of money provided to a firm or an individual by a bank for a specific, agreed purpose

Bank Overdraft

when bank allows an individual or organisation to overspend its current account in the bank to an agreed limit and for set period of time

Venture Capital

finance that is provided to small or medium-sized firms that seek growth but which may be considered as risky by typical buyers or lenders

Personal Sources of Finance

money provided by owner of business from their own savings or personal wealth

Teleworking

working separate from a central workplace, using telecommunication technologies

Least-cost Site

business location that allows a firm to minimise its costs (hence selling price)

Infrastructure

network or utilities such as transport links, sewerage, telecommunication systems, health services and educational facilities

Qualitative Factors

based on the opinions and wishes of individuals, can influence business decisions because an entreprenuer will want to include his or her wishes and preferences in decisions taken

Price

amount paid by a consumer to purchase one unit of a poduct

Total Revenue

income received from an organisation's activities
price per unit x quantity sold

Profit

difference between income and total costs
revenue - total costs

Fixed Costs

costs that dont vary directly with output in the short run (rent)

Variable Costs

costs that vary directly with output in short run (raw materials)

Total Costs

fixed costs plus variable costs

Contribution per Unit

selling price per unit - variable cost per unit

Total Contribution

difference between revenue and total variable costs

Breakeven Analysis

study of relationship between total costs and total revenue to identify the output at which a business breaks even

Breakeven Output

level of output at which total sales revenue is equal to total costs of prduction

Cash Flow

amounts of money into and out of a business durnig period of time

Cash Inflows

reciepts of cash, typically from sales of items, payments by debtors, loans recieved, sales of assets

Cash Outflows

payments of cash, typicaly from purchase of items, payments to creditors, loans repaid, purchase of assets

Net Cash Flow

sum of cash inflows to an organisation minus sum of cash outflows over a period of time

Cash-flow Cycle

regular pattern of inflows and outflows of cash within a business

Cash-flow Forecasting

process of estimating the expected cash inflows and cash outflows over a period of time. Cash flow is often seasonal, so forecasting is often over a period of a year

Cash-flow Statement

description of how cash flowed into and out of a business during a particular period of time

Liquidity

ability to convert an asset into cash without loss or delay

Budget

an agreed plan establishing, numerically or financially, the policy to be pursued and the anticipated outcomes of the policy

Income Budget

shows the agreed, planned income of a business (or department) over a period of time. AKA revenue budget or sales budget

Expenditure Budget

shows the agreed, planned expenditure of a business (or department) over a period of time

Profit Budget

shows the agreed, planned profit of a business (or department) over a period of time

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