98 terms

AQA GCSE Business Studies Unit 2 - all Key words

People in business keywords

Terms in this set (...)

Market share
The proportion of total market sales sold by one business
Economies of scale
The reasons why average costs of each item falls as a firm expands
Organic growth
Expansion from within the business e.g. by opening more shop branches
Inorganic growth
Expansion by merging with or taking over another business
Internet selling
Marketing products through the business's website
The firm that buys the franchise rights from the existing business
The existing firm that sells the franchise rights to another business
An agreement between business owners to combine two businesses and operate as a larger one
Purchasing another business from its owners
Horizontal integration
Joining two businesses in the same industry and same stage of production e.g. two hairdressing businesses
Vertical backward integration
Joining two businesses in the same industry but a different stage of production, towards the supplier e.g. a computer manufacturer taking over a 'chip' maker
Joining two businesses in different industries e.g. an insurance company merges with a publishing business
Any business with more than a 25 per cent market share
Limited company
A business recognised as a legal unit that offers investors (shareholders) limited liability
Private Limited Company (Ltd)
A company that cannot sell shares to the general public. It is not listed on the Stock Exchange
Public Limited Company (plc)
A company able to sell shares to the general public by being listed on the Stock Exchange
Limited Liability
Investors (shareholders) in a limited company can only lose their investment in the business if it fails; they cannot be forced to sell assets to pay off the firm's debts.
Part owners of a limited company - they own shares in it
Payment made to shareholders from company profits - usually made annually
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.
Ethical objective
A business aim to do the right thing, even if it is not the most profitable way.
Environmental objective
A business aim to protect the environment during their operations
Social cost
The costs of a business activity, including both financial costs paid by the firm and the costs on society (e.g. factory pollution)
Social benefit
The benefits of a business activity, not just to the firm but to society
Increasing trend for goods to be traded internationally and for companies to locate abroad
Making products or parts of products in other countries. Services can be off-shored too, as with call centres moving to India
A business with operations in more than one country
Product portfolio
The range of products sold by a business
Target market
The group of consumers aimed at by a business
Spreading risk by selling in different markets
Product life cycle
The lifespan of a product, recorded in sales, from launch, through growth, maturity and decline
Extension strategies
Steps taken to extend the life cycle of the product
Competitive pricing
Setting a price for a product based on the prices charged by competitors
Price skimming
Setting price at a high level to create a quality and exclusive image
Penetration pricing
Setting price at a low level to gain market share.
Cost-plus pricing
Setting a price by adding a profit mark-up to the total cost of production
Loss-leader pricing
Setting a price below cost, hoping to gain other profitable sales
All the ways a business communicates to consumers with the aim of selling products
Communication to consumers, using television and other media, to encourage them to buy a product
Sales promotion
Activities to attract consumer attention to a product to increase sales
Direct marketing
Using direct means to contact consumers to increase sales (e.g. email, telemarketing and direct mail
a business pays for an activity or an event to gain publicity
Promotional mix
The combination of promotion methods used by a business
Middlemen or distributor that buys in bulk, holds stocks and sells mainly to retailers not consumers
Selling to the customer through telephone contact alone
Mail order
Direct marketing through mail shots leading to goods being delivered directly to the customer
Retained profit
Profit kept in the business after tax and dividends have been paid
Sales and leaseback
Selling an asset, such as a building , to a leasing company and paying an annual leasing charge so that the asset can still be used
Profit and loss account
This shows whether the business made a profit or loss over the last period (usually a year). It is also known as the income statement.
Sales revenue
The value of goods sold
Sales revenue
Number of goods sold x price
Cost of sales
The cost to the business of the goods sold
Gross profit
The difference between sales revenue and cost of making the products sold
Gross profit
Sales revenue - cost of sales
Expenses of the business that are not directly part of the production process (e.g. rent and management salaries)
Net profit
The difference between sales revenue and total costs of the business.
Net profit
Gross profit - overheads
Gross profit margin
The percentage of sales revenue that is gross profit
Gross profit margin
Gross profit / sales revenue x 100
Net profit margin
The percentage of sales revenue that is net profit
Net profit margin
Net profit / sales revenue x 100
Balance sheet
This lists the value of a company's assets and liabilities
Items of value owned by a business
Debts owned by a business
How easy it is for a business to pay its short-term debts
Organisational structure
The internal links between managers and workers showing lines of authority
Layers of management
The number of different levels of management and responsibility in a structure
Span of control
The number of junior employees each manager is directly responsible for.
Senior managers take all important decisions
Decision making power is spread to managers in branches and divisions of a business
Attracting people to apply for a job vacancy
Job analysis
Identifying the tasks and skills needed to perform a job well
Job description
A detailed statement of the nature of the job and the tasks involved
Person specification
A profile of the type of person likely to make a good applicant
Internal recruitment
Appointing an existing employee of the business to fill a vacancy
External recruitment
Appointing an employee of another business to fill a vacancy
Induction training
Initial training to familiarise new recruits with the systems of the business
On-the-job training
Takes place when employees receive training they are working at the place of work
Off-the-job training
Takes place away from the job at another venue (e.g. college)
Assessing how effectively an employee is working
The will to work due to the enjoyment of the work itself
Retaining staff
Keeping existing staff in the business, which cuts down the cost of recruitment, selection and training
Autocratic management
Managers who believe in taking all decisions and just passing instructions to workers
Democratic management
Managers who involve workers and less senior managers in decision making
Flow production
Large-scale production where is stage of production is carried out one after the other, continuously, on a production line
Work is divided into separate tasks or jobs that allow workers to become skilled in one of them
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
Lean production
A production approach that aims to use fewer resources by using them more efficiently
Continuous improvement
Just-in-time-manufacturing (JIT)
Ordering supplies so that they arrive just when they are needed and making goods only when ordered by customers
Lean design
Producing new designs as quickly as possible
Economies of scale
The reasons why production costs of each item fall as the firm expands
Diseconomies of scale
The reasons why production costs of each item rise as a firm expands
Quality product
Goods or services that meet customers' expectations and are therefore 'fit for purpose'
Using an outside business to make all or part of a product or provide a service
Quality standards
The expectations of customers expressed in terms of the minimum acceptable standard of production or service
Quality assurance
Setting and trying to meet quality standards throughout the business
Total Quality Management (TQM)
An approach to quality that aims to involve all employees in the improvement process