Business Studies

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Business
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Terms in this set (104)
Business
an organisation that provides goods or services
Image: Business
Market
where buyers (or customers) and sellers (businesses) meet to exchange goods and services
Sole Trader
a business owned by only 1 person who has unlimited liability
Private limited company
A business owned by shareholders who have limited liability, but shares in the business CAN NOT be SOLD on the stock market
Image: Private limited company
Franchise
The right given by one business to another to sell goods or services using its name
Image: Franchise
Franchisee
A business that agrees to manufacture, distribute or provide a branded product under license by a franchisor
Franchisor
The business that gives franchisees the right to sell its products in return for a fixed sum of money or royalty payment
Image: Franchisor
Unlimited Liability
A legal obligation on the owner of a business to settle all debts of the business. In law, there is no distinction between what the business and the owner owns and owes
Limited Liability
When shareholders of a company are not personally liable for debts of the company: the most they can lose is the value of their investment in the shares of the company
Image: Limited Liability
Start up Fee
The amount of money that the Franchisee pays to the Franchisor to use its name
Image: Start up Fee
ShareholderThe owner of a company entitled to a share of the profits each yearCustomer NeedsThe wants and desires of the customerMarket ResearchThe process of gaining information about customers, competitors and market trends through collecting primary and secondary dataPrimary ResearchThe gathering of new information, which has not been collected beforeSecondary ResearchThe collecting of information that has already been gathered by someone else and that already existsQuantitative DataData which can be expressed as numbers and can be statistically analysedQualitative DataInformation about opinions, judgements and attitudesMarket Segmentationa part of the market that contains a group of buyers with similar buying habitsAdded ValueThe increased worth that a business creates for a product. PRICE CHARGED - COST FROM SUPPLIERSMarket MapA diagram that shows the range of possible positions for 2 features of a product. E.g Low to high price and low to high qualityEnterpriseA willingness by an individual or business to take risks, show initiative and undertake new venturesEntrepreneurA person who owns and runs their own business and takes risksMindmapA diagram that is used to record words and ideas connected to a central wordCreative ThinkingCreating an idea that has not been done before (new and unique) and developing a competitive advantage as a resultCompetitive AdvantageAn advantage a business has that enables it to perform better than its rival like; better products, quality, customer service or creating a totally unique productBlue Sky ThinkingA technique of thinking where participants are encouraged to think of as many ideas as possible about an issue or problemLateral ThinkingThinking differently to try and find new and unexpected ideas, such as by using DE BONO'S SIX Thinking HatsInventionThe discovery of new processes and potential new products, typically after a period of researchInnovationThe process of transforming inventions into products that can be sold to consumersPatentA right of ownership of an invention, design or process when it is registered with the government - Anyone copying this secured idea can be taken to court and sued - This must be registered with the Intellectual Property Office - This can last for 20 years from when they are first grantedCopyrightLegal ownership of material such as books, music and films which prevents these being copied by others - If other copies are made they can be taken to court and sued -This can last longer than a patent e.g. authors have this for their lifetime and 70 years after they dieTrademarkThe symbol, sign or feature of a product or business that can not be copied by others - Businesses have to ensure they do not use a name already in useCalculated riskweighing up risks and rewardsSMARTSpecific, Measurable, Agreeable/Achievable, Realistic/Relevant, Time-boundObjectivesthe goals a business is trying to achieveFinancial Objectivestargets expressed in monetary terms - profit -survivalNon financial objectivestargets not expressed in monetary terms - personal satisfaction - challengeProfitThe difference between totoal revenue and total costs over a period of time TOTAL REVENUE - TOTAL COSTSTotal Sales RevenueThe income they recieve from selling their goods and services over a period of time PRICE × QUANTITY SOLDSales VolumeHow many units are soldTotal CostFixed Costs + Variable CostsFixed CostsCosts which do not vary with output • Rent, rates and insurance • Advertising • Manager SalariesVariable CostsCosts which vary with output • Worker's wage • Raw materialsCashNotes, coins and money in the banksCash flowThe flow of cash in and out of a businessCash inflowthe cash flowing into a businessCash outflowthe cash flowing out of a businesscash flow forecasta prediction of how cash will flow in a period of time in futurenet cash flowTOTAL CASH INFLOW - TOTAL CASH OUTFLOWclosing balancethe amount of money in the bank at the end of the monthopening balancethe amount of money in the bank at the start of the monthcumulative cash flowthe sum of cash that flows into the business overtimepoor cash flowthere is more cash going out than the cash inflowstock and trade creditABC Ltd, (a business) seems to be paying for stock and machinery in one go. This means a large cash out flow at that specific time. If they organise _____ with their suppliers, this could spread the payments overtimenegative closing balancedue to low cash inflow and high cash outflow it leaves the business with a cash flow problemshort term sources of financesources of money for business that may have to be repaid either immediately or fairly quicklyoverdrafta facility that allows someone to take out more than is in their current account up to an agreed limittrade creditallows someone to purchase goods now and pay laterfactoringwhere another party pays you your invoices up front and then chases them up when they become duelong term sources of financesources of money for business that are borrowed or invested typically more than a yearbank loana sum of money borrowed from a bank, repaid in instalments with interestpersonal savingsmoney that has been saved up by the owners of the businessventure capitalis finance that is provided to small or medium sized firms that seek growth but may be considered as risky by typical share buyers or other lendersshare capitalthe sale of shares to raise money for the businessretained profitprofits that are not distributed to the owners of the business which can be reinvested into the businessbusiness planA plan for development of a business giving forecasts of items such as sales, costs and cash flowcustomer focusin order to make a business profitable they have to know the customer needs and for that they have to have _________marketing mixcombination of factors which help the business to take into account customer needs when selling a product4PsProduct, price, promotion and placecustomer servicethe experience that a customer gets when dealing with a business and the extent to which that experience meets and exceeds customer needs and expectationscustomer satisfactionmeasure of how much products and services meet customers' expectationrepeat purchaseorders or sales that occur from customers who have bought the product or service in the pastVATtax on the value of sales, paid by the Business to the GovernmentIncome Taxtax on the value of income earned by workers, this includes sole traders who have to pay income tax on their net earningsCorporate Taxtax on profits of limited companiesNational Insurance Contributionstax on earnings of workersJob descriptiondocument describing the duties of a worker and his/her status in the organisationPerson specificationa profile of the type of person needed for a job - their skills and qualitiesJob Particularsthese give more information about the business and about the job, which is in more detail than the job advert (e.g. rates of pay, hours of work, holidays)Curriculum Vitae (CV)brief list of the main details about a person including name, address, qualifications and experienceApplication Formdocument to be filled in with personal details and possibly further questions asked by the businessCovering Lettersletter written to the business about why the candidate wants the jobreferencean account by someone of independent standing of suitability, capability and character of the job applicantCommodityraw material such as oil, copper, iron ore and wheatCommodity marketwhere buyers and sellers meet to exchange commoditiesgoods marketmarket for everyday products such as iPhones and DVDsSurpluswhere supply exceeds demand, there is a tendency for prices to fallshortagewhere demand exceeds supply, there is a tendency for prices to riseDemandamount a customer is willing and able to buy at any given priceSupplythe amount sellers are willing and able to buy at any given priceInterest Ratespercentage reward from saving and the cost of borrowing on loansExchange ratesimply the price of one currency in terms of anotherExportthe sale of a good or service to a foreign buyer i.e. money flows into the UK economyImportthe purchase of a good or service from foreign businesses i.e. money flows out of the UK economySPICEDStrong Pound Imports Cheap Exports DearWPIDECWeak Pound Imports Dear Exports CheapEconomic activitythe amount of buying and selling taking place in a period of timeEconomic growthincrease in the rate of economic activity in an economy, measured by an increase in gross domestic product (GDP)The Business Cyclethe fluctuations in the level of economic activity over a period of timeboomwhere there is strong activityslowdownwhere economic activity begins to slow downrecessionwhere economic activity is falling (officially it is negative growth for 6 months)recoverywhere economic activity begins to riseStakeholderindividuals or groups which have an interest in and is affected by the activities of a business