Business Flashcards

Customer Need

Essential good or service required by the customer as a necessity

Business

Organisation that produces either goods or services

Customer Want

Things that people would like to have; not limited to the things they need to survive.

Good

Tangible items sold by a customer

Service

Non tangible items

Enterprise

For-profit business or company

Entrepreneur

Someone who is willing to take the risks involved starting a new business

Opportunity Cost

Sacrifice we make whenever we decide to do anything

Factors of Production

Resources needed for a business to provide a good and service to their customers

Capital

Equipment used to provide the good and service e.g. machinery

4 Factors of Production

(CELL) - Capital, Enterprise, Land Labour

Enterprise (Business Opportunities)

People involved in the business to identify business opportunities and bring together resources to meet these opportunities

Enterprise (New Business)

Newly formed business launching new products and services

Land

Where the business is located and other natural resources a business might use

Labour

Number of employees employed by business

Partnership

2 or more people to joint responsibility for the running of a business, to share in the profits and to share the risks

Primary Sector

First stage of production, Extracting of raw materials

Sleeping Partner

Invest money into a business but doesn't work in the business

Deed of Partnerships Details

Document containing an agreement that details the right and obligations of each partner participating in the journey

Finance

Managing financial resources of the business and reports on the financial position and performance

Functional areas of a business

Finance, Marketing, Operations, Human Resources

Marketing

The needs and wants of customers

Operations

Organise the transportation process that turns into (e.g. materials, people) in finished good and services

Human Resources

Responsible for all aspects of managing the people who work in a business

Dynamic nature of a business

Political, Economic, Social, Technological, Legal, Ethical / Environmental

Political

Decisions made by the government which will have an impact with a particular environment (increase income tax = less disposable income)

Economic

Influence such as inflation rate, interest rates and unemployment rate

Technological

Innovations in technology that affect an individual, an industry and the market

Social

Cultural and demographic aspects of an environment.

Demographic

Refers to characteristics.

Legal

Changing as the government introduces new laws through parliament.

Ethical / Environmental

Our surroundings, Air we breathe, Plants and animals, Water that covers most of earth.

Unlimited Liability

Owners of the business are personally liable for all the debt which the business may have.

Limited Liability

A shareholder that is fully responsible for the debt of a company.

Sole Trader

An individual who may or may not employ other people, but who owns and operates the business and who has ultimate liability.

PLC

Public Limited Company.

LTD

Private Limited Company.

Dividends

Form of thank you.

Not for Profit Organisation

Independent organization whose purpose is something other than to make its costs.

Social Enterprise

Aim to help society.

Charities

Aim to raise money for good causes.

Different types of Objectives

Survival, Profit Maximisation, Shareholder Value, Customer Satisfaction.

Objectives

Specific target that is set for a business to help achieve its aim.

SMART Target

Specific, Measurable, Achievement, Realistic, Time Frame.

Dynamic

Changing.

Shareholder

Individual or business that owns part of a business.

Pressure Group

Are organisations who may not like the way a business is conducting their business activity so will take drastic action to protest against the business.

Dynamic Market

Market that changes constantly because of external factors such as technology.

Business Location

Any structure, vehicle or establishment where a business is conducted.

Franchising

Occurs when one business sells the right to another business to use it and sell its product.

Franchise

When a franchisor sells its rights to its product to a franchisee; in return for a fee & % of turnover.

Franchisee

They buy a franchise for a fee & % of turnover.

Franchisor

Sells a franchise in return for a fee and % of turnover.

E-Commerce

Buying & selling goods or services using electronic network, such as the internet.

Profit

The amount of money a business is left with after all costs have been deducted.

Fixed Costs

Costs that stay the same regardless of the level of output.

Variable Costs

Costs that vary with the level of output.

Cash Flow

The money coming and going out of the business.

Revenue

Number of units sold × Price of each unit.

Total Variable Costs

Variable Cost per unit × Number of units.

Total Fixed Costs

Sum of all fixed costs added together.

Total Costs

Total variable costs + Total fixed costs.

External Growth

Occurs when a business gets bigger by joining or buying another business.

Merger

Two firms join together & have equal ownership.

Takeover

One firm takes over another firm & has the ownership of that business.

Economies of Scale

When a business unit cost of production falls as its output rises & the business expands.

Diseconomies of Scale

Difficulties of managing big businesses.

Unit Cost

Total Costs ÷ Output

M - Commerce

Buying & selling goods through wireless handheld devices

Chip & Pin

Payments are not more secure with this method compared to just signing to authorise a payment

Social Media

Methods of online communication such as websites & apps.

Digital technology

Where businesses use computer based tools, systems, devices and resources to generate, store or process data.

Digital communication

It is in widespread use throughout the world, through the use of devices such as smartphones, tablets, desktops and videoconferencing.

Ethics

Doing the right thing, refers to whether a business decision is thought to be morally right or wrong

Interest Rate

Is the price or cost of borrowing money

Interest

An amount of money which has to be paid on borrowed money

APR

Annual Percentage Rate

Exchange Rate

How much one currency is worth compared to another currency

SPICED

Strong Pound Import Cheap Export Dear

WPIDEC

Weak Pound Import Dear Export Cheap

Tax

A financial charge made by a government on individuals, consumers and businesses

Income Tax

Charged on income, such as wages that have been earned

Corporation Tax

Charge on a company's profits

National Insurance Contributions (NICs)

Charge to cover health care, state pensions and employment

Value Added Tax (VAT)

Charge on sales of goods and services based on the value of the item sold

Council Tax

Charge on property by local councils based on the property's value and number of people in the household

Inflation

A general and sustained increase in price over time

Unemployment

When someone who is actively seeking work but is not employed

Income elastic products

Are those whose sales are sensitive to change in consumer incomes.

Income inelastic products

Are relatively unaffected by changes in consumer incomes, many of these products are essential for consumers.

Legislation

Is a framework of rules controlling the way society is run

National Living Wage

Is an hourly rate which is set by the government

Market

Exists where there are buyers & sellers

Competition

Exists when more than one business is attempting to attract the same customer

Production

Process of changing input such as labour services into output of goods & services that can be sold

Input

Raw Materials

Output

Finished goods & services

Job Production

A product is supplied to meet the exact requirements of a customer

Efficient

Peak level of performance that uses the least amount of input to achieve the highest amount of output.

Lean Production

An approach to production that aims to minimise waste