National 5 Business Management

Business

An organisation that provides goods and services

Needs

Basic requirements for survival -- the goods and services a person must have (food, water, etc)

Wants

Goods that are purchased to add comfort or pleasure to life

Durable Good

Items with lasting value, the purchase of which is considered a form of savings

Non-Durable Good

goods that last a short period of time, such as food, light bulbs, and sneakers

Service

intangible things of value (haircuts, maid service, laundry, education, etc.)

Land

Any natural resource provided by nature and used in the production process

Labour

productive work (especially physical work done for wages)

Capital

Man made resources used to make a product

Enterprise

Combining the Factors of Production

Factors of Production

Land, Labour, Capital and Enterprise

Added Value

The increase in worth of a product or service as a result of a particular activity.

Primary Sector

The part of the economy that produces raw materials; examples include agriculture, fishing, mining, and forestry.

Secondary Sector

The portion of the economy concerned with manufacturing useful products through processing, transforming, and assembling raw materials.

Tertiary Sector

the part of the economy that involves services rather than goods

Sectors of Industry

Primary, Secondary & Tertiary

Sole Trader

a business owned by a single person

Partnership

A business in which two or more persons combine their assets and skills

Private Limited Company

A business organization owned by shareholders with limited liability but whose shares cannot be bought or sold to the general public.

Public Limited Company

a business with limited liability whose shares are available to the general public to buy on the stock market

Private Sector

Comprises businesses owned and controlled by individuals or groups of individuals

Public Sector

Comprises organisations accountable to and controlled by central or local government (the state)

Third Sector

The Not For Profit Sector

Dividend

A payment from profits by a company's Board of Director's to shareholders.

Unlimited Liability

The owner is personally and fully responsible for all losses and debts of the business

Social Enterprise

A business that is set up to help society rather than to make a profit.

Customer Satisfaction

the extent to which a product's perceived performance matches a buyer's expectations

After Sales Service

providing support for a product post purchase

Social Responsibility

An organization's aim to have a positive impact on society.

PESTEC

Political, Economic, Social, Technological, Environmental, Competitive

Recession

A slowdown in a nation's economy

Unemployment

Measures the number of people who are able to work, but do not have a job during a period of time.

Inflation

A rise in the general level of prices in an economy.

Legislation

A law or set of laws made by a government

Stakeholder

A person with a key interest in the success of a business

Customer

People who buy the product/service

Owner

Person who controls the company

Manager

Person who makes decisions for the company

Employees

People who work for the company

Suppliers

Companies that provide material, human, financial, and informational resources to other companies

Market

A place where buyers and sellers meet

Market Segmentation

Dividing a market into groups of similar customers

Marketing Mix

The 4 Ps

Product

The item made by the business and sold to customers

Price

How much you charge for your product

Place

Where the product is sold

Promotion

How customers are made aware of the product

Prototype

A working model of the test product

Product Life Cycle

Five stages that product goes through over its life: development, introduction, growth, maturity, and decline.

Branding

A firm uses a name, phrase, design, symbols, to distinguish itself from competitors.

Premium Pricing

Setting a high price for a quality product

Value Pricing

A low cost pricing strategy

Promotional Pricing

Temporarily pricing products below the list price, and sometimes even below cost, to increase short-run sales

Cost plus pricing

Adding a mark-up percentage to costs & expenses to determine selling price

Destroyer Pricing

Charging a deliberately low price to try to undermine competitors and put them out of business

Demand Oriented Pricing

Charging customers different prices for the same product or service depending on demand

Psychological Pricing

Setting prices that take account of customers' perception of value of the product

Warehouse

a storehouse for goods and merchandise

Advertising

A paid form of communication sent out by a business about a product or service.

Public Relations

any activity designed to create a favourable image of a business, its products, or its policies

Sales Promotion

Short-term incentives to encourage the purchase or sale of a product or service

Merchandising

Using point of sale displays to attract customers into the store

Sponsorship

When a company pays money to have their name or logo used in association with an event or an activity

Celebrity Endorsement

use of famous people to promote a product

Trade Fair

an event at which many different companies show and sell their products

Market Research

The activity of gathering information about consumers' needs and preferences.

Field Research

Data collected first hand

Desk Research

Data collected second hand

Questionnaire

A list of questions, usually printed, submitted for replies that can be analysed for information

Focus Group

A small group of individuals who are led in discussion by a facilitator in order to gather opinions on an issue

Hall Test

sampling products and offering feedback

IPO

Input Process Output

Stock

A supply of something available for future use.

Job Production

The manufacture of one-off goods tailor made to meet the specifications of the customer.

Batch Production

A production method that produces goods in groups

Flow Production

large quantities of a product are produced in a continuous process. Also called mass production because of the large quantity of a standardised product that is produced

Labour Intensive

Using a high proportion of employee effort rather than machinery in the production process.

Capital Intensive

Using a high proportion of machinery rather than employee effort in the production process

Quality

Consistently producing what the customer wants while reducing errors before and after delivery.

Quality Control

Checking the product at the end of production

Quality Assurance

Checking the product at each stage of production

Quality Circle

Voluntary groups of people drawn from various production teams who make suggestions about how to improve the product

Benchmarking

When a firm emulate the leading product in the field and try to improve upon it

Total Quality Management

Aims to have 100% customer satisfaction and aims for zero defects. Every employee is treated like a customer.

Recycling

Collecting and reprocessing a resource or product to make into new products.

Recruitment

Process of encouraging people to apply for a job vacancy

Selection

Process of choosing the best person for a job

Job Analysis

Looking at the tasks and duties in a position to see what it consists of

Job Description

A written statement listing duties and responsibilities of a specific role

Person Specification

Document which outlines the requirements, qualifications and expertise required by the ideal candidate

Leet

creating the shortlist for interview

Assessment Centre

A series of exercises in which management candidates perform realistic management tasks while being observed by appraisers.

Interview

A formal meeting arranged to evaluate an applicant

Induction

Training for new employees

On the job training

Training provided at the employee's place of work

Off the job training

Training provided at college or a training centre

E-Learning

Delivery of formal and informal training and educational materials, processes, and programs via the use of electronic media

E-Commerce

Buying and selling online

Motivation

Encouraging employees to get the best out of them

Fringe Benefits

Any financial extras beyond the regular pay check, such as health insurance, life insurance, paid vacation retirement, and/or company car