business eduqas

Business

Any unincorporated firm such as a sole trader or partnership.

Company

Any incorporated firm such as a private limited company (Ltd) or public limited company (Plc)

Asset-led Marketing

A business strategy based on the core strengths (core competencies) of the firm. Businesses that adopt this approach use their core assets, such as brand name, to develop and launch new products.

Market Orientation

An outward-looking approach basing product decisions on consumer demand, as established by market research

Product Orientation

A philosophy that focuses on the internal capabilities of the firm rather than on the desires and needs of the marketplace

Marketing

The action or business of promoting and selling products or services, including market research and advertising to satisfy customers.

Unique Selling Point (USP)

Something that makes a product stand out from its competitors

Product

A thing that you can touch (tangible) that you can offer for sale to your customers.

Differentiation

The extent to which consumers view your product or service as being different from those of rivals.

Product Portfolio

The range of products or brands provided by a business

Brand

A name, term, sign, symbol, or design, or a combination of these, that identifies the products or services of a seller and differentiates them from those of competitors

The 4P's

Product, Price, Place, Promotion

Product Life Cycle

The stages through which goods and services move from the time they are introduced on the market until they are taken off the market.

Extension Strategy

Method used to increase the life of a product and prevent it falling into decline

Cash Flow

The inflows and outflows of cash through a business

Introduction Stage

The initial stage of a product's life cycle; its first appearance in the marketplace, when sales start at zero and profits are negative

Growth Stage

The second stage of the product life cycle when sales typically grow at an increasing rate, many competitors enter the market, large companies may start to acquire small pioneering firms, and profits are starting to be made.

Maturity Stage

Stage of the product life cycle when industry sales reach their peak, so firms try to rejuvenate their products by adding new features or repositioning them

Saturation Stage

That stage of the product life cycle where additional growth in the market is very difficult as there are too many competitors.

Decline Stage

Stage of the product life cycle when sales decline and the product might eventually exit the market

The Boston Matrix

A model which analyses a product portfolio according to the growth rate of the whole market and the relative share of a product within that market; a product is placed in one of four categories - star, cash cow, problem child or dog

Dog

In the Boston Matrix this is a product experiencing low market share in a low growth market.

Star

In the Boston Matrix this is a product with a high market share of a high growth market.

Problem Child

In the Boston Matrix this is a product that has a small share of a fast growing market

Cash Cow

In the Boston Matrix, this is a product with a high share of a low growth market which generates high returns to finance other elements of the matrix.

Penetration Pricing

Setting a low initial price on a new product to appeal immediately to the mass market

Price Skimming

A pricing policy whereby a firm charges a high introductory price, often coupled with heavy promotion to attract the so-called 'early adopters'

Cost-Plus Pricing

Adding a standard markup to the cost of the product

Competitive Pricing

When the product is priced in line with or just below competitors' prices to try to capture more of the market.

Psychological Pricing

Pricing goods and services at price points that make the product appear less expensive than it is and give the perception of value e.g. £9.95

Contribution Pricing

The business calculates the variable costs of making or buying a product and then adds a contribution towards its fixed costs.

Pricing Strategy

The pricing policies or methods used by a business when deciding what to charge for its products

Promotion

Communication by marketers that informs, persuades, and reminds potential buyers of a product in order to influence an opinion or elicit a response

Above the Line Promotion

The use of mass media channels in order to increase consumer awareness of a product or service e.g. television.

Below the Line Promotion

A promotional effort that includes in-store promotions, coupons, dealer discounts, and product placement.

Distribution Channel

The means by which you deliver the product or service to the customer

Wholesaler

A type of business that buys goods in large amounts and resells them to other businesses in smaller lots.

Retailer

A distribution channel that sells to the end consumer

Manufacturer

A person or company that makes goods for sale

Direct Distribution Channel

A manufacturer sells the product directly to the customer

Traditional Distribution Channel

Manufacturer to wholesaler to retailer to consumer

Global Marketing

A marketing strategy that consciously addresses customers, markets, and competition throughout the world.

Global Brand

A brand marketed under the same name in multiple countries

Digital Media

Electronic devices and media platforms such as computers, cell phones, social networking sites, and the Internet, that allow users to communicate, and interact with one another.

Social Media

Electronic media that allows people with similar interests to participate in a social network

E-tailing

Online retailing that involves retailers selling products over the Internet to customers.

M-Commerce

The use of a mobile device for the purpose of buying or selling goods or services

The Marketing Mix

The set of tactical marketing tools - product, price, place, and promotion - that the firm blends to produce the response it wants in the target market

Budget

A forward financial plan of the income and expenditure for a business over a specified period of time.

Owner's Capital

Money put into the business by the owner

Trade Credit

The practice of buying goods and services now and paying for them later but this usually incurs an interest charge.

Venture Capital

Money provided by large investors to finance new products and new businesses that have a good chance to be very profitable

Share Capital

Money raised from the sale of shares of a limited company

Leasing

Obtaining the use of equipment or vehicles and paying a rental or leasing charge over a fixed period. this avoids the need for the business to raise long-term capital to buy the asset. Ownership remains with the leasing company.

Debt Factoring

A financial service whereby a factor (such as a bank) collects debts on behalf of other businesses, in return for a fee.

Loan

An amount of money given to the borrower for a set period of time. After the set time has passed, the money must be paid back plus the lending fee, called interest.

Bank Overdraft

The bank allows a business or individual to overdraw their account up to an agreed limit for a specified time, to help overcome a temporary cash shortfall. Interest is charged daily on the amount overdrawn.

Retained Profit

Profit which is kept back in the business and used to pay for investment in the business.

Sale of Assets

A method of raising short term finance by disposing of business assets in return for cash

Cash Flow Forecast

Predicts the cash inflows and outflows in future periods, usually months or quarters.

Cash Deficit

A situation where a business has more cash flowing out than flowing in.

Cash Surplus

When estimated income is greater than estimated expenses.

Income Statement

A financial statement that reports a company's revenues and expenses and resulting net income or net loss for a specific period of time.

Gross Profit

Net sales - cost of goods sold

Net Profit

Gross Profit - Expenses

Cost of Goods Sold

the amount of money a firm spent to buy or produce the products it sold during the period

Gross Profit Margin

Gross profit/sales revenue x 100

Net Profit Margin

Net profit/sales revenue x 100

Profitability Ratios

These measure the income and the operating success of a company for a given period of time

Flexible Working

Working arrangements that allow employees some flexibility in the hours and time that they work.

Job Sharing

An arrangement whereby two part-time employees share one full-time job

Temporary Staff

Workers employed for a fixed period of time after which the employment contract may not be renewed

Hot-Desking

Sharing desks or workstations between workers as a way of saving space and resources

Part-Time Work

Permanent employment in which individuals work less than a standard work week of 40 hours

Zero-hours contract

No minimum hours of work are offered and workers are only called in and paid when work is available

Home Working

Working at home, while communicating with your office by telephone, computer or other mobile device.

Multi-Skilling

Where workers are trained in more than one skill which enables them to do a range of jobs.

Workforce Planning

The process of predicting an organisation's future labour needs and the availability and skills of current employees and external hires to meet those employment needs and execute the organisation's business strategy

Recruitment

The process through which the organisation seeks applicants for potential employment

On the Job Training

Employee training at the place of work while he or she is doing the actual job.

Off the Job Training

Training that takes place away from the work area e.g. at a local college.

External Recruitment

The process of seeking new employees from outside the firm which brings in new skills and experiences.

Internal Recruitment

Appointing workers from inside the business

Job Analysis

The process of getting detailed information about jobs

Job Description

A written description of the basic tasks, duties, and responsibilities required of an employee holding a particular job

Person Specification

A detailed list of the qualities, skills and qualifications that a successful applicant will need to have. Often categorised as being desirable and essential.

Interview

A face-to-face or telephone questioning of a respondent to obtain desired information.

Work Trial

Giving an opportunity for a potential candidate to undertake the role on a trial basis to see how they fit in with the company and to assess their competency to undertake the job successfully.

Telephone Interview

Telephone conversation between an interviewer and a respondent

Staff Appraisal

A meeting in which a member of staff discusses with their manager how well they have been doing their job. It provides a means of assessing their performance and future training needs.

360-degree feedback

A performance appraisal process in which feedback is obtained from the boss, subordinates, peers and coworkers, and the employees themselves.

Peer Assessment

Assessment by co-workers of their performance in the workplace.

Induction Training

Training aimed at introducing new employees to a business and its procedures

Apprenticeships

These involve a combination of paid on-the-job training and classroom instruction.

Workforce Performance

Methods of measuring the effectiveness of employees including labour productivity, staff turnover and absenteeism

Labour Productivity

Output per time period / number of employees

Absenteeism

The number of working days lost as a result of an employee's deliberate or habitual absence from work

Labour Turnover

A measure of how many people leave a business over a given period of time. It is usually expressed as a percentage of the total labour force

Organisational Design

The framework that provides a business with a structure to achieve its objectives

Authority

The power or right to give orders, make decisions, and enforce obedience.