Business Studies - Key terms

Key terms for business studies

What is business ethics

Business ethics refers to whether a business decision is thought to be morally right or wrong

What is an ethical decision

An ethical decision is made on the basis of what is judged to be morally right

What is a supplier

A supplier is a business that sells goods or services to other organisations

What are animal rights

Animal rights refers to the idea that animals should be treated humanely and protected from exploitation and abuse

What is social responsibility

Social responsibility is an approach to managing businesses in which the interests of all groups in society are taken into account when making decisions

What are fair trade products

Fair trade products are those for which customers pay higher prices with the aim of improving the living standards of people in poorer countries

What is an ethical policy

An ethical policy sets out the actions that a business will take to ensure that its decisions and actions are ethical

What is motivation

Motivation is the range of factors that influence people to behave in certain ways

What is the environment

The environment is the natural world in which we live. It is the landscape and its natural features such as the seas, rivers, forests and mountains

What are external costs

External costs of production arise when a business's activities result in harmful effects on other people not directly involved in production

What are finite resources

Finite resources are those of which only a limited amount exists.

Examples include coal and oil

What is climate change

Climate change is a large-scale, long-term shift in the planet's weather patterns or average temperatures

What is sustainability

Sustainability refers to methods of production which can be continued in the long term without damage to the environment

What is sustainable production

Sustainable production takes place when producing goods and services does not result in future generations being

affected by, for example, using up non-renewable resources such as oil

What is renewable energy

Renewable energy is produced using resources which are not finite, such as wind turbines or wave power

What is environmental responsibility

Environmental

responsibility refers to the taking of decisions by businesses, consumers, governments and other groups with the intention of protecting the environment

What is recycling

Recycling is the reuse of raw materials used in making products, often for many times. Examples include the reuse of glass, paper and metals

What are environmental reports

Environmental reports are publications describing a business's environmental performance for the business's stakeholders

What is the economic climate

The economic climate describes the state of key factors within a country such as the level of goods and services produced and the number of jobs available

What is the economy made up of

The economy is made up of millions of individual consumers, many thousands of businesses and governments. All take decisions on what to buy and produce

What are consumers

Consumers are individuals who buy goods and services from businesses

What is unemployment

Unemployment exists when someone is looking for a job, but is unable to find one

What is consumer spending

Consumer spending refers to the value of goods and services bought by consumers over a time period,

usually a month or a year

What are income elastic products

Income elastic products are those whose sales are sensitive to changes in consumers incomes

What are interest rates

Interest rates are the price of borrowed money, expressed as a percentage rate

What is saving

Saving is income received by consumers or businesses which is not spent

What is inflation

Inflation measures the rate of change of prices over a period of time, often one year

What is taxation

Taxation exists when governments require payments from individuals and businesses based on factors such as their incomes or spending.

Direct taxes are those paid on income or profit - for example, income tax

What are indirect taxes

Indirect taxes are paid on spending by individuals and businesses - for example, value added tax

What is the unemployment rate

The unemployment rate is the number of people who are unemployed as a percentage of those working or looking for work

What is the employment rate

The employment rate is the percentage of people of working age who are in employment

What is international trade

International trade is the selling of goods and services across the world

What are exports

Exports are goods and services which are produced in one country and sold in another one

What are imports

Imports are goods and services that are bought from producers overseas

What is a supply chain

A supply chain is the various processes involved in producing a product and distributing it to buyers

What is the exchange rate

An exchange rate is the price of one currency expressed in terms of another

What is tariff

A tariff is a tax on an import. It is usually expressed as a percentage of the import's price

What is globalisation

Globalisation is the trend for markets to become worldwide in scope

What is multinational company

A multinational company produces goods and services in more than one country. They are also called transnational corporations

What are global markets made up of

Global markets are made up of customers from across the world

What is an inward investment

Inward investment occurs when governments, businesses and individuals invest capital into another country - for example, building new factories or buying companies

What is a brand name

A brand is a name, design, logo or symbol that makes a product different from those produced by rivals

What is government grant

A government grant is a sum of money given to businesses by a government for a specific purpose. These grants are not normally repaid

What is research & development

Research and development is scientific investigation needed to develop new products and production processes

WEhat is the gig economy

The gig economy refers to businesses that use mainly temporary workers who do not receive benefits such as guaranteed hours of work or holiday and sick pay

What does de-skilling mean

De-skilling means that employees carry out tasks that are less complex and less numerous

What is european single market

The European Single Market made the EU one territory without any internal borders or regulations that could prevent the free movement of goods and services

What is legislation

Legislation is a set of rules that governs the way society operates. It is another term for 'laws'

What is the national living wage

The National Living Wage is an hourly rate of pay which is set by the government. All employees above a certain age must receive at least this rate of pay

What is discrimination

Discrimination is treating one person differently from another without having good reasons to do so

What is a contract of employment

A contract of employment is a legal document stating the hours, rates of pay, duties and other conditions under which a person is employed

What is dismissal

Dismissal takes place when an employer ends an employee's contract of employment with the business

What is redundancy

Redundancy occurs when an employee is dismissed because a job no longer exists

What are consumer laws

Consumer laws are laws that have been introduced to prevent businesses from treating their customers unfairly

What is intellectual property

Intellectual property is inventions, works of art, books, as well as names, symbols and images used by businesses

What is a patent

A patent gives its holder the right to be the only user or producer of a new invention for a stated period of time

What is copyright

Copyright describes the rights that writers and artists have over their works

Whaty is atrademark logo

A trademark is a logo or symbol that distinguishes the products or brands of one business from those of others

What are operations

Operations (or production)

management refers to all the activities in managing the

transformation process

What is production

Production is the process of changing inputs such as labour services into goods and services that can be sold

What is job production

Job production is a method of production in which a product is supplied to meet the exact requirements of a customer

What is batch production

Batch production occurs when groups of items move together through different stages of the production process

What is mass flow production

Mass ('flow')

production techniques occur when an item moves continuously from one stage of the process to another. It involves the large scale production of identical items

What is specialisation

Specialisation occurs when individuals focus on a limited number of tasks

What is procurement

Procurement will involve selecting suppliers, establishing the terms of payment and negotiating the contract

What are logistics

Logistics refers to the movement of goods, services, information and money throughout the production process

What is just-in-time

Just-in-time

production holds as little stock as possible, Items are ordered just in time to be used

What is just-in-case

Just-in-case

production holds stocks just in case there is a delay from suppliers or a sudden unexpected increase in demand

What is customer service

Customer service is the part of a business's activities that is concerned with meeting customers' needs as fully as possible

What is after-sales-service

After-sales service is the meeting of

customers needs after they have purchased a product - for example, by repairing or servicing the product

What are premises

Premises are the buildings used by businesses - these may include offices, shops and factories

What is customer loyalty

Customer loyalty means that a business's customers make repeat purchases because they prefer the business's products to those of its rivals

What is an internal source of finance

An internal source of finance is money that is available from within the business, for example, last year's profits

What is interest

Interest is a payment made in order to borrow money. It means a business pays back more than it borrows

What is owners capital

Owners' capital (also called owners' funds) is money put into a business by its owner or owners

What is an asset

An asset is something that is owned by a business. Examples include land, buildings, vehicles and machinery

What is external source of finance

An external source of finance refers to money that comes from outside the business, for example, a loan from a bank

What is collateral

Collateral is an asset that a bank holds as security for the repayment of a loan

What is an overdraft

Overdrafts give entrepreneurs and businesses the right to borrow variable amounts of money up to an agreed limit

What is a venture capital

Venture capitalists are wealthy people or organisations that provide finance to businesses that are thought to be risky

What is trade credit

Trade credit is a period of time which suppliers allow customers before payment for supplies must be made

What is astart up business

A start-up business is one that has been recently established

What is cash flow

Cash flow is the money that flows into and out of a business on a day-to-day basis

What is price

Price is the amount a business asks a customer to pay for a single product

What is a cost

Costs are the spending that is necessary to set up and run a business

What are sales

Sales refers to the number of products sold by a business

What are the two main types of costs

Fixed costs & variable costs

What is a fixed cost

Fixed costs are those costs that do not alter when a business changes its output

What is a variable cost

Variable costs are the costs that vary directly with the business's level of output

What is loss

Loss is the amount by which a business's costs are larger than its revenue from all sales

What is break-even

Break-even is the level of production at which a business's total costs and total revenue from sales are equal

What is abreak-even chart

A break-even chart shows a business's costs and revenues and the level of production needed to break even

What is contribution

Contribution is sales revenue minus variable costs of production

What is contribution per unit

Contribution per unit is sales revenue minus variable costs of production divided by the number of units of output

Where does an investment happen

Investment takes place when a business buys an asset such as a factory in the hope of making a profit from its use

What is the average rate of return

The average rate of return (ARR) compares the average yearly profit from an investment with the cost of the investment and is stated as a percentage

What is a profit & loss account

A profit and loss account is a financial statement showing a business's sales revenue and costs and thus its profit or loss over a period of time. Profit and loss accounts are also called income statements

What doe sa financial ratio do

A financial ratio compares two figures from a business's financial statements

What is gross profit

Gross profit is a

business's sales revenue minus its cost of sales over a period of time, normally a year

What is net profit

Net profit is a business's sales revenue minus its cost of sales, its overheads and other costs over a period of time, normally a year