Business Activity, Marketing, and Finance Flashcards

Vocabulary flashcards covering understanding business activity, marketing, and financial information based on the lecture notes.

Scarcity

The basic economic problem of having unlimited human wants but limited resources to satisfy them

Opportunity Cost

The next best alternative given up when making an economic choice

Factors of Production

The resources needed to produce goods and services: Land (natural resources), Labour (workforce), Capital (machinery/finance), and Enterprise (the entrepreneur)

Added Value

The difference between the selling price of a finished product and the total cost of the raw materials used to make it

Primary Sector

Businesses that extract or harvest natural resources from the earth (e.g., farming, mining)

Secondary Sector

Businesses that manufacture, process, or assemble raw materials into finished goods (e.g., car construction)

Tertiary Sector

Businesses that provide services to consumers or other businesses (e.g., banking, retail)

Deindustrialisation

The decline in the importance of the secondary manufacturing sector of an economy, leading to a rise in the tertiary service sector

Mixed Economy

An economy that features both a private sector (owned by individuals for profit) and a public sector (owned by the government to provide public services)

Entrepreneur

A person who takes the financial risk to set up, organize, and manage a new business venture in search of profit

Business Plan

A written document detailing a business's objectives, strategies, marketing plans, and financial forecasts

Capital Employed

The total value of all long-term finance invested in a business to fund its operations

Market Share

A business's sales revenue expressed as a percentage of the total sales revenue in that entire market

Internal (Organic) Growth

Expanding a business using its own resources, such as opening new branches or launching new products

External Growth

Expanding a business by integrating with another company through a merger or a takeover

Horizontal Integration

The merger or takeover of a business in the same industry at the exact same stage of production (e.g., two bakeries combining)

Forward Vertical Integration

Merging with or taking over a business in the same industry at a later stage of production, closer to the consumer (e.g., a bakery buying a cafe)

Backward Vertical Integration

Merging with or taking over a business in the same industry at an earlier stage of production, closer to raw materials (e.g., a bakery buying a flour mill)

Conglomerate Integration

Merging with or taking over a business in a completely unrelated industry (e.g., a bakery buying a clothing store)

Sole Trader

A business owned and controlled by one single person, who has unlimited liability

Partnership

A business owned jointly by two or more people (usually up to 20) who share profits, responsibilities, and liabilities

Unincorporated Business

A business that does not have a separate legal identity from its owners (e.g., sole traders and partnerships; the owners have unlimited liability)

Incorporated Business

A business that has a separate legal identity from its owners (e.g., Private and Public Limited Companies; shareholders have limited liability)

Private Limited Company (Ltd)

An incorporated business owned by shareholders where shares can only be sold privately to friends or family, not on a public stock exchange

Public Limited Company (Plc)

An incorporated business owned by shareholders where shares can be freely bought and sold by the general public on a stock exchange

Franchise

A business system where an entrepreneur (franchisee) buys the right to use the name, logo, and products of an existing successful business (franchisor)

Joint Venture

An agreement between two or more separate businesses to start a completely new project together, sharing capital, risks, and profits

Business Objective

A specific target or goal that a business sets for itself to achieve within a given timeframe

Social Enterprise

A business operated for social, environmental, or community benefits rather than purely for private profit

Stakeholder

Any individual, group, or organization with a direct interest in or who is affected by the activities and decisions of a business

Stakeholder Conflict

A clash between the different objectives of various stakeholder groups over a business decision (e.g., workers wanting wage rises vs. owners wanting higher profits)

Market Research

The process of gathering, recording, and analyzing data about the target market, competitors, and consumer preferences

Primary (Field) Research

The collection of original, first-hand data tailored specifically to the business's needs (e.g., surveys, focus groups)

Secondary (Desk) Research

The collection of data that already exists and was gathered by someone else for another purpose (e.g., government statistics, internet articles)

Target Market

The specific group of consumers at whom a business aims its products and services

Market Segmentation

Dividing a whole market into distinct groups of consumers who share similar characteristics, needs, or buying habits (e.g., by age, income, or gender)

Mass Market

A very large market where standardized products are sold to a high volume of customers

Niche Market

A small, specialized segment of a much larger market, catering to highly specific customer needs

Product Life Cycle

The stages a product goes through from its initial development to its eventual withdrawal from the market (Introduction, Growth, Maturity, Decline)

Extension Strategies

Marketing techniques used to extend the maturity stage of a product and delay its decline (e.g., rebranding, changing packaging, targeting new markets)

Brand Image

The unique identity, reputation, and personality given to a product or business that distinguishes it from competitors

Cost-Plus Pricing

Adding a specific percentage profit margin (markup) to the total cost of producing a product to determine its selling price

Competitive Pricing

Setting a product's price at or just below the price charged by direct competitors in the market

Penetration Pricing

Setting a low initial price for a new product to attract customers, gain market share, and break into an established market

Price Skimming

Setting a high initial price for a unique, high-quality, or innovative product before competitors enter the market

Promotional Pricing

Reducing the price of a product for a short period of time to boost sales volume or clear out old inventory (e.g., buy-one-get-one-free)

Price Elasticity of Demand (PED)

A measure of how responsive the quantity demanded of a product is to a change in its price

Distribution Channel

The route or chain of intermediaries a product passes through to move from the manufacturer to the final consumer (e.g., Wholesaler, Retailer, Agent)

E-Commerce

The buying and selling of goods and services over the internet

Promotion

The methods used by a business to inform, persuade, or remind consumers about its products and brand image

Internal Finance

Money obtained from within the business's own existing resources (e.g., retained profits, sale of surplus assets)

External Finance

Money obtained from sources outside the business structure (e.g., bank loans, overdrafts, share capital, leasing)

Retained Profit

Profit kept by the business after all taxes and dividends are paid, which is reinvested back into the company

Overdraft

An arrangement with a bank allowing a business to temporarily spend more money than it actually has in its bank account, up to a set limit

Micro-Finance

Financial services (like small loans) provided to poor or low-income individuals and entrepreneurs who cannot get traditional bank loans

Crowdfunding

Raising finance for a new business venture by collecting small contributions from a very large number of people, typically via online platforms

Capital Expenditure

Spending on long-term fixed assets that will last the business for more than one year (e.g., buildings, machinery)

Revenue Expenditure

Spending on day-to-day running costs needed to keep the business operating (e.g., wages, rent, raw materials)

Cash Flow Forecast

A financial document predicting the expected cash inflows (money coming in) and cash outflows (money going out) of a business over a future period

Net Cash Flow

The difference between the total cash inflows and total cash outflows of a business in a given time period

Working Capital

The day-to-day money available to a business to fund its basic operations (calculated as $\text{Current Assets} - \text{Current Liabilities}$)

Income Statement

A financial document summarizing a business's revenues, costs, and profits over a specific trading period (usually one year)

Gross Profit

Revenue minus the direct cost of sales (calculated as $\text{Revenue} - \text{Cost of Sales}$)

Profit (for the year) / Net Profit

Gross profit minus all overhead expenses and taxes

Statement of Financial Position (Balance Sheet)

A financial statement showing the value of a business's assets, liabilities, and owners' equity at a specific point in time

Non-Current (Fixed) Assets

Long-term resources owned by a business that are expected to be used for more than one year (e.g., property, vehicles)

Current Assets

Short-term resources owned by a business that are expected to be turned into cash within one year (e.g., cash, inventory, trade receivables)

Non-Current Liabilities

Long-term debts owed by a business that are due for repayment after more than one year (e.g., bank mortgages)

Current Liabilities

Short-term debts owed by a business that must be repaid within one year (e.g., trade payables, bank overdrafts)

Gross Profit Margin

A profitability ratio that measures gross profit as a percentage of sales revenue (calculated as $\left(\frac{\text{Gross Profit}}{\text{Revenue}}\right) \times 100$)

Profit Margin

A profitability ratio that measures net profit as a percentage of sales revenue (calculated as $\left(\frac{\text{Profit for the year}}{\text{Revenue}}\right) \times 100$)

Return on Capital Employed (ROCE)

A profitability ratio that measures how efficiently a business uses its capital to generate profits (calculated as $\left(\frac{\text{Net Profit}}{\text{Capital Employed}}\right) \times 100$)

Current Ratio

A liquidity ratio that measures a business's ability to pay its short-term debts using its short-term assets (calculated as $\frac{\text{Current Assets}}{\text{Current Liabilities}}$)

Acid Test Ratio

A strict liquidity ratio that measures a business's ability to pay short-term debts without relying on selling inventory (calculated as $\frac{\text{Current Assets} - \text{Inventory}}{\text{Current Liabilities}}$)