business studies terms

division of labour

production is divided into separate tasks and each employee does just one of those tasks

de-industrialisation

decline in the importance of secondary, manufacturing industry

horizontal integration

the business integrates with another in the same industry and same stage of production

vertical integration

the business integrates with another in the same industry but different stage of production

backwards vertical integration

towards supplier

forward vertical integration

towards market/customer

conglomerate integration

the business integrates with another in a different industry and different stage of production

business plan

a document containing the business objectives and important details about the operations, finance and owners

entrepreneur advantages

independence

uses own ideas

could be profitable

entrepreneur disadvantages

business could fail

opportunity cost

lack of experience

taylor’s scientific management: advantages

production is more efficient because of more motivation, money

increase productivity

jobs are made into simple steps

taylor’s scientific management: disadvantages

work is boring and repetitive

low quality goods because of fast production

no stable income

hygiene and motivator factors; advantages

clean and safe environment

opportunity for promotion

workers are happy and satisfied

hygiene and motivator factors; disadvantages

more competition among workers

too many policies

conflict may arise

hierarchy

refers to the management levels within an organisation

delegation

giving subordinates the authority to perform particular tasks

delegation advantages

employee’s experience and skill will increase

more promotions

delegation disadvantages

the manager is to blame if a mistake happens or work is not completed

span of control

measures the number of subordinates reporting directly to a manager

narrow span of control

many levels of management

managers are responsible for few employees

wide span of control

few level of managment

managers are responsible for many employees

wide advantages

faster communication and decision making

less expensive

increase worker motivation

wide disadvantages

reduced promotion opportunities

less control over subordinates work

effective communication may be difficult

narrow advantages

effective communication is easier

better control over workers and work

increased promotion opportunities

narrow disadvantages

communication and decision making is slower

more expensive

more supervision reduces worker motivation

autocratic

manager has total control and there is no delegation. communication is one way. this style is used when employees are unskilled or not trusted

autocratic advantages

quick in decision making

manager always feels in control

employees have clear direction

autocratic disadvantages

motivation low as employees don’t feel involved

employees too dependent on manager

undeveloped skills for employees

democratic

manager is good at communicating and willing to delegate. employees are skilled and experienced. final decision made by manager after discussion

democratic advantages

employees are motivated as they are listened to

loyalty increases due to responsibility given to employees

managers feel that decisions are supported by employees

democratic disadvantages

decision making can be slow

problems can occur due to lack of knowledge from employees

conflict if views differ

laissez-faire

managers have little influence in the actions of employees and only involved to resolve disagreements. good for small, highly motivated teams

laissez-faire advantages

high motivation as employees are free to do what they want

all skills used for the benefit of the business

loyalty increases due to responsibility given to employees

laissez-faire disadvantages

no real direction

poor coordination which leads to inefficiency

conflict may arise

motivation

the factor that makes people want to do something for job satisfaction

salary

employees are paid a fixed amount per year, which is usually paid monthly

time rate

employees are paid a set amount for each hour worked

piece rate

employees are paid by the amount of output they produce

fringe benefits

non-financial rewards/incentives given in addition to wages

bonus

employees receive extra money above basic pay if they reach certain performance targets

commission

salesperson are given an incentive to sell more as they receive a percentage of any sales made

profit sharing

additional payments are given based on the level of business profits

share ownership

in limited companies, employees have a chance to buy shares to become part owners in the business, they receive dividends

job enrichment

the employees are given more responsibility or more difficult tasks to do

job satisfaction

enjoyment employees can derive from work if they feel that they have done a good job

job enlargement

tasks of a similar level of difficulty/responsibility are added to a workers job description

dividends

payments made to shareholders from the profits of a company

franchise

a business that uses, under licence, the brand name, logo and trading methods of an existing business. the franchisor sells the licence; the franchisee buys the licence

joint venture

two or more businesses start a new project together sharing capital, risks and profits

public corporation

a business in the public sector, that is owner and controlled by the government

business objectives

the aims or targets that a business works towards

profit

total income of a business minus total costs

market share

the proportion of total market sales held by one brand or business

market share formula

sales of business/total market sales × 100

social enterprise

an organisation with profit, environmental and social objectives

stakeholders

any person or group with a direct interest in the performance and activities of business

organisational structure

the levels of management and divisions of responsibility in an organisation

chain of command

the route taken by instructions passed down from senior management

level of hierarchy

a level of management where people have the same level of responsibility

line managers

have direct responsibility over people below them in the hierarchy of an organisation

staff managers

specialists who provide support, information and assistance to the managers

trade union

a group of workers who join together to protect their interests

recruitment

identifying need for new employees and encouraging people to apply for a vacancy

job description

responsibilities and duties to be carried out by job holder

on the job training

training at the place of work, watching and being instructed by experienced workers

off the job training

training away from the place of work. e.g at college, being instructed by specialists or trainers

induction training

training for new employees explaining the business structure, activities and procedures

redundancy

employees are no longer required

dismissal

an employee’s employment contract is terminated and they must leave the business

communication

sending a message from sender to receiver who understands it

message

information or instructions sent from sender and receivers

internal communication

communication between members of the same organisation

external communication

communication between one organisation and another organisation

sender

the person sending the message

receiver

the person who receives the message

feedback

reply from receiver to sender to confirm message received/understood

method of communication

how the message is communicated

one-way communication

message is sent without receiver required or expected to give feedback

two-way communication

gives feedback to a received message and there may be discussion about it

formal communication

messages sent through established channels

communication barriers

factors that stop effective communication

marketing

anticipating the needs and wants of targeted customers and managing the process through which these needs and wants are satisfied

role of marketing

* identifying and satisfying customer needs
* maintaining customer loyalty
* building customer relationships
* gain information on customers
* anticipate changes in customer needs

market

a place where buyers and sellers come together to buy and sell goods and services

niche market

a small and specific part of a larger market

mass market

a market for products that are often standardised and sold in large quantities

advantages of niche marketing

Less competition, Increased customer loyalty, Cost-effective marketing, Enhanced product development, Higher profit margins

niche ad - less competition

specialised products helps the business stand out from other firms

niche ad - increased customer loyalty

Build strong relationships and encourage repeat business.

niche ad - cost effective marketing

Optimize budget by focusing on a defined audience.

niche ad - enhanced product development

Understand and meet specific market needs.

niche ad - high profit margins

Customers willing to pay more for specialized products.

disadvantages of niche marketing

Limited customer base, Dependency on niche trends, High unit costs

niche dis - Limited customer base

Smaller pool of potential customers, limiting growth opportunities.

niche dis - Dependency on niche trends

Niche markets are driven by specific trends, leaving businesses vulnerable to quick changes.

niche dis - High unit costs

Small size of the market means that economies of scale are unlikely to be achieved.

Disadvantages of Mass Market

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Intense competition, Limited customization, Less choice, Reduced profit margins

mass dis - intense competition

Challenging to differentiate products and maintain market share.

mass dis - limited customisation

Lack of personalised product options may not appeal to customers seeking unique products

mass dis - less choice

Lack of diversity and limited choices for consumers because of standardised production