Business Studies Vocabulary

Flashcards for vocabulary review

Aims

The long-term objective of the business. Should be SMART: Specific, Measurable, Achievable, Realistic, Timed.

Objectives

A short or medium-term target of a business needed to reach its aim.

Stakeholders

Individuals and organizations who are affected by the decisions and actions of a particular business.

Business Enterprise

The formation of a new business or development of a new good or service to be introduced to the market.

Entrepreneur

A person who sets up a business by taking on the financial risks in the hope of making a profit.

Ethical Policy

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

Business Ethics

Involve a business doing what is morally right for its stakeholders.

Animal Rights

Refers to the idea that animals should be treated humanely and protected from exploitation and abuse.

Social Responsibility

An approach to managing business in which the interests of all groups in society are taken into account when making decisions.

Diversification

Allows a business to enter a different market in addition to the one they are already involved in.

Merger

When two or more businesses join together to form a new business.

Takeover (or Acquisition)

When one business gains control of another.

Internal (Organic) Growth

Where the business grows by increasing the size of a business by increasing its sales, revenue, profits and workforce.

Conglomerate Integration

Occurs when a business joins with another in a different type of production process.

Horizontal Integration

The buying or merger of other businesses producing the same or similar products.

Vertical Backwards Integration

Occurs when the suppliers of a business are taken over by that business.

Vertical Forwards Integration

Occurs when a business takes over another business to control the direct distribution of a business’ products.

Internal Economies of Scale

The benefits a business gains as a result of being large.

Franchise

The right given by one business to another to sell goods or services using its name.

Franchisor

A business which allows a franchisee to sell using their processes, experience and name in return for royalties.

Franchisee

A business which pays royalties for the right to sell goods or services using established processes and under the name of another business.

Footfall

The number of people passing close to the business. These are potential customers of that business.

Public Sector

Organizations owned and controlled by the government.

Private Sector

Businesses run by private individuals

Unlimited Liability

Means that the owners of a business are responsible for all of the debts of a business.

Sole Trader

Businesses owned by one person who has unlimited liability.

Deed of Partnership

A legal document which is an agreement between partners that sets out the rules of the partnership

Limited Liability

When the owners of a business are not responsible for the debts of a business.

Dividends

The term for the share of the profits of limited companies and Co-operatives.

Charities

Organizations set up to provide help and raise money for those disadvantaged in society.

Social Enterprise

Businesses which operate for the benefit of the community, or its workers, or as a charity.

Private Limited Companies (LTD)

Businesses which are owned by shareholders who have limited liability. Their shares are not available to others except with the agreement of other shareholders.

Public Limited Companies [Plc]

Businesses which are owned by shareholders who have limited liability. Their shares are available to others by selling to the general public often on the Stock Exchange.

The Business Plan

Helps in decision-making by showing the aims and objectives of a business and the strategies and requirements needed to achieve these.

Turnover (Revenue)

The amount of money taken in by a business when selling a good or a service.

Fixed Costs

Costs which always stay the same no matter how many goods are produced.

Variable Costs

A cost that changes with the number of goods produced / sold / output

Total Costs

Is the full amount of money spent by a business when producing the goods sold in a particular period.

Profit

Is the difference between the total revenue of a business and the total costs of a business, when revenue is greater than cost.

Cash Flow

The money that flows into and out of a business on a day-to-day basis.

Net Cash Flow

Another word for predicted ‘profit’ on a cash flow forecast.

Closing Balance

Cash remaining in a business at the end of a month.

Opening Balance

The cash available to a business at the start of a month, carried over from the closing balance of the previous month.

Cash Flow Forecast

Sets out a business’ expected inflows and outflows of cash over a period of time.

Communication

The exchange of information between two or more people.

Feedback

The response stage of the communication process.

Consumer Laws

Laws that have been introduced to prevent businesses from treating their customers unfairly.

Consumer Protection Act 1987

This law prevents firms from selling dangerous products to consumers.

Unfair Trading Regulations 2008

This law replaced the Trade Descriptions Act. It makes it illegal to give consumers incorrect information on packaging and labels.

Consumer Credit Act 1974

This law stops a business charging very high rates of interest to consumers if they take out a loan when buying expensive products such as cars.

Data Protection Act 1998

This law controls the use of consumers’ information.

Computer Misuse Act 1990

This Act prevents people looking at information stored on computers that they have no right to read.

The Consumer Rights Act 2015

This law provides consumers with clear rights and protection when buying goods and services.

Food and Drugs Act 1984

This law lists those things that can, and cannot, be added to food products.

Food Safety Act 1990

This law makes it illegal to sell food to consumers that is unsafe and may cause illness.

Intellectual Property

Property which cannot be seen or touched but is the result of the creativity of an individual or group.

Labelling of Food Regulations 1970

This law states that packaged food must contain the ingredients listed on the label.

Copyright

This describes the rights that writers and artists have over their works.

Trademarks

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

The Advertising Standards Authority (ASA)

The Advertising Standards Authority (ASA) is a self-regulated organisation that aim to regulate the content of advertisements, sales promotions and direct marketing offered by businesses in the UK to ensure they are obeying the advertising standards code.

Weights and Measures Act 1986

This law states that weights and measures must be stated on packets or containers.

Patents

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

The Economy

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

Unemployment Rate

The number of people who are unemployed as a percentage of those working or looking for work.

Employment Rate

The percentage of people of working age who are in employment.

GIG Economy

Refers to businesses that use mainly temporary workers who do not receive benefits such as guaranteed hours of work or holiday or sick pay.

Consumer Spending

Refers to the value of goods and services bought by consumers over a time period, usually a month or year.

Income Elastic Products

Those products whose sales are sensitive to changes in consumers’ incomes.

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.

Unemployment

Exists when someone is looking for a job, but is unable to find one.

Producers

Suppliers of goods and services.

Consumers

Individuals who buy goods and services from businesses.

Interest Rates

The price of borrowed money, expressed as a percentage rate.

Saving

Income received by consumers or businesses which is not spent.

Inflation

Measures the rate of change of prices over a period of time, often one year.

Taxation

Exists when governments require payments from individuals and businesses based on factors such as their income or spending.

Income Tax

A tax on a person’s income

Direct Taxes

Taxes which are paid on income or profit, for example, income tax.

Indirect Taxes

Taxes paid on spending by individuals and businesses, for example, Value Added Tax (VAT).

Corporation Tax

A tax on company profits

National Insurance

Individuals have to pay these contributions in order to pay for state benefits

VAT (Value Added Tax)

A tax on the purchase of goods and services.

Employment Law

Laws protecting the rights of employees which must be obeyed by the employers.

Protection Against Unfair Dismissal

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

** Health and Safety at Work Act ** Safe Working Conditions

Employers must ensure that they safeguard all their employees’ health, safety and welfare at work.

** National Living Wage ** Right to a Minimum Wage

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.

** The Equality Act 2010 ** No Discrimination in the Workplace

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

Contract of Employment

A legal document stating hours, rate of pay, duties and other conditions under which a person is employed.

External Costs

These arise when a business’ activities result in harmful effects on other people not directly involved in production.

Renewable Energy

Produced using resources which are not finite, such as wind turbines or wave power.

Environment

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

Sustainability

Businesses acting in a responsible manner and to ensure that our environment and resources are available for future generations to enjoy.

Environmental Reports

Publications describing a business’ environmental performance for the business’ stakeholders.

Recycling

The reuse of raw materials used in making products, often for many times.

Environmental Responsibility

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

Sustainable Production

Takes place when producing goods and services does not result in future generations being affected, for example, using up non- renewable resources such as oil.

Tariff

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

Imports

Goods and services that are bought from producers overseas.

Multinational Business

Businesses with their headquarters in one country but which operate in other countries through their offices, factories and shops.

Exports

Goods and services which are produced in one country and sold in another one.