Pearson Edexcel Level 3 Advanced GCE in Business

Flashcards for key vocabulary and concepts in the Pearson Edexcel Level 3 Advanced GCE in Business specification.

Mass Markets

A large market with a high volume of sales; products are often standardized and widely available.

Niche Markets

A small, specialized market with a unique customer base and specific product or service requirements.

Dynamic Markets

Markets that are constantly changing due to factors like technology, consumer preferences, and competition.

Online Retailing

The sale of goods and services through the internet, allowing businesses to reach a global customer base.

Market Research

The systematic gathering, recording, and analysis of data about customers, competitors, and the market.

Product Orientation

A business approach focused primarily on the quality and features of the product itself, rather than customer needs.

Market Orientation

A business approach focused on identifying and satisfying the needs and wants of customers.

Primary Market Research Data

Data collected directly from the source, such as through surveys, interviews, and experiments.

Secondary Market Research Data

Data that already exists, having been collected for another purpose, such as government statistics and industry reports.

Qualitative Data

Descriptive data that captures opinions, attitudes, and experiences, typically gathered through interviews and focus groups.

Quantitative Data

Numerical data that can be statistically analyzed, such as sales figures, market size, and customer demographics.

Market Segmentation

Dividing a broad consumer or business market into sub-groups of consumers based on shared characteristics.

Market Positioning

The process of defining how a product or service is perceived relative to competing products or services in the market.

Market Mapping

A visual tool used to position brands or products based on two key attributes, helping businesses identify gaps in the market.

Competitive Advantage

A unique aspect of a business that allows it to outperform its competitors, such as lower costs, superior quality, or better customer service.

Product Differentiation

Making a product or service different and more attractive than those of competitors.

Adding Value

Enhancing a product or service to make it more appealing to customers, often through branding, features, or service quality.

Price Elasticity of Demand

A measure of how much the quantity demanded of a good responds to a change in the price of that good, calculated as the percentage change in quantity demanded divided by the percentage change in price.

Income Elasticity of Demand

A measure of how much the quantity demanded of a good responds to a change in consumers' income, calculated as the percentage change in quantity demanded divided by the percentage change in income.

Design Mix

The combination of function, aesthetics, and cost in the design of a product or service.

Ethical Sourcing

Ensuring that products are obtained in responsible and sustainable ways, respecting human rights and environmental protection.

Branding

Creating a unique name, symbol, or design for a product or company to distinguish it from competitors.

Promotion

The activities that communicate the merits of a product and persuade target customers to buy it.

Unique Selling Points (USPs)

The specific factors that differentiate a product from its competitors, emphasizing what makes it better.

Pricing Strategies

Methods companies use to price their products or services, including strategies like cost-plus, skimming, penetration, and competitive pricing.

Distribution Channels

The path through which products or services travel from the manufacturer or provider to the end consumer.

Product Life Cycle

The stages a product goes through from when it was first thought of until it finally is removed from the market (introduction, growth, maturity, and decline).

Extension Strategies

Actions companies take to extend the life of a product, such as product modifications, new promotions, or targeting new markets.

Boston Matrix

A tool used to analyze a company's product portfolio based on market growth rate and relative market share (stars, cash cows, question marks, and dogs).

Business to Business (B2B)

Marketing that focuses on sales from one business to another.

Business to Consumer (B2C)

Marketing that focuses on sales from a business directly to consumers.

Approaches to Staffing

Strategies used by organizations to manage their personnel, considering them either as assets or costs.

Flexible Workforce

A workforce that is adaptable and can adjust to changing demands, often involving multi-skilling, part-time work, and outsourcing.

Dismissal

Termination of employment due to misconduct or poor performance.

Redundancy

Termination of employment due to the job no longer being needed, often because of restructuring or downsizing.

Employer/Employee Relations

The interactions and relationships between employers and employees, managed through individual approaches or collective bargaining.

Recruitment and Selection

The process of finding, screening, and hiring suitable candidates for job openings.

Types of Training

Induction, on-the-job, and off-the-job training

Organizational Design

The structure and arrangement of a business, including hierarchy, chain of command, and span of control.

Tall Structure

An organizational structure characterized by many layers of management and a narrow span of control.

Flat Structure

An organizational structure characterized by few layers of management and a wide span of control.

Matrix Structure

An organizational structure in which employees report to multiple managers, often used for project-based work.

Motivation Theories

Taylor (Scientific Management), Mayo (Human relations theory), Maslow (Hierarchy of needs), Herzberg (Two factor theory).

Financial Incentives

Methods of motivation using money e.g. piecework, commission, bonus, profit share, performance-related pay.

Non-Financial Incentives

Methods of motivation that are not money related e.g. delegation, consultation, empowerment, team working , job enrichment, job rotation, job enlargement.

Leadership Styles

Autocratic, paternalistic, democratic, laissez-faire.

Role of an Entrepreneur

Creating and setting up a business, running and expanding/developing a business and Innovation within a business (intrapreneurship).

Intrapreneurship

Innovation within a business.

Barriers to Entrepreneurship

Difficulties entrepreneurs encounter when establishing and growing their business.

Entrepreneurial Motives

Financial motives: profit maximization and profit satisficing. Non-financial motives: ethical stance, social entrepreneurship, independence and home working.

Profit Maximization

To make the most profit possible.

Profit Satisficing

To make enough profit to keep the stakeholders happy.

Social Entrepreneurship

Starting a business with the intention of helping society.

Business Objectives

Survival, profit maximization, sales maximization, market share, cost efficiency, employee welfare, customer satisfaction, social objectives.

Forms of Business

Sole trader, partnership and private limited company, franchising, social enterprise, lifestyle businesses, online businesses, growth to PLC and stock market flotation.

Sole Trader

A business owned and controlled by one person.

Partnership

A business owned and controlled by two or more people.

Private Limited Company

A business whose shares can only be sold if all the shareholders agree.

Franchising

A business model where a company (franchisor) licenses its brand and operating methods to another party (franchisee).

PLC

Public Limited Company; A company that can sell shares to the public.

Opportunity Cost

The value of the next best alternative foregone when making a decision.

Internal Finance

Owner’s capital: personal savings, retained profit and sale of assets.

External Finance

Sources of finance: family and friends, banks, peer-to-peer funding, business angels, crowd funding and other businesses.
Methods of finance: loans, share capital, venture capital, overdrafts, leasing, trade credit and grants.

Limited Liability

The owners of a company are only liable for the money they have invested in the business.

Unlimited Liability

The owners of a business are personally liable for all the business debts.

Business Plan

A document setting out the business idea, its goals and objectives, and other details on how the business is going to operate (including marketing, finances and operations.

Sales Forecasting

The process of predicting future sales, based on past sales data and market trends.

Sales Volume

The number of units sold.

Sales Revenue

The money received from sales; Volume x Selling Price.

Fixed Costs

Costs that do not change with the level of output.

Variable Costs

Costs that change with the level of output.

Contribution

Selling price – variable cost per unit.

Break-Even Point

Total fixed costs + total variable costs = total revenue. Using contribution to calculate the break-even point.

Margin of Safety

The difference between the actual output and the break-even output.

Budgets

An estimation of revenue and expenses for a specific period of time.

Variance Analysis

The process of calculating any differences between the budgeted figure and the actual figure.

Gross Profit

Revenue – Cost of sales.

Operating Profit

Gross Profit – Other operating expenses.

Profit for the year (net profit)

Operating profit – Interest.

Gross Profit Margin

Gross Profit x 100% / Revenue.

Operating Profit Margin

Operating profit x 100% / Revenue.

Profit for the year (net profit) margin

Profit for the year (net profit) x 100% / Revenue.

Liquidity

The ability of a business to pay its debts.

Current Ratio

Current assets / Current liabilities.

Acid test ratio (liquid capital ratio)

Current assets – Inventory / Current liabilities.

Internal and external causes of business failure

Financial factors and non-financial factors.

Production

The process of converting inputs into outputs.

Productivity

Output per unit of input per time period: - factors influencing productivity, link between productivity and competitiveness.

Efficiency

Production at minimum average cost: - factors influencing efficiency, distinction between labour and capital intensive production.

Capacity Utilisation

Current output (divided by) maximum possible output (x 100). Implications of under- and over-utilisation of capacity and ways of improving capacity utilisation.

Stock control

Interpretation of stock control diagram, buffer stocks, Implications of poor stock control, Just in time (JIT) management of stock and waste minimization.

Quality management

Quality control, assurance, circles, Total Quality Management (TQM) and Continuous improvement (Kaizen).

Economic influences

The effect on businesses of changes in: - inflation (the rate of inflation, the Consumer Prices Index), exchange rates (appreciation, depreciation), interest rates,

Growing economies

Growth rate of the UK economy compared to emerging economies. Growing economic power of countries within Asia, Africa and other parts of the world

International trade and business growth

Exports and imports, The link between business specialisation and competitive advantage and Foreign direct investment (FDI) and link to business growth

Factors contributing to increased globalisation

Reduction of international trade barriers/trade liberalisation, Political change, Reduced cost of transport and communication, Increased significance of global (transnational) companies

Protectionism

Tariffs , Import quotas and Other trade barriers.

Trading blocs

Expansion of trading blocs: -EU and the single market, ASEAN and NAFTA, Impact on businesses of trading blocs.