Paper 2 OCR Business GCSE

After sales service

Advice / help given to a customer after they have bought a product

As described

Goods must be as businesses described them

Automation

Production using machinery that is controlled by a computer

Average rate of return

A method to measure and compare the profitability of an investment, over the life of the investment

Batch Production

Process where one type of product is made and then production is switched to make a different product

Break even forecast

A prediction about the break-even quantity, based on estimates of future revenues and costs

Break even quantity

"The amount a business must sell to earn enough revenue to cover costs.

Doesn't make a profit or a loss"

Capital

Money or assets such as machines, buildings, vehicles

Cash

Notes and coins BUT also money in bank accounts

Cash flow forecast

A statement showing the expected flow of money in and out of a business over a period of time

Child labour

Use of children, below the legal age for employment to achieve low cost production

Click and collect

Ordering online and collecting in store later

Climate change

The process when average temperatures rise or fall and patterns of weather change

Closing balance

The amount of cash left at the end of the month. (This becomes the opening balance for the next month)

Consumer income

The total amount of income that all the customers in the country receive and which they have available to spend

Consumer Law

Area of law that protects the customers of a business. (Consumer Rights Act 2015)

Crowdfunding

Money raised through an appeal to the public

Customer Engagement

Contact between the business and customer

Customer Service

The area of business that deals with customer enquiries

Customers

Buyers who buy goods and services for the satisfaction or benefit they will get from them. Customers largely buy from retailers

Depreciation

Loss of value of an asset over time

Distribution of income

How the income is shared out amongst different people in the community. It tends to be unequal distribution of income

E-commerce

Bringing together buyer and seller electronically (Selling online)

Economic climate

How well the country is doing in terms of income and employment

Economic growth

A period where GDP is rising, causing income and employment to rise

Economies of scale

By producing on a large scale, the average cost of production falls

Environmentally friendly

Consumers and businesses that act to make production sustainable

Ethical businesses

Businesses that behave in a morally correct way

Ethical marketing

Marketing activities that seek to give customers information to make good choices for themselves

Ethics

About what is morally right or wrong

Expenditure

Money a business pays out

Expenses

The costs of operating a business e.g. wages, advertising

Exports

A product sold from one country to another

Face to face selling

Direct contact between buyer and seller, usually in a shop

Fairtrade

A movement that encourages businesses to pay a fair price to suppliers in developing countries

Finance function

Also known as the finance department. Only found in a larger business

Financial information

Details of profit, loss, cash flow, break even, profit margin and average rate of return. Used to help business decisions

Fit for purpose

Means goods must do what they are meant to

Fixed costs

Costs that stay the same as output changes e.g. rent

Flow Production

The same product is continuously produced on a production line. (Also called Mass Production)

Free trade

Absence of restrictions on trade between countries

Global warming

The rise in average temperatures that scientists say is taking place

Globalisation

The process by which business activity around the world has become increasingly interconnected

Gross Domestic Product

A measure of how much a country produces in a year. It influences the level of income and employment

Gross Profit

"Profit made BEFORE paying day to day expenses

Formula: Sales - cost of sales"

Gross profit margin

"The amount of Gross profit made as a percentage of sales revenue.

Formula: Gross Profit / Sales x 100"

Import

A product bought into the country from another country

Income

Money a business receives

Infrastructure

Roads, rail, ports, and airports for transporting goods and people

Interdependence and location

Businesses may decide to locate based on related factors such as availability of raw materials or labour

Interdependent nature of business

Refers to links between areas of a business that must be considered when making decisions

Interest

The amount of money that has to be paid back on borrowed money

International branding

Creating an image or values for a product that are communicated in countries around the world

International economic climate

What is happening to income and employment in different parts of the world

Job Production

Where products are made individually

Labour

The factor of production that is the workers needed to produce a good or service

Level of employment

The numbers of people in work in the country

Level of income

The average income of people in a country

Level of unemployment

The number of people out of work in a country

Liquidity

The ability of a business to pay short term debts

Loans

Sums of money borrowed for the period of time for which finance is required

Location

The place where a business is sited

Logistics

The management of transportation and storage of goods

Loss

Occurs when costs are greater than revenue

Margin of safety

The amount a business' actual output is greater than its break even output

Multinational companies

Businesses that operate in different countries around the world

Multinational companies (MNC's)

Businesses that operate in different countries around the world

Negative cash flow

When a business has more money flowing out of a business that flowing in. (Also known as a cash flow deficit)

Net cash flow

Total inflow - Total outflow

Net Profit

"Profit made AFTER all the expenses have been paid for

Formula: Gross profit - expenses"

Net profit margin

"The amount of Net profit made as a percentage of sales revenue.

Formula: Net Profit / Sales x 100"

Non-renewable resources

Resources that can only be used once e.g. oil

Opening balance

The amount of cash available at the beginning of the month. (Which would also be the closing balance at the end of the previous month)

Overdraft

An arrangement with a bank that a business can spend more money than it has in its account

Owner's capital

Money from personal savings put into the business by the owner

Pollution

Causes harm to the environment including air, land, water

Positive cash flow

When a business has more money flowing into the business than flowing out

Procurement

The management of purchasing within a business

Product knowledge

Detailed knowledge of the product / service by the staff

Product processes

The 3 methods of production e.g. job / batch / flow

Productivity

Measure of the output of each worker on average

Profit

Revenue - costs

Profitability ratios

Calculations that interpret financial data e.g. gross profit margin and net profit margin

Proximity

Nearness to something e.g. proximity to raw materials

Quality

Is about a product being fit for purpose

Quality (Quality of production)

Is about a product being fit for purpose

Quality assurance

An approach that involves the whole business focusing on quality, therefore preventing problems happening

Quality control

A system for inspecting the quality of goods or services to ensure they are good standard

Quota

A limit in terms of weight or value on the amount of a good or service that can be imported

Raw materials

Materials that are processed to manufacture a product

Recalls

When a fault occurs with a product and the business asks for the product to be brought back to repair or replace it

Recession

A period when GDP is falling, causing income and employment to fall

Recycling

When resources are reused to produce something

Regulations

Rules about the goods and services that can be sold in a country

Renewable resources

Resources that can be used more than once, such as wind or water power, or that can be recreated e.g. crops