BUSINESS A LEVEL THEME 1 key terms

A-level Business EDEXCEL Theme 1: Marketing and people

Entrepreneur

A person who sets up a business, taking on the financial risk. They organise a business venture by combining the other factors of production, such as land, labour and capital

Entrepreneurship

The activity of setting up a business, taking on the risks, normally in hope of making a profit

Resilience

The ability to recover from difficulties and try again

Risk

Something an entrepreneur can essentially plan for. Probabilities of outcomes are known or at least understood or considered

Entrepreneurial characteristics

Qualities or traits demonstrated by an individual starting up or running a business of their own

Entrepreneurial motive

Factors that drive a person to start a business

Ethical stance

In support of a moral belief

Home working

Setting up a business from home

Independance

The desire to be one’s own boss

Profit satisficing

Making enough profit to satisfy the needs of the business

Social entrepreneurship

Setting up a business for the intention of social issues

Business objective

A goal/target set by the business in the short/medium term to help achieve its aim/mission

Cost efficiency

Minimising costs/expenses/waste when producing a product or service

Customer satisfaction

The measure of how satisfied a customer is with their purchase

Employee welfare

Facilities and benefits provided by a business to meet the wellbeing of the employee

Profit maximisation

When the difference between sales revenue and costs is at its greatest

Sales maximisation

An attempt to sell as much as possible in a given time period (or to generate as much sales revenue as possible)

Social objectives

A goal to benefit/improve the community

Survival

A short-term business objective that aims to keep the business running

Franchise

Where a business buys the right to trade using the brand/logo/business model of an existing firm in return for a fee/royalty

Franchising

A type of business where a business operator (franchisor) allows others (franchisees) to trade under its name (for a fee)

Lifestyle business

A business set up with the aim of making no more than a set level of income from which to enjoy a particular lifestyle

Partnership

A type of business ownership/organisation owned by two or more people

Private limited company

A small to medium sized business, usually run by the family that owns it. Shares are sold to friends, family and business associates and it has limited liability

Public Limited Company

A business with limited liability whose shares are publicly traded on the stock market

Social Enterprise

A business which has aims/objectives which benefits society and isn’t for profits, it’s profits are reinvested into the business/community

Sole trader

A business owned by one person who has unlimited liability

Stock market flotation

When a business sells shares publicly on the stock exchange for the first time

Opportunity Cost

The next best alternative forgone when making decisions

Trade off

A situation where having more of one thing leads to less of something else

Leader

A person who inspires and motivates others to meet objectives

Demand

The quantity of goods/services that a customer is willing to buy at a given price and a given time

Complementary goods

Products used/consumed together, so they are purchased together (e.g printer + printer ink)

Consumer income

The money earned/received from work/investment

Demographics

The structure/groups of the population such as age, gender and geographical distribution

External shocks

Factors beyond the control of the business

Seasonality

When demand rises or falls at a particular times of year according to seasonal factors

Subsitutes

Goods that can be bought as an alternative to others, but perform the same function (e.g petrol car + electric car)

Demand curve dynamic

Inverse relationship/negative correlation - As one variable increases the other decreases

Supply

The amount that producers are willing and able to produce at a given price/over a given period of time

Equilibrium

The price where supply and demand are equal. Also known as market clearing price

Non-Price Factors

Factors other than the price. E.g Change in consumer incomes, advertising and seasonality

Shortage in markets

Where demand exceeds supply

Luxury

Goods that consumers like to buy if they can afford them. E.g Fashion items

Necessity

Basic good that consumers need to buy e.g. food, electricity and water

Price Elastic

• Quantity demanded is responsive to change in price

• There is a greater change in demand than the change in price

Price Inelastic

• Quantity demanded for the product is less responsive proportionately to a change in price

• There is a greater change in price than the change in demand

Price Elasticity of demand (PED) 

Measures the responsiveness of quantity demanded to a change in price