Paper 2 business

Added value

The difference between the cost of making a product and its selling price

Advertising

Paid promotion used to persuade customers to buy products.

Assets

Items owned by a business that have monetary value.

Automation

The use of machinery or technology to complete tasks previously done by workers.

balance sheet

A financial document showing a business’s assets and liabilities

Batch Production

Producing identical groups of products together.

Chain of Command

The structure showing how authority passes through a business.

Consumer

Person who buys good or service for personal use

Customer service

Activities designed to satisfy customer needs before, during and after purchase.

Decentralisation

The delegation of decision-making powers to lower levels of management.

Dividend

A share of profit paid to shareholders.

Economies of scale

Cost advantages gained when a business increases production.

Deseconomies of scale

Average costs increasing after a business becomes very big,

External finance

Money raised from outside the business.

Flow production

Continuous, mass production of identical products.

Globalisation

The process of businesses operating and selling in international markets.

HR

The department responsible for managing employees.

Inflation

A general increase in prices over time.

Job Description

A document outlining the duties and responsibilities of a job.

Inventory

Stocks of raw materials, work-in-progress and finished goods.

Just-in-Time (JIT)

A stock control system where materials arrive only when needed.

Labour Turnover

The rate at which employees leave and are replaced.

Liquidity

The ability of a business to pay its short-term debts by converting assets into cash

Market research

The collection and analysis of information about customers and markets.

Primary research

FIrst-hand information being collected directlty

Secondary research

Using existing data from other sources

Outsourcing

Using another business to complete tasks or services.

Productivity

The output produced per worker or per hour worked.

Public Limited Company

A company whose shares can be sold on the stock exchange.

Total quality management:

making employees check and improve the quality of goods at every stage of production.

Return on Capital Employed

A measure of how well a business uses its money to make profit.

Shareholder

Person who owns shares in a company

Stakeholder

Person or group who has any type of interest and/or is affected by the activities of a business

Span of control

The number of employees directly supervised by a manager.

Supply chain

The sequence of businesses involved in producing and distributing a product.

Working capital

The difference between current assets and current liabilities.

Franchise

using another businesses system and brand for a fee

Venture capital

Money from investors in exchange of shares(equity)

Crowdfunding

When a business raises money a large number of people

Social enterprise

Business aiming to make profit but with a environmental/social objective

Trading bloc

Group of countries that agree to reduce/remove trading barriers

Competition pricing

Setting a price based on what competitors charge

Promotional pricing

Temporarily setting a lower price to attract customers and increase sales.

Internal recruitment

Hiring someone from within the business.

External recruitment

Hiring someone from outside the business.

Herzberg’s motivational theory

“Hygiene factors” like pay or working conditions prevent dissatisfaction, but don’t motivate.

Motivators (recognition, carreer progression) increase motivation.

Casual workers

Workers hired for short term or irregular work paid hourly

Interest rates

-Change in borrowing rates

_Change in business investemnt

-Change in consumer spending

boston matrix

High market share high market growth: Stars

High market share low market growth: Cash cow

Low market share high market growth: Question marks

Low market share low market growth: Dog

External communication

External communication refers to all the ways a business or organisation communicates with people outside the company.

Sole trader

Business owned and run by a single person

Labour intensive production

Production that uses more labour (humans) than capital (machines)

Statement of financial position

Assets, liabilities and equity

Comprehensive income statement

Revenue, expenses and profit/loss.

Public corporation

Business owned by a government

Penetration pricing

Setting a low price at launch to attract customers quickly

Price skimming

Setting a high initial price then to maximize profit from customers willing to spend more

Cost plus pricing

setting a price by adding a profit margin to the cost of production

Delegation

giving tasks and authority to employees to complete work on behalf of a manager.

Overdraft

Withdrawing more money than there is in the bank account up to an agreed limit, usually with interest.

Share capital

Money raised by a company by selling shares to investors.

Hierarchial structure

Structure where there are clear levels of authority from top management to lower employees