Theme 1 + 4 Business -> Paper 1

competitive market

where there are many rivals selling similar products

direct competition

Businesses produce similar products that appeal the same group of customers

indirect competition

Different businesses make or sell products that are not in direct competition but compete for the same customer experience e.g. Netflix and the local cinema

Market growth

An increase in demand/sales for a particular product/service

Market share

The % of the total market a business has in terms of volume or value

Market Orientation

when a business products/ services are based around the needs and wants of the customer.

Market Segmentation

dividing a whole market into particular customer groups that have similar characteristics.

ie - demographic, behavioral, psychological

Primary market research

obtaining data first hand by the business to match the specific needs of the business. AKA - Field Research

Product Orientation

When a business prioritises a products design quality or performance rather than meeting customer preferences to guide production and marketing decisions

Qualitative Research

Market research collected relating to the opinions and beliefs of consumers . Data not presented numerically.

Quantitative research

Numerical information gathered and can be presented and analysed using graphs, charts, table.

secondary market research

Data collected by another business or organisation but used by the business in question. Also known as desk research

Trade publications

Specialist magazines that look at current trends in the business world

Added Value

The increase in value that a business creates when producing a product/service. The difference between the price the customer pays and the total cost of inputs needed to create a product

Competitive advantage

A feature of a business and/or its products that enable it to compete effectively with rival producers/products.

Demand

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

External shocks

Factors beyond the control of a business

Government subsidies

A payment given to producers, usually to encourage production of a certain good

Indirect Taxes

Taxes imposed by the government on spending e.g. VAT and Excise duties. Responsibility for payment lies with the business

Supply

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

Equilibrium price

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

Non price factors

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

Shortage in markets

Where demand exceeds supply

Surplus in markets

Where supply exceeds demand

price elastic

demand is responsive to change in price

PED - Price Elasticity of Demand

% change in quantity demanded / % change in price x 100

Measures the responsiveness of demand to a change in price.

YED - Income elasticity of demand

% change in quantity demanded / % change in income x 100

measures the responsiveness of changes in demand to changes in consumer income

Cost (design mix)

when the business focusses on being economically viable therefore they aim to minimise costs.

design for recycling

Producing products using materials that have been discarded as waste and recycled

Design for reuse

When materials used in the initial product are utilised again in the future beyond their initial intended use.

design for waste minimsation

Reducing the quantity of resources that are discarded in the production process

design mix

The combination of factors needed in designing a product and include Aesthetics, Function, Economic Manufacture

emotional branding

The creation of brands that perhaps appeal to customers' emotional nature, rather than their logical side.

Manufacture/ corporate branding

Brands created by the producers of goods and services eg Kellogg's cornflakes (bear the producers name)

product branding / generic branding

Products that only contain the name of the product category rather than the company or product name e.g. Carrots

public relations

An organisations attempt to communicate with interested parties, usually through unpaid media such as press conferences

collective bargaining

Negotiation of wages/conditions of employment between employee representatives / trade unions and the employer

dismissal

Referred to informally as firing or sacking. It is the termination of employment by an employer against the will of the employee.

multiskilling

The process of increasing the skills of employees

staff as a cost

A cost to businesses in terms of recruitment, training, remuneration, welfare and even severance

staff as an asset

Employers recognise the input of employees as an important business resource. They contribute to the value of output, whether this is through providing added value to a product by supporting the manufacturing process or through effective customer service

trade unions

A workforce representative that act to protect and improve the economic and working conditions for their members.

External recruitment

When the business looks to fill the vacancy from outside of the business.

internal recruitment

Selecting employees who already work within the business to fill job vacancies

Off-the Job Training

When employees are given training away from their normal job environment, often in a classroom

On-the Job Training

Learning/gaining/developing skills whilst at work doing the job

Centralised structure

An organisational structure where business decisions are made at the top of the hierarchy by senior management/or at the headquarters of a business

Decentralised structure

When a business allows branches to take more control/make their own decisions

Matrix Organisational structure

Organises employees from different disciplines or divisions into projects/teams

Commission

A payment to a worker based on a percentage of the value of sales.

Delegation

Authority to pass down from superior to subordinate

Empowerment

Giving official authority to employees to make decisions and to control their own work activities

Hertzberg's Two-Factor Theory

theory of motivation that is split into two categories: Motivators and Hygiene factors

Job Enlargement

Giving an employee more work to do of a similar nature, horizontally extending their work role

Job Enrichment

Giving employees greater responsibility and recognition by vertically extending their work role

Job Rotation

The changing of jobs or tasks

Maslow's Hierarchy of needs

The order of people's needs, starting with basic human needs

Mayo's Human Relations Theory

Emphasises the importance of the ways in which people interact and how they are treated. Motivation can improve when employees feel more involved

Taylor's Scientific Management

Suggested a job could be broken down into constituent parts, so that the most efficient way of working could be calculated. He believes workers are motivated by money

Non-financial techniques

Ways of encouraging employees without the use of monetary rewards e.g Delegation, consultation, empowerment, team working, flexible working, job enrichment, job rotation and job enlargement

Autocratic leadership

A leadership style where the decision-making is best kept with managers, who will direct subordinates with little consultation

democratic leadership

A type of leadership style in which members of the group take a participative role in the decision-making process. Group members are encouraged to share ideas and communication is two ways

Laissez-faire

A leadership style where employees are encouraged to make their own decisions within certain limits

Paternalistic leaders

Leaders that are in control, but take the welfare of employees into account when making decisions

Entrepreneur

Someone who organises a business venture by combining the other factors of production, namely land, labour and capital. They task risks to set up a business in hope of profit/reward

Profit satisficing

Making enough profit to satisfy the needs of the business owner

Social Entrepreneurship

Setting up a business and showing concern for the local area

Social enterprise

A business created to advocate for a social change ie - a business who sells sustainable clothes for those in protest for sustainability

Cost efficiency

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

Profit Maximisation

When the difference between sales revenue and cost 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)

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

stock market floatation

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

Globalisation

A process by which economies and cultures have been drawn deeper together and have become more interconnected through networks of trade and the rapid spread of technology

Trade Barriers

Measures designed to restrict trade

Trading Bloc

A group of countries that trade freely with reduced or no tariffs and quotas on trade between businesses in these countries

International Trade Barriers

A regulation or policy that restricts international trade, for example: tariffs, quotas, customs duties, rules and regulations

BRICS

economies are considered to be: Brail, Russia, India, China and South Africa

ASEAN

The Association of Southeast Asian Nations

NAFTA

The North American Free Trade Area. Replaced by the USMCA.

EU

The European Union, the most powerful trading bloc in the world. A single market that guarantees the free movement of people, goods, services and capital through member states

MINTS

Economies are considered to be Mexico, Indonesia, Nigeria and Turkey

Economic growth

An increase in the GDP - value of output of goods and services produced in an economy over time

Economy

An area/country where goods and services are produced, sold and bought

Emerging economy

The economies of developing countries where there is rapid growth, but also significant risk

Employment patterns

A key indicator of growth looking at unemployment rates, trends, labour costs and productivity as well as education qualifications and potential employees

GDP

Gross Domestic Product. Measures the output of goods and services in an economy over a period of time

HDI

Is a composite index focusing on three basic measures of human development: Life expectancy at birth, mean years of schooling and expected years of schooling and standard of living, measured by gross national income per capita

Exports

Goods or services that a firm produces in its home market, but sells in a foreign market

FDI

Foreign Direct Investment, when a business invests by setting up operations or buying assets in businesses in another country

FDI flows

The transfer of funds by an MNC to purchase and acquire physical assets such as factories or machines

Mitigation

The movement of people from one country to another to seek employment or a better life

Imports

Goods and service that are bought into one country from another

Structural change

Where some businesses grow while others will shrink or close down e.g. those in primary, secondary and tertiary sectors

Trade Liberalisation

The reduction, and sometimes removal, of trade barriers between countries

Transnational companies

Companies that own or control production or service facilities outside the country in which they are based

Domestic subsidies

Financial support given to a domestic producer to help compete with overseas firms

Protectionism

Policies used by a government to protect domestic businesses by making foreign owned products less attractive. Examples include tariffs, quotas, subsidies and regulation

Tariffs

A tax on imports to make them more expensive

Import Quotas

physical limit on the quantity of imports allowed into a country