Business Studies AS level

Entrepreneur

person who combines all factors of production to start up a new business with the goal to make profit

Customer

an individual consumer or organisation that purchases goods or services from a business

Consumer

an indvidual who purchases goods and services for personal use

Consumer goods

the physical and tangible goods sold to consumers that are not intended for resale

Consumer services

the non-tangible products sold to consumers that are not intended for resale

Factors of production

the resources needed by business to produce goods or services

Capital goods

the physical goods used by industry to aid in the production of other goods and services such as machines and commercial vehicles

Enterprise

the action of showing initiative to take the risk to set up a business

Adding value

increasing the difference between the cost of bought-in inputs (materials) and the selling price of the finished goods

Added value

the difference between the cost of purchasing bought-in inputs (materials) and the selling price of the finished goods

Branding

the process of differentiating a product by developing a symbol, name, image or trademark to it

Opportunity cost

benefit lost by choosing the next best alternative

Multinational business

a business organisation that has its headquarters in one country but operating branches and factories in other countries

Intrapreneur

a business employee who takes direct responsibility for turning and idea into a profitable new product or business venture

Business plan

a written document that describes business, its objectives, its strategies, the market it is in and its financial forecasts

Private limited company

a business that is owned by shareholders who are often members of the same family. This company cannot sell shares to the general public

• incorporated business

Initial Public Offering (IPO)

an offer to the public to buy shares in a public limited company

Public Limited Company (PLC)

businesses owned by shareholders but they can sell shares to the public and their shares are tradeable on the stock exchange

• incorporated business

Public sector

firms controlled or managed by the government or local authority

Private sector

business owned and controlled by individuals or group of individuals

Mixed economy

economic resources are owned and controlled by both private and public sectors

Free-market economy

economics resources are owned largely by the private sector with very little state intervention

Command economy

economic resources are owned, planned and controlled by the state

Public corporation

a business enterprise owned and controlled by the state - also known as a nationalised industry

Sole trader

a business in which one person provides the permanent finance and, in return, has full control of the business and is able to keep all of the profits

Unlimited liability

business owners have full legal responsibility for the debts of the business

• owners personal possessions can be taken to pay off debts

Partnership

a business formed by two or more people who share profit, responsibilities and capital investment

Limited liability

liability of shareholder is limited to the amount they invested

Share

a certificate confirming part-ownership of a company and entitling the shareholder owner to dividends and certain shareholder rights

Shareholder

a person or institution owning shares in a limited company

Memorandum of Association

this states the name of the company, the address of the head office through which it can be contacted, the maximum share capital for which the company seeks authorisation and the declared aims of the business

Articles of Association

this document covers the internal workings and control of the business, the names of directors and the procedures to be followed at meetings

Cooperative

a jointly owned business operated by members for their mutual benefit, to produce or distribute goods or services

Franchise

the legal right to use the name, logo and trading systems of an existing successful business

Franchiser

a person or business that sells the right to open stores and sell products or services, using the brand name and brand identity

Franchisee

a person or business that buys the right from the franchiser to operate a franchise

Joint venture

two or more businesses agree to work together on a particular project and create a separate business division to do so

Social enterprise

a business with mainly social objectives that re-invests most of its profits into benefiting society rather than maximisng returns to owners

Revenue

the total value of sales made in a given time period

• = selling price x quantity sold

Capital employed

the total value of all long-term finance invested in the business

Market capitalisation

the total value of a company´s issued shares

Market share

sales of the business as a proportion of total market sales

• = total sales of business/ total sales of industry x 100

Organic growth

expansion of a business by opening new branches, shops or factories (also known as internal growth)

External growth

business expansion by integrating with another business by either merger or takeover

Merger

an agreement by owners and managers of two businesses to bring them together in a new combined businesses. This is often referred to as a friendly merger

Takeover

when a company buys more than 50% of the shares of another company and becomes its controlling owner.

• It can be called an acquisition

Business objective

a measurable target that a business plans to achieve

Corporate social responsibility (CSR)

when businesses consider the interests of society by taking responsibility for the impact of their decisions and activities on customers, employees, communities and the environment

Pressure group

organisations created by people with a common interest or aim, who put pressure on businesses and governments to change policies so that an objective is achieved

Triple bottom line

the three objectives of social enterprises: economic, social and environmental

• economic- make a profit and reinvest into the business with returning some to owners

• social- provide jobs and support to the community

• environmental- manage the business in an environmentally sustainable way

SMART objectives

aims that are specific, measurable, achievable, realistic and time limited

Business aim

a lon-term goal that a business hopes to achieve

Mission statement

a brief statement of a businesse´s core aims, phrased in a way to motivate employees and to stimulate interest from outside groups

Annual company report

a document that gives details of a company´s activities over the year including its financial accounts

Business strategy

a long-term plan of action for a business, designed to achieve a particular objective

Tactic

a short-term action as part of an overall strategy

Target

a short-term goal that must be reached before an overall objective can be achieved

Budget

a detailed financial plan for the future

Ethical code (code of conduct)

a document detailing a company´s rules and guidelines on staff behaviour that must be followed by all employees

Stakeholders

individuals or groups who can be affected by, and therefore have an interest in, any action taken by an organisation

External stakeholders

individuals or groups who are separate from the business but are affected by or interested in its operations/activities

Internal stakeholders

individuals or groups who work within the business, or own it, and are affected by the operations/activities of the business

Trade union

an organisation formed by workers with the objective of improving the pay and working conditions of its members and providing them with support and legal services

Stakeholder concept

the view that businesses and their managers have responsibilities to a wide range of groups, not just shareholders

Motivation

the internal and external factors that stimulate the desire in workers to be continually interested in, and committed to doing a job well

Piece rate

payment to a worker for each unit produced

Self-actualisation

a sense of self-fulfilment reached by feeling enriched and developed by what one has learned and achieved

Motivators (motivating factors)

aspects of a worker´s job that can lead to positive job satisfaction, such as achievement, recognition, meaningful and intersting work, responsibility, and advancement at work

Hygiene factors

aspects of a worker´s job that have the potential to cause dissatisfaction, such as pay, working conditions, status and over-supervision by managers

Job enrichment

aims to use the full capabilities of workers by giving them the opportunity to do more challenging and fulfilling work

Time-based wage rate

payment to a worker made for each period of time worked (e.g. one hour)

Salary

annual income that is usually paid on a monthly basis

Commission

a payment to a salesperson for each sale made

Bonus

a payment made in addition to the contracted wage or salary

Performance-related pay

a bonus scheme to reward employees for above-average work performance

Profit-sharing

a bonus for employees based on the profits of the business, usually paid as a proportion of basic salary

Share-ownership scheme

a scheme that gives employees shares in the company they work for or allows them to buy those shares at a discount

Fringe benefits

benefits given, separate from pay by an employer to some or all employees

Job rotation

a scheme that allows employees to switch from one job to another

Job enlargement

an attempt to increase the scope of a job by broadening the tasks undertaken

Job redesign

the restructuring of a job to make the work more interesting, satisfying and challenging

Development

the gaining of new or advanced skills and knowledge as well as opportunities to apply what is gained

Employee promotion

the advancement of an employee within a business to a higher level of responsibility and status

Employee status

the level of recognition offered by an employer to a worker in therms of pay, level of responsibility and benefits

Employee participation

active encouragement of employees to become involved in decision-making within an organisation

Teamworking

production is organised so that groups of workers undertake complete units of work

Empowerment

the giving of skills, resources, authority and opportunity to employees so that they can take decisions and be accountable for their work

Quality circle (QC)

a voluntary group of workers who meet regularly to discuss, and try to resolve, work related problems and issues

Manager

the person responsible for setting objectives, organising resources and motivating workers so that the objectives of the business are met

Management

the organisation and coordination of activities in order to achieve the defined objectives of the business

Decision-making

is a key management role

Autocratic management

a management style where one manager takes all the decisions with very little, if any input from others

Democratic management

a management style that encourages the active participation of workers in taking decisions

Paternalistic management

a management style based on the view that the manager is in a better positions than the workers to know what is better for an organisation

Laisses-faire management

a management style that leaves much of the business decision-making of the workforce

Theory X

the view that some managers believe that the employees are lazy, fear-motivated and in need of constant direction

Theory Y

that view that some managers believe employees are internally motivated, enjoy their work and are prepared to take on additional responsibilities

Emotional intelligence (EI)

the ability to understand one´s own emotions, and those of others, to achieve better business performance

Emotional quotient (EQ)

the level of a person´s emotional intelligence as recorded in a standardised test

Human resource management (HRM)

the strategic approach to the effective management of an organisation's workers so that they help the business gain a competitive advantage