Edexcel GCSE Business - Theme 2: Building a Business

2.1.1 Internal growth

Where a business grows by selling more products, launching new products or opening more stores.

2.1.1 External growth

Where a business grows by taking over or merging with another business.

2.1.1 Market share

The percentage of total market sales belonging to one business.

2.1.1 Brand awareness

The number of potential consumers who know about a business / product.

2.1.1 Product portfolio

The range of products a business has available for sale.

2.1.1 Research and development

The scientific research and technical development needed to come up with new ideas

2.1.1 Merger

Where two businesses decide to combine to make one new business.

2.1.1 Takeover

Where one business buys more than 50% of the share capital of a business

2.1.2 Aim

An aim is the long term goal for an organisation

2.1.2 Objective

An objective is the medium/long term target that a business sets

2.1.2 SMART

Specific, Measurable, Achievable, Relevant, Timed

2.1.2 Redundancy

Where an employee is released as their job is no longer required.

2.1.2 Dismissal

Where an employee is released due to misconduct

2.1.3 Globalisation

Where different countries trade with each other to buy and sell global goods and services.

2.1.3 Imports

Buying in materials or goods from overseas

2.1.3 Exports

Selling goods or materials to overseas

2.1.3 Exchange rates

The value of one currency in relation to another

2.1.3 MEDCs

More economically developed countries

2.1.3 LEDCs

Less economically developed countries

2.1.3 Tariffs

A tax on imports

2.1.3 Quotas

A limit on imports

2.1.3 Protectionism

Where a country imposes barriers to restrict international trade

2.1.3 Trade liberalisation

Where a country removes barriers to have free trade

2.1.3 Trading bloc

A formal agreement between countries to work together on trade

2.1.4 Opportunity cost

What is sacrificed when a decision is made

2.1.4 Trade off

Where the more you have of one thing, the less you have of another

2.1.4 Ethics

What is "morally right" - The right thing to do.

2.1.4 Sustainability

Whether something will run out in the future. If it is sustainable, it won't.

2.1.4 Pressure groups

kAn independent organisation that aims to influence decisions made by businesses or governments

2.2.1 Marketing

Understanding and communicating with customers so that they will buy from you

2.2.1 The marketing mix

Product, price, promotion and place of the product and key decisions the marketing team must make

2.2.1 The design mix

A model that helps a business decide on the priorities when designing a new product

2.2.1 Product life cycle

The stages a product goes through from its launch to its removal from the market

2.2.1 Extension strategy

Any action a business does to prevent a product entering the decline stage of the product life cycle

2.2.2 Price

The amount of money given in payment for a good or service

2.2.2 Mass market

The largest part of the market where products are sold to wide audiences and are similar

2.2.2 Niche market

The smaller part of the market where products are sold to specific people

2.2.2 Price skimming

A pricing strategy for new, innovative products that involves a high starting price that declines over time

2.2.2 Profit margins

What percentage of a products selling price is made as profit / percentage of a business' revenue is made as profit

2.2.3 Promotional strategy

The plan for how to communicate effectively with customers so that they are aware of products / services

2.2.3 Advertising

The activity of producing advertisements for commercial products or services

2.2.3 Sponsorship

Paying to have your brand or company name attached to an activity or person

2.2.3 Branding

The process of giving a product or service a name/logo that helps recall and recognition

2.2.3 Product trial

Giving customers a free sample of a product

2.2.3 e-newsletter

An online e-mailed update sent to registered customers and potential customers

2.2.3 Viral

The tendency of an image, video, or piece of information to be circulated rapidly and widely from one internet user to another; the quality or fact of being viral.

2.2.4 Distribution

How ownership of a product changes from producer to consumer.

2.2.4 Distribution channel

The process a product goes through to move from producer to consumer.

2.2.4 Direct distribution

Channels that involve no intermediary between producer and consumer

2.2.4 Indirect distribution

Channels that involve an intermediary between producer and consumer, such as a wholesaler or other retailer

2.2.4 e-commerce

Sales made via an online platform

2.2.4 e-tailer

An electronic retailer that sell products from a variety of brands (perhaps including their own)

2.2.4 Retailer

A business that sells to consumers

2.3.1 Operations

The department that provides the customer with the goods or services they have asked for

2.3.1 Method of production

The process by which a product is manufactured

2.3.1 Batch production

Producing a limited number of the same item

2.3.1 Flow production

Continuous production of identical products

2.3.1 Job production

One off production of a one off order

2.3.1 Labour intensive

When an activity is carried out primarily by human labour

2.3.1 Capital intensive

When an activity is carried out primarily by machine

2.3.1 Productivity

The quantity produced by the resources available

2.3.1 Efficiency

Getting the most out of resources

2.3.1 Automation

Production without people being involved

2.3.2 Bar gate stock graph

A diagram showing how stock levels change over time

2.3.2 Lead times

How long it takes between ordering new stock and it arriving

2.3.2 Buffer stock

The minimum stock level held at all times to avoid running out

2.3.2 Just in Time (JIT)

A stock management process where new stock is ordered so that it arrives "just in time" for existing stock to run out

2.3.2 Procurement

The process of finding the right suppliers, ordering the right quantities and checking everything is done on time and to the right standards

2.3.2 Logistics

Ensuring the right supplies will be delivered and ordered on time

2.3.3 Quality control

Measures put in place to check the quality is acceptable at the end of production

2.3.3 Quality assurance

The process of checking quality throughout production

2.3.3 Culture

The consistent attitudes and behaviours of a group

2.3.4 Sales process

The stages involved in the final stage of the distribution process.

2.3.4 After sales process

The support and processes available to consumers after making a purchase

2.4.1 Retained profit

The profit a business makes that is reinvested into improving the business

2.4.1 Gross profit

The difference between a product's selling price and what it cost the business in direct costs to make

2.4.1 Gross profit margin

The percentage of a business' revenue that is gross profit - i.e. how much of their revenue they earn after paying their cost of sales (direct costs)

2.4.1 Net profit

The profit a business makes after all costs are taken away

2.4.1 Net profit margin

The percentage of a business' revenue that is net profit - i.e. how much of their revenue they earn after paying all of their costs

2.4.1 Average rate of return

The percentage of the investment cost that is earned each year as profit

2.4.2 Quantitative data

Numeric data that is measurable and easy to compare

2.4.2 Line graph

Data presented as lines making it easy to identify trends, especially if time is on the x axis.

2.4.2 Bar chart

Data presented so the height of the bar represents the quantity involves, useful for comparisons

2.4.2 Pie chart

Data presented in a circle, where each "slice" represents a proportion of the whole. Good for showing proportions

2.5.1 Organisational chart

A diagram showing the internal structure of an organisation

2.5.1 Span of control

How many people a manager is directly responsible for

2.5.1 Line manager

The person directly above someone in a hierarchy

2.5.1 Chain of command

The line of command / communication between two people in a hierarchy

2.5.1 Hierarchy

A tiered ranking of staff based on responsibility

2.5.1 Tall organisational structure

A structure with many layers of hierarchy and a narrow span of control

2.5.1 Flat organisational structure

A structure with few layers of hierarchy and a wider span of control

2.5.1 Centralisation

Where all decisions are made by the top of the hierarchy

2.5.1 Decentralisation

Where decision making is passed down to managers / staff lower down the hierarchy

2.5.1 Permanent employee

An employee with a continuous contract of employment

2.5.1 Temporary employee

An employee with a contract of employment that has an end date (i.e. after x months or after x project is complete)

2.5.1 Part time worker

Someone who works less hours, usually less than 30 hours per week

2.5.1 Full time worker

Someone who works more hours, usually more than 30-35 hours per week

2.5.1 Freelancer

Someone self-employed who does contracted,on demand work for other businesses

2.5.1 Flexible working hours

Where hours/days worked can vary within an agreed total

2.5.1 Self-employment

Where an employee is not employed by another company, but works for their own company or on their own