A Level Business Studies Revision Flashcards

Vocabulary flashcards covering core business concepts, management theories, human resources, marketing, operations, and finance.

Need

A good or service essential for living.

Want

A good or service which people would like to have but is not essential for living.

The Economic Problem

Unlimited wants but limited resources (means) to produce the goods and services to satisfy those wants, creating scarcity.

Factors of Production

Resources needed to produce goods or services, categorized into Land, Labour, Capital, and Enterprise.

Opportunity Cost

The next best alternative forgone by choosing another item.

Added Value

Refers to the value added through the increased selling price of the product from the original cost price of in-bought materials.

Entrepreneur

An individual who takes full independent risks to build a new business, taking direct responsibility for turning an innovative idea into a profitable venture.

Intrapreneur

An individual who innovates within an existing organization using company resources to turn an innovative idea into a profitable product or project.

Industrialisation

The growth of manufacturing activity in an economy where the relative importance of the secondary sector increases while the primary sector declines.

Deindustrialisation

The decline in the importance of the secondary sector and growth in the tertiary sector in developed economies.

Sole Trader

A business owned and operated by just one person who is the sole proprietor.

Partnership

A group or association of at least two people who agree to own and run a business together, contributing capital and sharing profits and risks.

Private Limited Company

An incorporated business with a separate legal identity where shares can be sold privately to a restricted number of people but cannot be advertised or sold to the general public.

Public Limited Company

An incorporated business structure with limited liability that is able to sell shares publicly to the general public on stock exchanges.

Market Capitalization

A measure of size for public stock exchange listed companies, calculated as $\text{Market Capitalization} = \text{current share price} \times \text{total number of shares issued}$.

Market Share

The proportion of total market sales achieved by a business, calculated as $\text{Market Share} = \frac{\text{total sales of BUSINESS}}{\text{total sales of INDUSTRY}} \times 100$.

Horizontal Integration

When a business takes over or merges with another business in the same industry and at the same stage of production.

Forward Vertical Integration

When a business takes over or merges with another business in the same industry but at the next stage of production.

Backward Vertical Integration

When a business takes over or merges with another business in the same industry but at the previous stage of production.

Conglomerate Integration

When a business takes over or merges with a firm in a completely different industry.

Synergy

The idea that the performance and value of two combined firms will be greater and more profitable than the sum of the separate individual parts.

Triple Bottom Line

The three main objectives of social enterprises: Economic (financial profit/reinvestment), Social (jobs/community support), and Environmental (sustainability).

SMART Objectives

Targets that are Specific, Measurable, Achievable, Realistic/Relevant, and Time Limited.

Mission Statement

A statement attempting to condense the central purpose of a business's existence into a brief written core statement.

Shareholder Concept

The traditional view that a company's main responsibility is to prioritize the interests of its shareholders and maximize shareholder value.

Stakeholder Concept

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

Human Resource Management (HRM)

The strategic recruitment, management, development, and rewarding of employees to help achieve business objectives.

Workforce Planning

Thinking ahead to establish the number of employees and required skill levels needed in the future to meet planned organizational targets.

Labour Turnover

The rate at which employees leave a firm, calculated as $\text{Labour Turnover} = \frac{\text{Number of employees leaving in 1 year}}{\text{average number of people employed}} \times 100$.

Job Description

A detailed document outlining the role, tasks, responsibilities, hierarchical position, and working conditions of a specific job.

Person Specification

A profile outlining the required skills, qualifications, experience, and personal characteristics sought in a candidate for a job vacancy.

Redundancy

Occurs when a worker's job is no longer required by the business due to changes in demand, technological adoption, or cost reduction strategies.

Dismissal

The termination of an employee's employment contract due to unacceptable performance or breaches of organizational rules.

Induction Training

Introductory training given to new employees to familiarize them with colleagues, organizational structure, workplace layout, and safety procedures.

Employee Appraisal

The annual evaluation of an employee's performance against agreed pre-set targets combined with setting future performance goals.

Hawthorne Effect

Elton Mayo's finding that employee motivation improves when management consults workers, gives them control over their work life, and fosters team cohesion.

Economic Man Theory

F.W. Taylor's concept asserting that individuals are motivated solely by monetary rewards and financial incentives.

Piece Rate

A payment system where workers are compensated a fixed rate for every unit of output produced.

Herzberg's Motivators

Factors that directly create job satisfaction according to Herzberg, including achievement, recognition, meaningful work, responsibility, and advancement.

Herzberg's Hygiene Factors

Aspects of the workplace that do not motivate on their own but cause dissatisfaction if absent or inadequate, such as salary, company policy, supervision, and working conditions.

Expectancy Theory

Victor Vroom's theory stating that individual motivation depends on Expectancy (effort leading to performance), Instrumentality (performance leading to reward), and Valence (desirability of the reward).

Theory X

Douglas McGregor's management perspective assuming workers dislike work, lack ambition, avoid responsibility, and require strict control and coercion.

Theory Y

Douglas McGregor's management perspective assuming workers view work as natural, seek responsibility, and possess creativity and self-direction.

Equilibrium Price

The price level in a market at which the quantity demanded by consumers equals the quantity supplied by producers.

Customer Orientation

An approach where a business conducts market research to identify customer needs first and then develops products to satisfy those requirements.

Product-Oriented Business

A firm that focuses primarily on inventing and producing goods it excels at making, relying on finding customers to buy them afterwards.

Brand Leader

The product or brand that commands the highest market share in its specified market sector.

Market Segmentation

The division of a broad target market into distinct sub-groups of consumers sharing similar demographic, geographic, or psychographic characteristics.

Customer Relationship Marketing (CRM)

Marketing practices focused on building long-term customer loyalty and engagement to retain existing clients cost-effectively.

Primary Research

The collection of original, first-hand data gathered specifically for a business's exact research needs.

Secondary Research

The compilation and analysis of existing data previously collected by internal or external sources for other purposes.

Unique Selling Point (USP)

A distinctive feature or benefit of a product that sets it apart from all rival products in the market.

Product Life Cycle

The pattern of sales revenue over time that a product passes through, consisting of introduction, growth, maturity, and decline phases.

Boston Matrix

A product portfolio management framework categorizing products into Cash Cows, Stars, Question Marks, and Dogs based on market growth rate and market share.

Penetration Pricing

Setting a low initial price for a new product to capture market share quickly before raising prices later.

Market Skimming

Setting a high initial price for an innovative new product to extract maximum revenue from early adopters before competitor entry.

Labour Productivity

A key efficiency indicator calculated as $\text{Labour Productivity} = \frac{\text{total output in a given period of time}}{\text{total workers employed}}$.

Job Production

A production method where individual, custom, one-off items are created to customer specifications from start to finish.

Batch Production

A manufacturing method where identical items pass through production stages together in designated groups or batches.

Flow Production

High-volume continuous manufacturing where standardized items move continuously through sequential operations.

Mass Customisation

A flexible manufacturing strategy combining low unit costs of mass volume production with custom individual design options.

Just In Time (JIT)

An operational inventory management method aiming for zero inventory holding by delivering parts precisely when needed in production.

Inventory Control Chart

A visual tool tracking inventory levels over time, indicating maximum capacity, re-order levels, buffer inventory, and lead times.

Capacity Utilisation

The ratio measuring current operating output relative to total potential capacity, calculated as $\text{Rate of capacity Utilisation} = \frac{\text{Current Output Level}}{\text{Maximum Output Level}} \times 100$.

Outsourcing

Contracting non-core business activities and operations out to specialist external third-party providers.

Working Capital

The liquid capital available for day-to-day operations, calculated as $\text{Working Capital} = \text{Current Assets} - \text{Current Liabilities}$.

Capital Expenditure

Funds spent by a business to acquire, modernize, or maintain long-term physical fixed assets.

Revenue Expenditure

Short-term operational expenses incurred during daily operations to generate current period revenue.

Fixed Costs

Costs that remain constant in total regardless of output volume changes in the short run.

Variable Costs

Costs that alter directly in proportion to changes in production output level.

Cost Centre

A distinct operational section or department within a firm that incurs expenses without directly generating sales revenue.

Profit Centre

A functional business division assigned full accountability for both its operating costs and generated sales revenue.

Marginal Cost

The incremental cost incurred from manufacturing one extra unit of output.

Contribution

The revenue remaining after deducting variable costs to contribute towards covering fixed costs, calculated as $\text{Unit Contribution} = \text{Selling price} - \text{Direct costs}$.

Break-Even Level of Output

The output quantity where total revenue equals total expenses, calculated using $\text{Break-even level of output} = \frac{\text{Fixed Cost}}{\text{Contribution Per Unit}}$.

Margin of Safety

The difference between current output volume and the break-even quantity, reflecting the drop in sales permitted before losses occur.

Zero Budgeting

A budgeting method requiring departments to justify every expense item from a base of zero each financial period.

Flexible Budgeting

A budgeting system that dynamically adjusts target expenditures to match the actual activity or production output achieved.

Variance Analysis

The process of computing and analyzing deviations between planned budget projections and actual financial performance.