(Specialization)When the production process is split up into different tasks and each worker performs one of these tasksBusinessesCombine factors of production to make products which satisfy the people’s wantsBusiness ObjectivesThe aims or targets that a business works towardsValue AddedThe difference between the selling price of a product or service and the cost of bought in materials and componentsStakeholderAny person or group with direct interest in the performance and activities of a businessPrimary SectorExtracts and uses the natural resources of the EarthSecondary SectorManufactures goods using the raw materials provided by the primary sectorTertiary SectorProvides services to consumers and the other sectors of industryDe-industrializationWhen there is a decline in the importance of the secondary sector industry in a countryFree Market EconomyNo government control over factors of productionMonopolyBusiness which controls all of the market for a productCommand EconomyDoes not have a private sector as all resources are owned by the stateMixed EconomyHas both a public and a private sectorCapitalThe money invested into a business by the ownersProfitThe surplus after total costs have been subtracted from the sales revenueInternal GrowthWhen a business expands its existing operationsExternal GrowthWhen a business takes over or merges with another businessMergerWhen owners of two companies agree to join together their firms to make one businessTakeoverWhen one business buys out the owners of another business which then becomes part of the predator businessHorizontal IntegrationWhen one firm merges with or takes over another one in the same industry at the same stage of productionVertical IntegrationWhen one firm merges with or takes over another one in the same industry but at different stages of productionConglomerate IntegrationWhen one firm merges with or takes a firm in a completely different industryLimited LiabilityThe owners of a company cannot be held responsible for the debts of the company they own and their liability is only limited to the investment they made in buying the sharesPartnership AgreementWritten and legal agreement between business partnersUnincorporated BusinessOne that does not have a separate legal identityShareholdersThe owners of a company who buy shares which represent part ownership of the companyProspectusA detailed document issued by the directors of a company when they are converting it to a PLC status. It is an invitation to the general public to buy shares in the newly formed PLC.Annual General MeetingA legal requirement for all companies in which it is voted on who should be on the Board of Directors for the upcoming yearDividendsPayments made to shareholders from the profits of a company after it has paid corporation tax. They are the return to the shareholders for investing in the businessFranchiseA business based upon the use of the brand names, promotional logos and trading methods of an existing successful businessInflationThe increase in the average price level of goods and services over timeUnemploymentWhen people who are willing and able to work cannot find a jobEconomic GrowthWhen a country’s GDP increasesBalance of PaymentsRecords the difference between a country’s exports and importsReal IncomeThe value of income and falls when the prices rise faster than money incomeGross Domestic ProductThe total value of output of goods and services in a country in one yearExportsThe goods and services sod from one country to another countryImportsGoods and services bought in by one country from another countryExchange RateThe price of one currency in terms of anotherE.R. DepreciationThe fall in the value of currency compared with other currencies- it buys less of another currency than beforeE.R. AppreciationThe rise in the value of currency compared with other currencies- it buys more of another currency than beforeFiscal PolicyAny change by the government in tax rates or public sector spendingDirect TaxesPaid directly from incomesIndirect TaxesAdded to the prices of goods and the taxpayers pay the tax as they purchase the goodsDisposable IncomeThe level of income a taxpayer has after paying income taxImport TariffA tax on an imported productImport QuotaA physical limit to the quantity of a product that can be importedMonetary PolicyA change in the interest rates by the government or central bankSupply Side PolicyUsed by the government to improve the efficient supply of the goods and services in their countryEthical DecisionDecision taken by a manager because of the moral code observed in that firmIndustrial TribunalLegal meeting which considers workers’ complaints of unfair dismissal or discrimination at workContract of EmploymentLegal agreement between employer and employee listing the rights and responsibilities of the workersPlanning PermissionGiven by a government body to allow a business to build a factory in a particular locationDevelopment AreaA region of a country where businesses will receive financial support to establish there due to the high unemployment in that areaConstraintSomething that limits or controls the actions and decisions of a companyExternal ConstraintConstraints over which a business has no direct controlSocial ResponsibilityWhen a business takes decisions that may benefit stakeholders other than shareholdersPressure GroupsFormed by people who share a common interest and who will take action to try and change the government policy or business decisionsCost-Benefit AnalysisValuation by a government agency of all the external and private costs and benefits resulting from a business decisionExternal CostsThe costs paid by the rest of the society other than the business as a result of a business decisionExternal BenefitsThe gains to the rest of the society other than the business resulting from a business decisionPrivate CostThe costs of a business decision actually paid for by the businessPrivate BenefitThe financial gains made by a business as a result of a business decisionSocial CostAddition of the private and external costs of a business decisionSocial BenefitAddition of the private and external benefits of a business decisionFixed Costs

(Overhead Costs)Costs which do not vary with the number of items sold or produced in the short term. They have to be paid whether or not the business is making any salesVariable Costs

(Direct Costs)Costs which vary with the number of items sold or produced. They can be directly related to or identified with a particular productTotal CostFixed and variable costs combinedBreak-even ChartsGraphs which show how the costs and revenues of a business change with sales. They show the level of sales a business must make in order to break evenRevenueThe income during a period of time from the sale of goods and servicesTotal RevenuePrice multiplied by quantity soldBreak-even PointThe level of sales at which total costs equal total revenueContributionThe selling price less variable costMarginal CostsThe extra costs that a business will incur by producing one more unit of outputAverage Cost per UnitTotal cost of production divided by total outputEconomies of ScaleFactors that lead to a reduction in average costs as a business increases in sizeForecastsPredictions of the futureTrendUnderlying movement or direction of data over timeLine of Best FitLine drawn through a series of points which best show the trend of that dataBudgetsPlans for the future containing financial or numerical targetsAccountsFinancial records of a firm’s transactionsFinal AccountsProduced at the end of the financial year and give details of the profit or loss made over the year and the worth of the businessTrading AccountShows how the gross profit of a business is calculatedCost of Goods SoldCost of producing or buying in the goods actually sold by a business during a time periodSales RevenueIncome to a business during a period of time from the sale of goods and servicesGross ProfitMade when sales revenue is greater than the cost of goods soldNet ProfitProfit made by a business after all the costs have been deducted form sales revenueProfit and Loss AccountShows the net profit and retained profit of a businessDepreciationThe fall in the value of a fixed asset over timeAppropriation AccountThat part of the profit and loss account which shows how the profit will be distributed after tax- either given as dividends or kept in as retained profitsRetained ProfitThe net profit reinvested back into a company after deducting tax and payments to owners such as dividendsBalance SheetShows the value of a business’s assets and liabilities at a particular timeAssetsThose items of value which are owned by the businessLiabilitiesItems owed by the businessReturn on Capital EmployedShows how much profit is made as a proportion of the capital that has been invested in the businessLiquidityAbility of a business to pay back its short-term debtsCash-FlowThe cash inflows and outflows of a business over a period of timeCash Flow CycleThe stages between paying out cash for labor, materials etc. and receiving cash from the sale of goodsCash Flow ForecastAn estimate of future cash inflows and outflows of a business, usually on a month by month basis. This will then show the expected cash balance at the end of each monthOpening Cash BalanceThe amount of cash held by the business at the start of the monthNet Cash FlowThe difference between inflow and outflow of cashClosing Cash BalanceAmount of cash held by the business at the end of each month. This becomes the next month’s opening cash balanceStart-up CapitalThe finance needed by a new business to pay for essential fixed and current assets before it can start tradingCapital ExpenditureMoney spent on fixed assets which will last longer than a yearRevenue ExpenditureMoney spent on day-to-day expenses which do not involve the purchase of a long-term assetOrganizational StructureRefers to the levels of management and division of responsibilities within an organizationJob DescriptionOutlines the responsibilities and duties to be carried out by someone employed to do a specific jobDelegationGiving authority to a subordinate to perform particular tasks. The final responsibility, however, remains in the hands of the managerChain of CommandThe structure in an organization which allows instructions to be passed down from senior management to lower levels of managementSpan of ControlNumber of subordinates working directly under a managerLine ManagersHave direct authority over subordinates in their department. They are able to take decisions in their departmental areaStaff ManagersSpecialist advisers who provide support to line managers and to the Board of DirectorsDecentralized Management StructureMany decisions are not taken at the center of the business but instead are delegated to a lower level of managementCentralized Management StructureMost decisions are taken at the center or higher levels of managementStrategic DecisionsVery important decisions which can affect the overall success of the businessTactical DecisionsTactical decisions are medium term, less complex decisions made by middle managersOperational DecisionsDay-to-day decisions which will be taken by a lower level of managementCommunicationThe transferring of a message from the sender to the receiver who understands the messageMedium of CommunicationThe method used to send a messageFeedbackThe reply from the receiver which shows whether the message has arrived, been understood and, if necessary, been acted uponOne-way CommunicationInvolves a message which does not call for or require a responseTwo-way CommunicationWhen the receiver gives a response to the message and there is discussion about itInternal CommunicationWhen messages are sent between people working in the same organizationExternal CommunicationWhen messages are sent between one organization and another organization or an outside individualCommunication NetsThe ways in which members of a group communicate with one anotherMotivationThe reason why employees want to work hard and effectively for the businessWageA payment for work, usually paid weeklySalaryPayment for work, usually paid monthlyCommissionPayment relating to the number of sales madeProfit-SharingA system whereby a proportion of the company’s profits is paid out to the employeesBonusAn additional amount of payment above basic pay as a reward for good workPerformance-Related PayPay which is related to the effectiveness of the employeeAppraisalA method of assessing the effectiveness of an employeeFringe BenefitsNon-financial rewards given to employeesJob SatisfactionEnjoyment derived from feeling that you have done a good jobJob RotationInvolves workers swapping round and doing each specific task for only a limited time and then changing round againJob EnlargementExtra tasks of a similar level of work are added to a worker’s job descriptionJob EnrichmentInvolves looking at jobs and adding tasks that require more skill and/or responsibilityLeadership StylesDifferent approaches to dealing with people in a position of authorityAutocratic LeadershipWhen the manager expects to be in charge of the business and have their orders followed- there is little/no opportunity for workers to comment on anythingDemocratic LeadershipInvolves a team guided by a leader where all individuals are involved in the decision-making process to determine what needs to be done and how it should be done.Leave-to-do LeadershipLaissez-faire leaders allow followers to have complete freedom to make decisions concerning the completion of their work. It allows followers a high degree of autonomy and self-rule, while at the same time offering guidance and support when requestedFormal GroupA group designated to carry out specific tasks within a businessInformal GroupGroup of people who form independently of any official groups set up within a business and who have similar interests or something else in commonJob AnalysisIdentifies and records the responsibilities and tasks related to a jobJob SpecificationDocument which outlines the requirements, qualifications, expertise, physical characteristics etc. for a specified jobInternal RecruitmentWhen a vacancy is filled by someone who is an existing employee of a businessExternal RecruitmentWhen a vacancy is filled by someone who is not an existing employee and will be new to the businessInundation TrainingIntroduction given to a new employee, explaining the firm’s activities, customs and procedures and introducing them to fellow workersOn-the-job TrainingWatching a more experienced worker doing the jobOff-the-job TrainingInvolves being away from the workplace, usually by specialist trainersWorkforce PlanningEstablishing the workforce needed by the business for the foreseeable future in terms of the number and skills of the employees requiredRedundancyWhen an employee is no longer needed and so loses their job- not due to any aspect of their work being unsatisfactoryTrade UnionGroup of workers who have joined together to ensure their interests are protectedCraft UnionTrade union which represents a particular type of skilled workerGeneral UnionTrade union which represents workers from a variety of trades and industry- they are often unskilled or semi-skilledIndustrial UnionTrade union which represents all types of workers in a particular industryWhite-Collar UnionTrade union which represents non-manual workersClosed ShopAll employees must be a member of the same trade unionSingle-Union AgreementA firm will deal with only one trade union and no othersEmployer AssociationsGroups of employers who join together to give benefits to their membersNegotiationJoint decision making involving bargaining between representatives of the management and of the workforce within a firm in hopes to arrive at a mutually acceptable agreementCollective BargainingNegotiations between one or more trade unions and one or more employers on pay and conditions of employmentProductivity AgreementWorkers and management agree on an increase in benefits, in return for an increase in productivityIndustrial ActionAction taken by the trade unions to decrease or halt productionStrikeWhen employees refuse to workPicketingWhen employees who are taking industrial action stand outside their workplace to prevent or protest at the delivery of goods, arrival and departure of other employees etc.Work-to-RuleRules are strictly obeyed so that work is slowed downGo SlowEmployees do their normal tasks but slower than usualNon-cooperationEmployees refuse to comply with the new working practicesOvertime BanEmployees refuse to work longer than their normal working hoursNo-Strike AgreementWhen trade unions and management agree to have pay disputes settled by an independent arbitrator instead of taking strike actionArbitratorListens to both sides in the industrial dispute and then gives a ruling on what they think is fair to both sidesLock-OutEmployees are locked out of their workplace by the employersWorker ParticipationWhen employees contribute to decision-making in the businessWorks CouncilsCommittees of workers who are consulted or informed on matters that affect employeesMarketWhere buyers and sellers come together to exchange products for moneyProduct-OrientedA business whose main focus of activity is the product itselfMarket-OrientedA business which carries out market research to find out consumer wants before a product is developed and producedMarketing BudgetFinancial plan for the marketing of a product or product range for some specified period of timeMarketingManagement process which identifies customer wants, anticipates future wants and then goes about satisfying them profitablyMarket ShareThe percentage of total market sales held by one brand or businessMarket SegmentationMarket is divided up into groups of consumers who have similar needsMass MarketA very large number of sales for a productNiche MarketSmall, specialized segment of a much larger marketPrimary Research

(Field Research)Collection and collation of original data via direct contact with potential or existing customersSecondary Research

(Desk Research)Information which has already been collected and is available for use by othersQuestionnaireSet of questions to be answered as a means of collecting data for market researchConsumer PanelsGroups of people who agree to provide information about a specific product or general spending patterns over a period of timeRandom SampleWhen people are selected at random as a source of information for market researchQuota SampleWhen people are selected on the basis of certain characteristics as a source of information for market researchBrand NameUnique name of a product that distinguishes it from other brandsBrand LoyaltyWhen consumers keep buying the same brand again and again instead of choosing a competitor’s brandBrand ImageImage or identity given to a product which gives it a personality of its own and distinguishes it from its competitors brandsPackagingThe physical container or wrapping for a product- also used for promotion and selling appealProduct Life CycleDescribes the stages a product will pass through from its introduction, through its growth until it is mature and then finally its declineTrade CycleA cycle or series of cycles of economic expansion and contractionCost-Plus PricingCost of manufacturing the product plus a profit mark-upPenetration PricingWhen prices are set lower than the competitors’ prices in order to be able to enter a new marketPrice SkimmingHigh price set for a new product on the market due to its novelty factorCompetitive PricingProduct is priced in line with or just below competitors’ prices to try to capture more of the marketPromotional PricingWhen a product is sold at a very low price for a short period of timePsychological PricingWhen particular attention is paid to the effect that the price of a product will have upon the consumers’ perceptions of the productInformative AdvertisingThe emphasis of advertising or sales promotion is to give full information about the productPersuasive AdvertisingAdvertising or promotion which is trying to persuade the consumer that they really need the product and should buy itTarget AudienceRefers to the people who are potential buyers of a product or serviceAIDA ModelSimple way of planning an advert’s design. It stands for attention, interest, desire and actionChannel of DistributionThe means by which a product is passed from the place of production to the customer or retailerAgentAn independent person or business that is appointed to deal with the sales and distribution of a product or range of products. The agent will either put an additional amount on the price to cover their expenses or will receive a commission on salesProductivityOutput measured against the inputs used to create itJob ProductionA single product is made at a timeBatch ProductionA quantity of one product is made, then a quantity of another item will be produced depending on the orders which come inFlow Production

(Mass Production)Large quantities of a product are produced in a continuous processLead TimeMargin of time between the date when stock is obtained and the date when it is soldLean ProductionTechniques used by businesses to cut down on waste and therefore increase efficiencyKaizenA process of continuous improvement through the elimination of wasteJust-in-TimeProduction method that involves reducing or virtually eliminating the need to hold stocks of raw materials or unsold stocks of the finished products. Supplies arrive just at the time they are neededQuality ControlA system of maintaining standards in manufactured products by testing a sample of the output against the specification.Quality AssuranceThe maintenance of a desired level of quality in a service or product, especially by means of attention to every stage of the process of delivery or production.Total Quality ManagementContinuous improvement of products and processes by focusing on quality at each stage of productionCommon CurrencyResult of an agreement between countries to use the same currency for all business and other transactions- e.g. euro in EUGlobalizationThe process by which businesses or other organizations develop international influence or start operating on an international scaleMultinational (Transnational) BusinessesA business with factories, production or service operations in more than one country]]>/2015/05/12/all-definitions/feed/0minztwinz/2014/12/05/23//2014/12/05/23/#commentsFri, 05 Dec 2014 11:52:15 +0000/?p=23I’m giving my IGCSE for Business Studies this year & decided to share the notes I made- hope they help!