Business Studies — Year 12

After completion of Unit 1 - What is business, students will sit an end of topic assessment to check their knowledge

Markets
A place where buyers and sellers come together to exchange goods and services There is normally an exchange of money at a set price Price is normally set based on market forces i.e. the interaction between demand and supply Markets can be local/global

Mass Market
When a firm targets the whole of a market rather than a particular segment Mass marketing can give a business a high volume of sales but often at lower prices High degrees of competition may mean a firm has to use tactics such as branding to stand out

Business objective
A stated goal or target of a business (note: a business can have more than one objective!)

Social enterprise
A business that has objectives other than making profit. Part of a group of organisations in the “not-for-profit” sector

Aims / goals:
General statements of what a business intends to achieve. Precise details of those intentions are set out in objectives

Business unit strategy:
How a business attempts to compete successfully in a particular market

Corporate objectives:
Objectives that relate to the business as a whole. Usually set by top management.

Corporate strategy:
Concerned with the overall purpose and scope of the business activities

Cost leadership:
A business strategy concerned with aiming to be the lowest-cost producer in an industry. Usually requires exploitation of economies of scale

Functional objectives:
Set for each major business function – designed to ensure that the corporate objectives are met

Mission statement:
A statement of the overall purpose of the business

Shareholder value:
Where shareholders earn a return from their investment which is greater than their required rate of return

SMART objectives:
Objectives that are more likely to be achieved because they are Specific, Measurable, Achievable, Realistic and Timed

Social responsibility:
The way in which a business meets its responsibilities to society as a key external stakeholder

SWOT analysis:
Assessment of the internal strengths and weaknesses of a business and the external opportunities and threats that the business needs to consider

Targets:
Similar to objectives. Targets are often set at an individual or team level

Financial Strategies and Accounts
Acid-test ratio: A liquidity ratio that looks at whether a business can pay for current liabilities out of cash and near-cash assets (it ignores the value of stocks)

Asset turnover:
A ratio that calculates the relationship between revenues and the total assets employed in a business

Assets:
Amounts owned by, or owed to a business

Average rate of return:
A measure of the total accounting return from an investment project

Balance sheet:
The financial statement that provides a snapshot of the assets and liabilities of a business at a particular date

Capital expenditure:
Expenditure on assets which are intended to be kept in the business (e.g. IT systems, machinery) rather than sold or turned into products

Cash flow targets:
Specific objectives set by a business for cash-flow generated by a business

Corporation tax:
The tax levied on the profits of companies. The percentage varies depending on the size of the profits earned; typically 20-30%

Cost minimisation:
A strategy of achieving the most cost-effective way of delivering goods and services to the required level of quality

Creditor days:
A ratio that estimates the average period (in days) taken to settle amounts owed by a business to suppliers

What is Business

Students will sit and end of unit assessment based on their learning.

Competitive Advantage
A competitive advantage is an advantage over competitors gained by offering consumers greater value, either by means of lower prices or by providing greater benefits and service that justifies higher prices.

Obsolete
A product or service that is out of date or not used anymore.?

Consumer
Someone who buys and uses goods and services?

Original Idea
Ones that have not been used before to put a product or service into production.?

Financial Reward
Money received by an entrepreneur or investor when a business succeeds.?

Product
A product is anything that is capable of satisfying customer needs.?

Entrepreneur
Someone who creates a business and takes risks to start their business.?

Service
A service is an act that a business person carries out for you in exchange for money.?

Market Research
Gathering information about the market and customers’ needs and wants.?

Revenue Forecast
A prediction of future revenue based on expected sales.?

Investment
Putting money into a business with the intention of making a profit.?

Intuition
Knowing something instinctively or understanding something easily without conscious thought.?

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Managers, leadership and decision making

Students will sit and end of unit assessment based on their learning.

The Marketing Mix
A combination of the four P’s of marketing – Price, Product, Place, Promotion - used to attract customers.?

Price War
When competing businesses try to undercut each other by lowering prices. This leads to an ongoing battle where only the customer benefits, not the businesses.?

Brand Loyalty
A customer’s willingness to buy a product from a particular business rather than from its competitors.?

Market Share
The percentage of the total sales of a product in a market that is taken by one business in that market.

M-Commerce
Using mobile technologies, such as smartphones and tablets, to carry out business transactions.?

Recession
A period of economic decline characterised by the fact the economy has failed to grow for 6 consecutive months.?

Promotional Mix
The combination of promotional activities that a business uses to make customers aware of a product, with the aim of increasing sales.?

Business Plan
A document that outlines how an entrepreneur is going to set up a new business.

Budget
Pre-set financial targets for a  business to achieve, like a sales budget, or abide by, such as an expenditure budget, in a given period of time.?

Bank Loan
A fixed sum of money lent by a bank to an individual or a business for a specific purpose, which must be repaid with interest in set payments over an agreed period of time.?

SMART Objective
Objectives that are Specific, Measurable, Achievable, Realistic, and Time-bound.

Decision making to improve marketing

end of topic assessment

Correlation:
A measure of how close the relationship it (positive or negative) between an independent variable and a dependent variable

Customer relationship management (CRM):
The process of building a long-term, profitable relationship between a business and its customers

Diversification:
The strategy of trying to enter new markets with new products (from Ansoff matrix)

Extrapolation:
The use of trends established by historical data to make predictions about future values

Growth rate:
The percentage growth over a particular period. Market growth rates are typically quoted in terms of percentage growth per year

Market analysis:
The process of analysing the size, structure and growth of a market in order to support marketing decisions

Market development:
A growth strategy where the business seeks to sell its existing products into new markets - e.g. exporting (from Ansoff matrix)

Market penetration:
A relatively low-risk growth strategy where a business focuses on selling existing products into existing markets (from Ansoff matrix)

Market share:
The proportion of a market revenue or sales volume that is captured by a business or brand

Marketing budget:
Specific amounts that are allocated to activities in the marketing plan

Marketing plan:
The actions that management intend to take via the marketing mix in order to achieve marketing objectives

Moving average:
A calculation that takes a data series and “smoothes" the fluctuations in data to show a trend average

Product development:
A growth strategy where a business aims to introduce new products into existing markets (from Ansoff matrix)

Product positioning:
The way in which the marketing function tries to create an image or identity in the minds of the target market

Repositioning:
Changing the marketing mix for a product to appeal to a different market segment

Sales forecasting:
Techniques for estimating the likely demand (revenue and volume) for a product in future periods

Target market:
The market segment or segments which a business is attempting to enter with the chosen marketing mix

Test marketing;
Launching a new product or service in a limited part of the target market in order to gauge the viability of the product and assess the most appropriate marketing mix

Trend:
A general direction in which something tends to move

Decision making to improve operational performance

Students will sit and end of unit assessment based on their learning.

Profit quality:
The sustainability of profit from one period to the next. Higher quality profit is profit that is likely to be repeated rather than affected by one-off items

Profitability:
The amount of profit earned in a period (absolutely measure) or rate of profit earned compared with revenue (relatively measure)

Provisions:
Amounts set aside to cover future costs or liabilities (e.g. redundancies, business closures, legal disputes)

Ratio analysis:
Interpretation of financial performance by calculating and interpreting ratios

Retained earnings:
Profits earned by a business that are kept in the business rather than distributed as dividends

Revenue expenditure:
Spending on day-to-day operation of the business – e.g. paying for materials, staff costs, management salaries, advertising

Rights issue:
The issue of new shares to existing shareholders in order to raise new finance. The new shares are usually offered at a significant discount to the existing share price to encourage take-up

ROCE:
A measure of the percentage return that a business earns from the capital employed in the business. Often referred to as the “primary ratio"

Share capital:
The amount invested into a company by shareholders

Shareholder returns:
The rewards earned by shareholders = dividends paid to them + any increase in the value of their shares

Stock turnover:
A liquidity ratio that looks at how often a business rotates its stock during a year

Trade creditors:
Amounts that a business owes to its suppliers

Trade debtors:
Amounts that are owed to a business from its customers

Working capital:
The net amount invested by a business to finance day-to-day trading: usually calculated as current assets less current liabilities

Marketing Strategies

Ansoff's Matrix:
A strategic model for helping a business analyse the relationship between general strategic direction and suitable marketing strategies

Competitive advantage:
Skills, competences, resources and other advantages that enable a business to out-perform its competition

Decision making to improve financial performance

Students will sit and end of unit assessment based on their learning.

Arbitration:
An alternative to a court of law in determining legal and employment disputes. Involves a specialist outsider being asked to make a decision on a dispute

Centralisation:
An organisational structure where authority rests with senior management at the centre of the business

Communication:
The process by which a message or information is exchanged from a sender to a receiver

Conciliation:
A way of mediating industrial disputes to gain agreement without going to arbitration

Core workers:
Employees who are part of the core workforce of a business – central to the business activities

Decentralisation:
An organisational structure where authority is delegated further down the hierarchy, away from the centre

Delayering:
The process of removing one or more layers from the organisational structure

Downsizing:
The reduction in the scale and resources of a business, usually involving job losses and/or the sale or closure of business units

Flexible working:
The range of employment options designed to help employees balance work and home life (e.g. part-time, job-sharing, home-working, annualised hours contracts)

Gap analysis:
Analysis of the difference between the workforce needs or a business and its current capabilities

Hard HRM:
An approach to HRM based on treating employees as resources in the same way as any other business resource

Human resource management (HRM):
Strategies for managing people in order to achieve business objectives

Labour shortage:
Where a business finds it does not have sufficient employees in number, or with the right skills and experience, for its needs

Peripheral workers:
Employees who are on the fringe of the core workforce. They are not essential (core) workers, and their activities can often be outsourced or provided using flexible contracting

Soft HRM:
An approach to HRM based on treating employees as the most important resource in a business

Staff (Labour) turnover:
The proportion of staff that leave their employment with a business over a period – usually measured over a year

Teamworking:
Individuals work in groups rather than focusing on their own specialised jobs

Trade union:
Organisations of employees who seek to negotiate their employment terms through collective bargaining

Workforce planning:
How a business determines how many and what kind of employees are required

Works council:
A formal meeting of employer and employees to consider issues affecting the business and workplace – mandatory for larger businesses in the EU

Decision making to improve human resource performance