Business Studies AS (1) Key terms

Enterprise: Refers to the term in which businesses or products are formed and introduced into the market. 

Entrepreneurs: individuals that have an idea or product that they try and develop into a business and encourage it to grow.

Opportunity cost: the real cost of taking a particular action or the next best alternative forgone 

Franchise: When a business gives another business the right to supply its product or service 

Copyright: legal protection against copying from authors, composers and artists.

Patent: An official document granting the holder the right to be the sole user or producer of a newly formed product or process for a specific period. 

Trademark: Signs or logos displayed on a company's product which distinguishes it from its rivals 

Resources: the elements that go into producing good and services 

Factors of production: The four elements - Land, Labour, Capital, Enterprise - used the production of goods and services. 

Production: the Process whereby resources are converted into a form that is intended to satisfy the requirements of potential customers 

Output: the finished products resulting from the transforming action processes 

Primary sector: Those organisation's involved in extracting raw materials (farmer, and foresters) 

Secondary sector: those organisations involved in processing or refining the raw materials from the primary sector into finished or semi-finished products. 

Tertiary sector: Those organisations involved in providing services to customers and to other business, in either the public or the private sector (education, Doctors)

Adding Value: the process of increasing the worth of resources by modifying  them.

Value Added = Sales revenue - the cost of materials brought in. 

USP: a feature of a product or service that allows it to be different from other products. 

Business plan: a report describing the marketing strategy, operational issues and financial implications of a business start-up. 

Benefits

• A business plan is useful in helping entrepreneurs to clarify their objectives and to consider their business idea thoroughly.
• It enables owners to know precisely what needs to be done in order to meet their business objectives, including targeting specific customer groups, product pricing costing, and sales forecast and marketing. 

Marketing: the anticipation and satisfying of customers' wants in a way that delight s consumers and also meets the needs of the organisation. 

Market research: the systematic and objective collection analysis and evaluation of information that is intended to assist the marketing process.

Primary Market research: When a company invest money to gain first hand information for a specific purpose 

Secondary Market research: the use of information that has already been collected for a different purpose 

Sample: a group of respondents or factors whose views or behaviour should be representative of the target market as a whole. 

Random Sample: A group of respondents in which anyone can be selected and has an equal chance of being chosen 

Quota sample: a group of respondents comprising several different segments, each sharing a common feature (age or gender) 

Stratified sample: a group of respondents selected according to particular features but results are divided into sub-groups and their sizes are chosen specifically

The Market: where buyers and sellers come together.

Demand: the amount that a product or service is wanted by consumers and the willingness to buy it at any given price over a period of time.

Market segmentation: The classification of potential customers into groups or sub-groups 

Segmentation analysis: where a firm uses quantitive or qualitative data or information to try to discover the types of consumer who buy the product and why.

Market size: the volume of sales of a product or the value of a product 

Market growth: the percentage change in a product over a period of time. 

Market share: 

  Market share = Sales of a prodcut or brand or company

                                              total sales in the market           x100

Unincoperated business: there is no distinction between the owner of the business and the business. Such businesses tend to be sole traders or partnerships 

Incorporated business: this has a legal indentity that is separate from the individual owners. such businesses are known as PLC's or LTD 

Unlimited liability: a situation in which the owners of a business are liable for all the debts that the business may incur 

Limited liability: A situation in which the liabitlity of the owners of a business is limited to the fully paid up value of the share capital.

Sole trader: a business that is run by one person.

Partnership: a form of business in which two or more people operate for the common goal of making a profit. 

Private limited company: a small to medium sized business that is usually run by the family or a small group of individuals 

Public limited company: a business with limited liability; a share capital of over£50,000; atleast two directors, a qualified company secretary; and usually, a wide spread of shareholders. it has 'PLC' after the name.

 Ownership: providing finance and therefore taking risks

Control: managing the organisation and making decisions 

Stakeholder: any group of individuals with an inter est in a business

Ordinary Share Capital: Money given to a company by share-holders in return for a share certificate that gives them part ownership of the company in return for a share certificate

Loan Capital: Money received by an organization in return for the agreement to pay interest during the period of the loan and to be repaid orgination's within a period of time period of time.

Bank loan: A sum of money given to a firm for a specific agreed purpose 

Bank Overdraft: When the bank allows an individual or firm to overspend its current account 

Venture capital: When an individual invests money into a business for a percentage share of that firm, Aslo deemed to be risky by other lenders

Personal sources of finance: Money that is put forward by the owner of the business from their own savings or wealth.

Teleworking: Working in a location that is separate from a central workplace, using telecommunications 

Least-cost site: the location that allows the firm to minimize its costs

Infrastructure: the network of utilities such as: transport links, Telecommunications and sewerage

Qualitative factors: based on the opinions and wishes of individuals. these factors can influence business decisions.

Price: the amount paid by a consumer for a product or service 

Total revenue: the income received from an organisation's activities.

Total Revenue = Price per unit x quantity of units sold.

Profit: the difference between the income of a business and its total costs 

Profit = total revenue - total costs

Fixed costs: costs that do not vary directly with output in the short run

Variable costs: costs that vary directly with output in the short run.

Total Cost's: The sum of fixed costs and variable costs ( FC + VC)

Contribution cost per unit: selling price per unit - variable cost per unit 

Total contribution: the difference between total revenue and the total variable costs

Total Revenue - Total Variable cost

Breakeven analysis: study of the relationship between total costs and total revenue to identify the output at which a business breaks even

Breakeven output: the level of output at which total sales is equal to total costs of production 

Breakeven output =           Fixed costs (£)        

                                   contribution per unit (£) 

Target profit output =  Fixed costs (£) + Target profit (£)

                                         contribution per unit (£)

Cash flow: the amoutns of money flowing into and out of a business over a period of time.

Cash Inflows: Receitpts of cash, Typically arising from sales of items, Payments and debtors, Loans received, rent charged, sale of assets and interest received.

Cash outflows: payments of cash, typically arising from the purchase of items. 

Net cash flow: the sum of cash inflows to an organisation minus the sum of cash outflows over a period of time.

Cash-flow cycle: the regular Pattern of inflows and out flows of cash within a business 

Cash-flow forecasting: the process of estimating the expected cash inflows and cash outflows over a period of time. 

Liquidity: the ability to convert an asset into cash without loss or delay

Budget: an agreed plan established in numerical or financial terms, the policy to be pursued and the anticipated outcomes of that policy.

Income budget: shows the agreed, planned income of a business over a period of time.

Expenditure budget: shows the agreed, planned expenditure of a business over a period of time 

Profit budget: shows the agreed, planned profit of a business over a period of time