Exploring Business Vocabulary: Key Terms and Concepts

Vocabulary Adding Value: everything that a business does to make a good more desirable. Brand: a product or group of products with a unique, consistent and easily recognisable character. (e.g coca-cola brand, not only logo, but shape, size, colour etc) Branding: a brand is any distinguishing mark that is associated with a product → consumers are often attracted by brand names → pay more. Nationalisation: the process of taking an activity into the public sector. Stakeholder: someone who has an interest in the decisions taken by the business, some are internal (e.g owners of the business, work within the business), others are external (e.g customers/ suppliers) Unlimited Liability: When the sole traders are personally responsible for all the debts of the business → has to be paid by owner. Limited Liability: Owners of a company have legal protection known as limited liability, which limits the debts owed by an individual owner of a company. Sleeping Partners: Partners in a partnership who put money into the business but do not get involved in its running. Joint Venture: A joint venture (JV) is formed when two independent businesses set up a new enterprise in which they jointly own a stake → form incorporated business/ partnership. Franchise: a business which allows its name to be bought by others under certain conditions. A Company: ‘Company’ suggests a group of companions who come together to set up a business → becomes a legal body, separate in law from owners. Multinational: a company that has its headquarters in one country, but produces and sells its products in other countries. Working Capital: The short term funds that are needed for regular payments (e.g wages, utility bills, electricity, cost of supplies) Gearing Ratio: The ratio between capital raised internally and capital raised externally is the gearing ratio. Market Orientation: A company that takes its direction from what customers want. Market Research: Means carefully gathering, making a record of and then analysing data about the market for goods/ services. Primary data: obtained by interviewing a sample of the targeted market. Secondary research: research carried out by someone else, can be in the form of published research on set topics by market research organizations. Mass Marketing: Ignores segmentation and seeks to appeal to all of the customers within different segments – having the largest audience. Niche Marketing: Niche market is a relatively small segment of a larger market, marketers focus their marketing activity on the characteristics of consumers that make up a particular niche. Price elasticity of demand: a measure of responsiveness of demand to a change in price, measures how much the quantity demanded changes following a change in price. Distribution: makes products available to customers when they want them. Distribution Channel: when an organisation and its customers are brought together at a particular page & time to buy/ sell goods. Promotion: ways of spreading information about a product, brand, or company. Marketing strategy: a plan choosing the right combination of marketing mix elements to support the product. Marketing budget: shows how much a company plans to spend on marketing activities in a given period of time. Cost effectiveness: describes the relationship between the cost of an activity and the returns from it. Mass production: when thousands of identical items flow of a production line. Job Production: products are produced individually to meet the requirements of a specific customer, expensive. Batch Production: a number of identical/ similar items are produced in a batch. Fixed Costs: do not increase as output increases. Variable Costs: increase as output increases. Total Cost: Fixed Cost + Variable Cost Break Even: is the point at which an organisation barely covers its costs with the money it makes through sales. Profit: the final amount of money that a business makes. Sales Revenue: the Profit minus costs. Profit and Loss Accounts: The financial statement that helps them know what their costs are and what money is coming in. Balance sheet: statement showing the financial health of a business at a particular moment in time. Assets: items that are owned by a business. Liability: money that a business owes. Financed by: How total net assets are financed. Gross Profit Margin: shows how much gross profit is made for each $1 of sales. Net Profit Margin: shows much net profit the business makes for each $1 of sales. Return on capital employed (ROCE): a calculation of how much net profit a business makes as a percentage of the amount of money used. Liquidity: how easily assets can be turned into cash. Liquid Assets = Current Assets Acid test ratio: a ratio to check whether they have enough working capital. Grant: money given by the government to a business for a particular purpose, repayment is not expected. Planning regulations: Rules governing where businesses can and cannot set up. Subsidies: sums of money given to support businesses in particular activities in the long term (e.g. subsidising relocation to areas of high unemployment.