Business Studies - References

1. What is meant by ‘Quality Assurance’?

Quality Assurance is the checking for quality standards throughout the production process.

2. What is meant by ‘Multinational Company’?

A business with factories, production or service operations in more than one country

3. What is meant by ‘Brand’?

A unique name, feature, design or logo or image of a product or service or business which
distinguishes it from other businesses or products or services

4. Identify ways a business could ‘Build Good Customer Relationships’?

● Offer Personal Service
● Find out customer preferences
● Ask for feedback and suggestions
● Extra services like delivery, after sales assistance
● Communicate with customers to maintain customer loyalty

5. What is meant by ‘Secondary Market Research’?

Collecting information about the market, customer needs, competitors, etc., which is already
available or collated by other companies and agencies.

6. What is meant by a ‘Focus Group’?

A selected group of people who have similar characteristics towards a target market who give
their opinions on a product or service.

7. What is meant by a ‘Business Plan’?

A document containing the business aims and objectives and also important details about the
operations, finance, and workers of a business.

8. What is meant by a ‘Balance Sheet’?

A sheet which shows the value of a business assets and liabilities at a particular point in time

9. What is meant by ‘Flow Production’?

Flow Production is where large quantities of a product are produced in a continuous process

10. What is meant by an ‘Economic Boom’?

A strong rise in level of economic activity

11. Identify stages of the Business Cycle

● Slump or Trough
● Growth or Recovery or Expansion
● Recession or Depression or Contraction
12. What is meant by ‘Revenue’?
Revenue is the income or money made by the business from the sale of goods or services
Quantity Sold * Price per unit

13. What is meant by a ‘Variable Cost’?

Costs that change with the level of output produced or sales made

14. Identify stages of recruitment process

● Job Analysis
● Job Description
● Person Specification
● Advertising
● Shortlisting
● Interviewing
● Selection

15. What is meant by a ‘Partnership’?

Partnership is when two or more people agree to own and run a business together

16. Methods of Market Research

● Questionnaires
● Surveys
● Interview
● Consumer Panel
● Observing Target Market
● Focus Groups

17. Advantages of having a ‘Business Plan’.

● Supports Loan Applications
● Clears guidance for business
● Helps decision making processes
● Provides an estimate of costs

18. What is meant by ‘Batch Production’?

A type of production where products are made in group or blocks followed by another
grp or block.

19. What is meant by ‘Market Segment’?

An identifiable subgroup of a whole market in which consumers have similar characteristics
or preferences.
20. Ways to measure the size of a business
● Employees working
● Sales Value or Value of Output or Revenue
● Capital Employed
● Value of Balance Sheet
● Market Share

21. Characteristics of a successful entrepreneur

● Risk taker
● Innovator
● Creative
● Self-Confident
● Optimistic
● Hardworking
● Independent
● Effective Communicator
● Leadership Style
● Self-Motivating
● Determined
● Results Driven
● Good at Networking
● Multi-Skilled

22. What is meant by ‘Specialization’?

A way in which work is divided so each worker concentrates on a specific task so the worker can
become an expert at it.

23. Ways a Business can measure its success

● Achievement of Objectives
● Growth
● Increase in market share
● Sales Revenue
● Survival

24. Reasons why cash flow is important

● Day to Day expenses
● To avoid cash flow problems
● To avoid liquidation

25. What is meant by ‘Import Quota’?

Quota refers to a limit on the flow of goods that are allowed into a country
26. What is meant by ‘Inventory (Stock)’?
The amount of raw materials, work in progress and finished goods held by a business
intended for sale

27. What is meant by ‘Average Cost’?

Total cost divided by the total number of units produced

28. How to calculate output per employee

Total Output/Number of Employees

29. Advantages of using Batch Production-

● Variety in workers jobs, which motivates workers
● Allows more variety of products to be produced
● Could improve productivity and efficiency
● Work Flexibility
● More output

30. What is meant by a ‘Private Limited Company’?

A business whose shares cannot be sold to general public and only owned by family and friends

31. Causes of Business Failure

● Lack of management skills
● Actions of competitors
● Change in government laws
● Lack of Demand
● Recession
● Poor Market Research
● Lack of Finance
● Cash Flow Problems
● Diseconomies of Scale

32. What is meant by ‘Mass Market’?

Where there are a large number of potential customers willing to buy the product

33. What is meant by ‘Market Share’?

Percentage of the total market sales held by one brand or business

34. What is meant by ‘Made Redundant’?

The worker is no longer required through no fault of their own

35. What is meant by ‘Tertiary Sector’?

An industry which provides or sells services to consumers and other sectors of the economy
36. What is meant by ‘Span of Control’?
The number of subordinates working directly under an individual or a manager

37. What is meant by ‘Delegation’?

To give a subordinate the authority to perform a particular task and make decisions

38. Reasons why delegating tasks is important for a business

● Managers or Individuals can’t do all the jobs
● Managers get time to focus on other issues
● Employees can be motivated and retained
● Could be a way to train employees who might be on managerial roles in the future

39. What is meant by the ‘Private Sector’?

When a business activities are owned by individuals or group of individuals

40. What is meant by ‘Customer Loyalty’?

A customer who returns and buys the product from the same shop or supplier multiple times. The
customer keeps buying the same brand no matter what the price is.

41. Business Activities in the Primary Sector

Farming, Mining, Fishing, Forestry, Oil Extraction

42. What is meant by ‘Cost of Sales’?

Money spent on producing or buying in the goods sold by the business
Cost per unit * Number of Output

43. What is meant by ‘Sole Trader’?

Ownership of business in the hands on one individual or person

44. Possible ways to show that the economy is growing

● Rise in GDP
● Fall in unemployment rate
● Shortage of skilled workers
● Higher living standards
● Rise in Business Profits
● Increase in demands
● Rise in investments

45. What is meant by ‘Financial Bonus’?

Extra money for the performance that reachers target over and above basic pay
46. Motivational Theories
● Herzberg’s Theory
● Taylor’s Scientific Theory (Money is the main motivator)
● Maslow Hierarchy of needs
● Mayo’s Human Relations
● Fayol Management

47. What is meant by the ‘Primary Sector’?

Involves extraction or production of raw materials using natural resources which is used by other
businesses

48. What is meant by ‘Non-Current Assets’?

Assets that are owned by a business for more than one year

49. What is meant by ‘Break Even’?

Level of output where total costs equal total revenue

50. What is meant by ‘Primary Market Research’?

Collection of new data about potential and existing customers.

51. What is meant by ‘Globalization’?

The growth in worldwide trade, Free movement of people and capital between countries, Process
of countries becoming more interconnected.

52. Possible threats due to Globalization

● Increased competition
● Exchange Rates
● Loss of individualized products
● Unable to meet demand
● Increasing investment from multinationals
● Increase in expenses as worker wage must be increased to match multinational
wage rates

53. What is meant by ‘Return on Capital Employed’?

ROCE means the profit of the business expressed as % of capital invested in the business
Profit/Capital Employed * 100

54. What is meant by a ‘Recession’?

A sustained reduction over a period of time in the GDP or national income or output.

55. Reasons why governments support business start-ups

● Reduce Unemployment
● Increase Competition and Output
● Benefit Society
56. Functions of Management
● Planning
● Organizing
● Coorenating
● Commanding
● Controlling
● Supervising
● Decision Making
● Problem Solving
● Recruiting

57. What is meant by ‘Redundancy’?

A job position has gone and hence a person is no longer required.

58. What is meant by ‘Added Value’?

A difference between prince of a finished product and the cost of the inputs involved in making it
or the difference between the selling price of a product and the cost of bought in materials

59. What is meant by a ‘Social Enterprise’?

A business with both social objectives as well as aim to make profits

60. Possible stakeholder groups

● Governments
● Suppliers
● Local Community
● Customers
● Bands
● Pressure groups

61. What is meant by a ‘Joint Venture’?

When two or more businesses agree to start a new project together so they share risks, capital,
profits and resources

62. Advantages of having objectives

● Target to work towards
● A sense of direction
● Measure of success to judge performance
● Help budgeting, planning and decision making
● A mode of motivation
63. Reasons or Advantages of entering new markets
● Economies of scale
● Increase Sales, Market Share, Target Market
● Brand Awareness
● Access to cheaper labor and resources
● Fewer trade restrictions

64. What is meant by ‘Trade Receivables’?

Amount of money owed by customers for goods bought on credit terms

65. Ethical issues for businesses

● Paying for wages to workers
● Not price fixing
● Charging fair price to customers
● No child labour
● Environment Friendly Products

66. What is meant by ‘Chain of Command’?

A structure within an organization through which orders are passed from senior management to
the lower levels.

67. What is meant by ‘Liquidity’?

The ability of a business to pay back its short-term or day to day debts

68. Methods of Pricing

● Competitive Pricing
● Cost Plus Pricing
● Penetration Pricing
● Price Skimming
● Promotional Pricing

69. What is meant by an ‘Overdraft’?

A loan repayable within 12 months

70. What is meant by the ‘Business Cycle’?

Fluctuations in economic activity that an economy experiences over a period of time

71. Advantages of Flow Production

● Increased Output
● Economies of scale
● Low average costs
● Quicker and Continuous (24/7) Production
● Allows Specialization, Capital Intensive Production and greater use of unskilled labor
72. What is meant by ‘Productivity’?
A measure of the output of a business in relation to its inputs or effective utilization of resources
in a time period.

73. Reasons why a business might need working capital

● Day to Day Expenses
● Paying wages, salaries, rent, utilities
● Repayment of short term debts
● Emergency Bail Out Funds

74. What is meant by ‘Economies of Scale’?

Factors that lead to lower average costs as a business increases in size

75. What is meant by ‘Autocratic Leadership Style’?

Managers expect to be in charge of business, expecting orders to be followed. Decisions are made
without consulting workers.

76. Advantages of Specialization

● Increased output < Quicker Production < Increased Productivity and Efficiency
● Lower unit cost
● Workers become more skilled
● Improved Accuracy
● Help improve competitiveness

77. What is meant by ‘External Cost’?

Impact paid for by the rest of the society as a result of business actions

78. Parts of a Business Plan

● Executive Summary
● Business Aims
● Marketing
● Market Research
● Human Resources
● Finance
● Production Details and Break Even
● Organizational and Management Details

79. Reasons why markets become more competitive

● Globalization
● Tech developments
● Lower barriers to entry
● Improvement in transport links
● More businesses enter market
80. Methods of training that a business might use
● On-the-job training
● Off-the-job training
● Induction

81. What is meant by ‘Market Share’?

A percentage or proportion of the total market sales held by one brand or business
Business Sales/Total Market Sales * 100

82. Aims of promotion

● Attract Customers to Increase Sales
● Create brand image
● Compete in the market
● Introduce new products

83. Features of a Sole Trader

● Keeps all profits
● Unlimited Liability
● No separate legal identity
● Takes all decision on his/her own
● Has total ownership of the business
● Few legal requirements

84. What is meant by ‘Cash Flow Forecast’?

An estimate of the cash inflows and outflows of a business usually on a month by month basis.

85. Ways to measure success of a business

● Market Share
● Sales Revenue
● Survival
● Profits
● Customer Satisfaction
● Reputation
● Share price or Dividends
● Productivity, Efficiency, Number of Output
● Number of Employees
● Employee Loyalty
● Customer Loyalty
● Environmental Targets
● Ethical Targets

86. What is meant by ‘Niche Market’?

Highly specialized sub part of a large market
87. What is meant by ‘Micro Finance’?
Small amounts of capital loaned to entrepreneurs in countries where finance is difficult to obtain.

88. What is meant by ‘Net Cash Flow’?

DIfference between cash inflows and cash outflows every month

89. What is meant by a ‘Franchise’?

An agreement that allows one business to trade under the name of another business to sell the
other company’s products or services.

90. What is meant by ‘Break-Even Output’?

Level of Sales/Output at which total costs are the same as total revenue

91. What is meant by “Off-the-Job Training’?

Trained away from the workplace by specialist trainers

92. What is meant by ‘Total Cost’?

Sum of total fixed costs + Total Variable Costs
Or
Sum of Total Direct Costs + Total Indirect Costs

93. What is meant by ‘Job Enrichment’?

Involves looking at jobs and adding tasks that require higher skill or more responsibility.

94. What is meant by ‘Gross Domestic Product’?

The total value of output of goods and services in a country in one year or a given time period.

95. What is meant by ‘Quality Control’?

Checking that a product meets the required standard

96. What is meant by ‘Wholesaler’?

Someone or an organization that buys and stores large quantities of several producers’ goods and
then breaks into bulk deliveries to supply retailers with smaller quantities.

97. What is meant by ‘Pressure Group’?

People who have common interests and take actions to change or influence business or
government’s decisions.

98. Define ‘Crowdfunding’

Asking a large number of people for a small amount of money to raise finance for a project.

99. State few Economies of Scale

 ● Bulk Purchase
● Marketing
● Technical
● Financial
● Risk Bearing
● Managerial

100. Ways of Motivating employees

● Bonuses
● Performance related pay
● Profit share
● Provide opportunities for promotion
● Job rotation
● Job enrichment
● Job enlargement
● Training opportunities
● Increase rate of pay
● Awards

101. Factors that affect leadership style

● Personality
● Skills and Task assigned
● Size of Business
● Organizational Structure

102. Define ‘Profit’

Amount of money that a business makes once costs have been subtracted from the revenue

103. Define ‘Induction Training’

Introduction given to a new employee explaining the business activities and processes and
allow them to meet other employees.

104. Ways to Advertise Job Vacancy

JobCentre, Trade Magazines, Recruitment Agencies, Websites, News Papers and TV

105. Define ‘Margin of Safety’

Difference between current level of output and break-even output

106. Stages of Product Life Cycle

Development, Introduction, Growth, Maturity, Decline

107. Define ‘Opportunity Cost’

The benefit that could have been gained from an alternative use of the same resource.
108. Define ‘Job Rotation’
Employes swapping around and doing each specific task for only a limited time

109. Define ‘Cost Plus Pricing’

The price is based on the cost making a product and the addition of a fixed percentage for profit

110. Define ‘Marketing Mix’

Involves all activities that go into the marketing of a product or services. These activities are
brought down as the 4 P’s - Product, Promotion, Plan, and Price.

111. Define ‘Opening Balance’

Amount of cash held by a business at the start of the month or training period

112. Ways a business can increase productivity

● Improve labor skills
● Increase motivation
● Automation
● Improve Quality of Materials
● Introduce Quality Control and Quality Assurance
● Introduce Inventory Control

113. Sources of Internal Finance

● Retained profit
● Sale of non-current assets
● Sale of inventories
● Owner’s savings
● Reduce trade receivables

114. How to calculate Margin of Safety

Current Output - Break Even Output

115. Define ‘Ethical Business’

An organization that takes decisions based on moral code.

116. Define ‘Externalities’

Third party effects arising from production or consumption of goods and services for which
no appropriate compensation is paid.

117. Define ‘Secondary Sector’

Firms that process and manufacture goods from natural resources.

118. Define ’Unemployment’

When people want to work but cannot find a job.
119. Cash Flow Forecasting:
 ● Cash In-Flow = Sum of Sources of Revenue
● Cash Out-Flow = Sum of Total Expenses
● Net Flow = Cash In-Flow - Cash Out-Flow
● *If Net Flow value comes in negative, add brackets for the value, no minus sign
Eg: 20-100 = -80 ; So, (80)
● Closing Balance = Net Flow - Opening Balance
● Month 1’s closing balance is Month 2’s Opening Balance

January February

Net Flow 30 50

Opening 15 15
Balance

Closing Balance 30 - 15 = 15 50-15 = 35

120. Gross Profit = Revenue - Cost of Sales

121. Net Profit = Gross Profit - Expenses
122. Retained Profit = Net Profit - Dividends