Business Vocab
Unit 1: Business Activity
Aims and objectives
Are the things that a business is trying to achieve, such as grow larger, or make more profit
Backwards vertical growth
When a business merges with, or takes over a business that supplies it with goods or services
Business objectives
What the business aims to achieve, and include survival, profit, growth and providing a service
Business plans
A simple plan which sets out details on the products or service being sold, where the finance is to come from to start the business, how the product or service is to be marketed, and the market research to show there is a need for what is being sold
Capital
Money raised to start or develop a business
Deed of partnership
A document setting out the operations of the partnership, including amount of capital to be invested and how profits will be shared
Diversification
When a business merges with or takes over another business with which there is no connection
Dividend
The money paid to a shareholder from the profits of a limited company. This is the reward for the shareholder taking a risk by investing money in the company
Entrepreneur
A person who takes the risk of starting and running a business enterprise
Enterprising characteristics
The features of an entrepreneur, which include being determined, creative and having the ability to take risks
External growth
Growth of a business by takeover or merger
External stakeholders
The local community, suppliers, customers and government
Finance
A business word used instead of money. The finance needed to start a business is the money needed to do so
Forwards vertical growth
When a business merges with, or takes over a business that it supplies good or services to
Growth
Where a business becomes larger, for example by making more products or opening more places where goods and services are sold
Horizontal growth
A merger or takeover where two businesses are involved in a similar operation, e.g. two electrical producers or two shops selling fashion clothing
Internal stakeholders
The business owners and people who work in the business
Limited liability
Where the responsibility for the debts of a business is limited to the amount invested by a shareholder. A feature of private and public limited companies
Limited liability partnerships
Part partnership, part limited company. Owners are members, not partners. They have limited liability and have to make their finances available to the public
Markets
Where a business sells its goods and services
Market share
The share of the total market for a product or service and is shown as a percentage
Merger
Where two or more businesses agree to join together
Operate
A term used to explain how a business works
Organic growth
Growth of a business internally by increasing sales. Sales can be increased in a number of different ways
Partnership
A business owned by between two and twenty partners
Private limited company
A smaller business owned by at least two shareholders. Shares cannot be sold to the general public. Has Ltd after its name
Profit
The difference between revenue and costs
Providing a service
Where a business makes sure that the needs of the customers are being met
Public limited company
A large business where shares can be sold to the general public enabling vast sums of money to be raised to develop the company. Has plc after its name
Resources
The things a business sells needs to make it work, including finance, staff and materials
Satisficing
Making just enough profit to provide the business owner with a decent living. More common in smaller businesses
Shareholders
Are the owners of a private or public limited company
Sleeping partner
A partner who invests in a partnership but has no part in the running of the business
Sole trader
A business owned by one person
Spotting an opportunity
The ability to see the need for a particular product or service that customers need
Stakeholders
Groups or individuals who have an interest in business
Stakeholder group
Owners, employees, customers, suppliers, government, local community
Success
For a business, can take many forms, including making profit, surviving and providing a good service to customers
Survival
When a business just manages to keep going
Takeover
Where a business takes a controlling interest in another business
Unlimited liability
Where the responsibility for all the debts of a business rests with the owners of the business. A feature of sole traders and partnerships
Unit 2 – Marketing
Advertising Campaign
A series of advertisements, often using different advertising media
Advertising Media
The methods by which a business can advertise a product. Includes newspapers, TV and radio
Census Data
Data collected by the Government every 10 years, questioning the entire population on their income, occupation etc.
Competitor Pricing
When a price is set based on prices charged by competitor businesses for a similar product
Cost-Plus Pricing
A pricing method that adds a percentage of profit to the total costs of making a product. This gives the selling price.
Decline
When sales are falling as the product or service is seen by customers as being old and they switch to newer products and services
Design
An important element in a number of different products, especially where style and technology work together
Digital Distribution
The distribution of goods and services digitally by downloading from a website
Focus Groups
Selected small groups of customers who give their opinion on products
Growth
When sales are growing strongly as the new product or service becomes known
Innovation
The improvement on an original idea, which will often involve using new processes. It is closely linked to design, where new ideas can be used in a product due to changes in design
Internal Data
Data already within a business based on past performance
Interview
A question sheet filled in by the person conducting the interview
Introduction
When a product or service is first on sale
Invention
The introduction of a totally new product or feature
Marketing
Finding the needs of consumers and demonstrating how a business fulfils those needs in a way that increases sales
Market Data
Information that help marketing decisions. It includes data on such things as market shares, changes in demand and the effect of promotions
Market Research
The collection of data on consumer habits to help decision-making in marketing
Market Segmentation
Splitting the market for a product into different parts, or segments
Market Share
The percentage of total sales of a product that a business has made. If a business sells 20,000 products and the total market for that product is 50,000, then the business has a market share of 40%
Maturity
When sales are at their highest level
P’s of Marketing Mix
Price, Product, Promotion and Place
Penetration Pricing
When a price is set lower than the competitor businesses. Often used by new businesses to break into a market. This should only be seen as a short-term strategy
Physical Distribution
The distribution of goods using a physical presence such as a shop or office
Point of Sale Promotions
Includes price reductions, loss leaders, competitions and free samples
Primary Research
Data collected first-hand, often in the form of surveys. Sometimes referred to as field research
Product Life Cycle
The life of a product, usually shown as a graph divided up into four stages: introduction; growth; maturity; and decline
Promotional Pricing
Where prices are reduced to give products a boost or to sell off old stock. Most commonly seen as sales in shops
Qualitative Data
Data based on opinions of those being asked
Quantitative Data
Data collected that is based on facts or numbers, usually easier to analyse than qualitative data
Questionnaire
A question sheet filled in by the consumer
Research and Development
Used to help introduce both new and existing products. The research may be testing products in a laboratory or conducting market research by interviewing customers
Secondary Research
The collection of data using research or information provided by others, such as magazines, journals and the internet. Often called desk research
Skimming
Where a new product is more advanced than that of competitors; a price is set high as some customers are willing to pay higher prices to own the newest technology.
Target Market
The group of customers to whom a business aims to sell its products. The target market may be other businesses as well as consumers
Trials
Used to test whether customers will buy a product
Unit 3 – Definitions of People
Application Form
A form which asks applicants for personal details, experience and skills
Apprenticeship
A long-term development programme for workers to learn job skills while they work through a mixture of on-and-off-the-job training and study. Apprenticeships lead to some kind of vocational qualification
Authority
The power that one person has to make decisions and to control what other workers do
Accountability
The responsibility that a person has for a job meaning that they will take the blame for what goes wrong as well as the credit for what goes well
Award Scheme
A presentation of some kind to recognise somebody’s effort
Bonus
An additional payment to workers for achieving a target
Chain of Command
The links in the levels of authority from those at the top with the most authority to those at the bottom with the least
Communication
The transmission of a message
Contract of Employment
A legal agreement between an employer and an employee
Customer Service
The service given to customers, including service at the time of sale and after the sale
CV
A document in which the applicant outlines their personal details, experiences and skills
Delegation
The process of giving a manager authority to a subordinate to make decisions for which that manager is responsible
Development
Long term and is focused on the worker to help to realise their longer-term potential
Digital Communication
The exchange of information electronically
Discrimination
When one worker is treated differently from another for no acceptable reason. There are several unacceptable reasons for different treatment
Employment Agency
An agency that has workers readily available for business hire, usually for a short period of time
Employment Law
Designed to protect workers from employers who may treat them unfairly
Employment Tribunal
A panel that hears cases where employment laws may have been broken and which comes to a decision either in favour of the employer or employee
External Communication
Communication between people in an organisation and others outside that organisation
External Methods of Recruitment
Include websites, newspapers, social media and specialist magazines
External Recruitment
When a job vacancy is filled by employing someone from outside the business
Feedback
The response made by a person who receives a communication
Flexible Working
The practice of people working partly at their place of work and partly elsewhere, perhaps at home or while they are mobile
Formal Communication
Communication that uses the official channels of communication
Fringe Benefits
Additional benefits that workers receive on top of their pay. They include pensions, childcare vouchers, subsidised canteen meals
Full-Time Working
When a person works 35 hours or more per week
Functions
Different types of work that need to be done in business including production, finance and marketing
Group Activities
Usually designed to test how well an applicant works with others
Holiday Entitlement
The amount of paid holiday that a worker can have in a year
Horizontal Communication
Communication between people on the same level of the hierarchy in an organisation
Human Resources
The workers employed by a business
Human Resources Plan
A plan detailing workers a business needs – how many, whether they will be full time or part time, the skills they should have and when they will work
Identifying Human Resource Needs
The activity of thinking about the purposes of human resources, and how many and what types of workers will be needed
Induction Training
Training to introduce a new worker to the business, place of work and their fellow workers as well as their jobs
Informal Communication
Communication that is outside the official channels of communication
Internal Communication
Communication between people employed in the same organisation
Internal Methods of Recruitment
Includes notice boards, word of mouth, company website and emails to staff
Internal Recruitment
When a job vacancy is filled by employing someone who is already an employee of the business
Interviews
Sessions in which the people making the appointment asks questions of the applicants
Job Description
Lists the main duties, tasks and responsibilities of a worker
Layers
The number of levels of authority that there are in a chain of command
Letter of Application
A letter written by the applicant usually explaining why they think they are suitable for the job
Motivation
How workers are encouraged to work hard
Off-the-Job Training
Occurs away from the job. It may still be at the same place of work, or the employee may be sent somewhere else for the training
On-the-Job Training
Occurs at the place of work and while the worker is doing their job
Organisation Chart
A diagram that shows how the workers are organised in a business and who is in charge of whom
Pay
The money earned by workers as a reward for the work they do
Part-Time Working
When a person works fewer than 35 hours per week
Person Specification
Lists the qualities, qualifications and knowledge that a person should have to do a particular job
Praise
A method of motivating a worker by complimenting their work and so making their work recognised and valued
Productivity
A measure of output per worker. It is the only way of measuring the performance of workers
Professional Development
Includes both vocational and academic development. It involves learning over a long period of time. Workers may learn through external courses with this learning being reinforced by practical activity in the workplace.
Profit Sharing
When workers receive some of the profits made by a business
Recruitment Agency
A specialist agency that carries out all the tasks involved in recruitment and selection of workers on behalf of an organisation
References
Statements from a previous or current employer or other responsible person about the suitability of the applicant for the job
Regulations
Rules imposed on businesses by the government
Retention
When workers can be kept employed by businesses rather than them leaving to work elsewhere
Retention of Workers
When workers choose to stay in a firm rather than move elsewhere
Selection
The process of choosing between applicants for a job
Self-Employment
When people work as their own business, selling their work to buyers who may be consumers or other businesses
Skills Gap
When the business recruits skilled workers because it is short of them
Skills Shortage
Refers to a situation in which businesses cannot recruit workers with the skills they need
Social Media
Online applications that allow people to create and share content to participate
Span of Control
The number of subordinates who report directly to the line manager
Statement of Employment Particulars
Part of the employment contract. It gives details of the terms of employment
Subordinates
The workers that a line manager is responsible for
Temporary Working
When a person only works for a short period of time for an employer, sometimes on a short-term contract or sometimes just on a day-to-day basis as needed
Tests
Activities completed by applicants which check their skills
The Purpose of Human Resources
The work that must be done by human resources. It is usually broken down into a number of different jobs
Trade Union
An employee organisation that exists to represent the interest of its members
Training
Short term and is focused on helping a worker to do his or her job well
Turnover of Labour
A measure of the number of proportion of a staff who leave a firm each year and need replacing
Verbal Communication
Communication by speaking
Vertical Communication
Communication up or down the hierarchy within an organisation
Website
An online location with several pages that can be contacted by internet users through its address
Working Environment
The quality of the physical workplace and its climate
Working Time Directive
A statement of maximum number of hours that a person can be asked to work
Working While Mobile
When people work when they are on the move, travelling or on holiday
Written Communication
Communication by written words and diagrams
Zero-Hours Contracts
Contracts given to employees which do not guarantee any work. The business will call workers if and when they are needed to ask them to come in to work
Unit 4 – Operations
After-sales service
Advice and help given to a customer after they have bought a product or service
As Described
Means that goods must be as the business described them
Automation
A production process involving machinery that is not controlled by a person but usually controlled by a computer
Batch Production
The process of production where one type of product is made and then production is switched to make a different product
Click and Collect
Ordering online and collecting goods from the store at a later time
Consumer Laws
The area of law which protects the customers of a business. This is mainly through the Consumer Rights Act of 2015
Customer Engagement
The contact between the business and the customer
Customer Service
The name given to an area of business that deals with customer enquiries
E-Commerce
The bringing together of buying and selling electronically
Face to Face Selling
Usually completed in a shop where there is direct contact between buyer and seller
Fit for Purpose
Means that goods must do what they are meant to do
Flow Production
Production of one product that takes place continuously using a production or assembly line. This is sometimes called mass production
Job Production
The process of production where products are made individually
Labour
A factor of production. It is the labour employed by businesses to produce goods and services
Location
The place where a business is sited
Logistics
The management of the transportation and storage of goods
Procurement
The management of purchasing within a business
Product Knowledge
The detailed knowledge of a product or service that staff within a business use to help persuade a customer to buy
Product Processes
The three methods or processes of production – job, batch and flow
Proximity
Means ‘nearness to’. It can refer to proximity to the market, to raw materials and to labour supplies
Quality
About a product being fit for purpose
Quality Assurance
An approach that involves the whole business focusing on quality, thus aiming to prevent quality problems arising
Quality Control
A system for inspecting the quality of the goods or services produced and that they are of a good standard
Raw Materials
Materials that are processed in some way as part of the manufacture of a product
Recalls
When a fault occurs with a product and the business asks for the product to be brought back so it can be repaired or replaced
Returns
Goods which customers take back to the shop because there are problems with the quality of them
Reputation
What customers say and feel about a business. Damage to a reputation can seriously affect a business
Robotics
The use of robots in the process of productions
Satisfactory Quality of Goods
How the goods are made will reflect the price. A high-priced product must be of high quality
Suppliers
Parties who supply goods and/or services to a business
Telesales
Sales completed over the telephone
Transport Infrastructure
The provision of roads, railways, ports and airports in an area for transporting goods and people
Unit 5 – Finance Definitions
Average Rate of Return (ARR)
A method of measuring and comparing the profitability of an investment over the life of the investment
Break-Even Forecast
A prediction about the break-even quantity based on estimates of future sales revenues and costs
Break-Even Quantity
The amount a business must sell to earn enough revenue to just cover its costs so that it does not make a profit nor a loss
Cash
Not simply notes and coins held in the business, but also money in a bank account
Cash Flow Forecast
A statement showing the expected flow of money into and out of a business over a period of time
Closing Balance
The amount of cash left at the end of the month. This becomes the opening balance at the start of the next month
Crowdfunding
Money raised through an appeal to the public
Expenditure
Money that the business pays out
Expenses
The costs of operating a business
Finance Function
Sometimes referred to as the finance department. Only found in larger businesses
Financial Information
Includes details of profit, loss, cash flow, break-even, profit margin and average rate of return. These can be used in helping business decision-making
Fixed Costs
The costs that stay the same as output changes, for example, rent
Gross Profit
Sales minus the cost of sales
Gross Profit Margin
Gross profit divided by sales multiplied by 100
Interest
The amount of money that has to be paid on borrowed money
Income
Money that the business receives
Liquidity
The ability of a business to pay its short-term debts which must be paid in the near future
Loans
The sums borrowed for a certain period at an agreed rate of interest
Loss
Occurs in a business when costs are greater than revenue
Margin of Safety
The amount by which a business’ actual output is greater than its break-even output
Negative Cash Flow
When during one month, more cash is flowing out of the business than flowing in
Net Cash Flow
The total inflow minus total outflow
Net Profit
Gross profit minus the expenses of operating the business
Net Profit Margin
Net profit divided by sales multiplied by 100
Opening Balance
The amount of cash available at the beginning of the month that was the closing balance at the end of the previous month
Overdraft
An arrangement with a bank that a business can spend more money than it has in its account
Owners’ Capital
Money from savings put in to the business by the owner
Positive Cash Flow
When, during one month, more cash flow is flowing into the business than is flowing out of it.
Profit
The revenue received by a business minus the costs of running the business
Profitability Ratios
Calculations such as gross profit margin and net profit margin which help to interpret data
Retained Profit
Profit that is not distributed to shareholders as dividend
Revenue
The money from sales
Sale of Assets
Items sold by the business
Security
Something of value that is offered to a lender as a form of guarantee of payment
Share Issue
Money raised from investors by selling new shares
Short-Term Debts
The bills that a business has to pay in the near future, for example electricity or rent
Taking on a Partner
Adding a new partner who contributes some new capital
Time Period
The length of time for which the finance is required
Total Costs
The addition of fixed and variable costs
Total Inflow
The total amount of cash flowing into a business
Total Outflow
The total amount of cash flowing out of a business
Trade Credit
When the business has the goods to sell and agrees to pay at some time later
Variable Costs
The costs that change as output changes, for example, wages
Unit 6 – Influence on Business
Capital
Money or assets such as machines, buildings, vehicles
Child Labour
The use of young children, below the legal age for employment, in order to achieve low-cost production
Climate Change
The process is when average temperatures rise or fall and patterns of weather change
Consumer Income
The total amount of income that all customers in the country receive and which they have available to spend
Customers
Buyers who buy goods and services for the satisfaction or benefit they will get from them. Customers largely buy from retailers
Distribution of Income
Refers to how the income is shared out amongst different people in the community.
Economic Climate
Refers to how well the country is doing in terms of the levels of income and employment
Economic Growth
A period when GDP is rising, causing income and employment to rise
Environmentally Friendly
An adjective that describes consumers and businesses that act to make production sustainable
Ethical Business
Businesses that behave in a morally correct way
Ethical Marketing
Marketing activities that seek to give customers information to make good choices for themselves
Ethics
What is right and what is wrong
Free Trade
The absence of restrictions on trade between countries
Globalisation
The process by which business activity around the world has become increasingly interconnected
Global Warming
The rise in average temperatures that scientists say is taking place
Gross Domestic Product (GDP)
A measure of how much a country produces in a year. It influences the level of income and employment
Income
The amount of money that people receive from work and from assets they own, such as shares and property
International Branding
Creating an image or values for a product that are communicated in countries around the world
International Economic Climate
Refers to what is happening to income and employment in different parts of the world
Level of Employment
The number of people in work in a country
Level of Income
The average income of people in a country
Level of Unemployment
The number of people out of work in a country
Multinational Companies
Businesses that operate in different countries around the world
Non-Renewable Resources
Resources that can only be used once, such as oil
Pollution
Causing harm to the environment including air, land and water
Productivity
A measure of the output of each worker on average
Quota
A limit in terms of weight or value on the amount of a good or service that can be imported
Recession
A period when GDP is falling, causing income and employment to fall
Recycling
When resources are reused produce something
Regulations
Rules about the goods and services that can be sold in a country
Renewable Resources
Resources that can be used more than once, such as wind or water power, or that can be recreated such as crops
Sustainable Production
When production does not lead to the depletion of natural resources
Tariff
A tax on goods or services that is imported
Trade
The import and export of goods and services
Unit Cost
The cost per unit produced. The greater the productivity of workers, the lower the unit cost of production
Waste Disposal
The process of getting rid of unwanted materials
