Key Terms

• What is the definition of 'Aim' in business?


  The intention to reach a goal.
• What does 'Air pollution' refer to?


  The presence of harmful substances in the air.
• What is an 'Asset' in business?


  Something the business owns that has value.
• How is the 'Average rate of return' calculated?


  Average rate of return = average return per annum / initial investment × 100.
• What is the purpose of the 'Boston matrix'?


  To analyze the contribution of each product in a business' product portfolio.
• What does 'Brand image' refer to?


  The consumers' perception of the brand.
• What does a 'Break-even chart' represent?


  A diagram showing total costs against total sales revenue.
• What is 'Break-even output'?


  The point where total sales equals total costs.
• What is 'Buffer stock' used for?


  To protect the production process from unforeseen shortages.
• What is a 'Business plan'?


  A detailed statement of how the business intends to operate.
• What is 'Cash' in a business context?


  Money that the business has in cash or at the bank.
• What is a 'Cash flow forecast'?


  A financial planning tool estimating money coming in and out of the business.
• What is 'Cash inflow'?


  Money received by the business from operations or investments.
• What is 'Cash outflow'?


  Money paid out by the business to fund operations or investments.
• What does 'Centralisation' mean in a business context?


  Maintaining control by keeping authority at senior levels.
• What is 'Chain of command'?


  The line showing responsibility from top to bottom of an organization.
• What are 'Channels of distribution'?


  The route ownership of the product transfers from seller to buyer.
• What is 'Closing balance'?


  The amount remaining in the account at the end of an accounting period.
• What is 'Commission'?


  An amount paid to an employee based on a percentage of sales achieved.
• What is 'Competition' in business?


  The rivalry between businesses selling goods/services in the same market.
• What is 'Competitive pricing'?


  Setting the price of a product in line with competitors' prices.
• What is 'Consumer law'?


  Laws ensuring businesses make safe products and deal with customers fairly.
• What is 'Consumer spending'?


  The money spent by households on goods and services.
• What are 'Contracts of employment'?


  A legal document outlining job terms and conditions.
• What is 'Cost' in a business context?


  The money spent by a business on goods and services.
• What is 'Cost-plus pricing'?


  Setting the price higher than the cost of producing it to make a profit.
• Who is a 'Customer'?


  Individuals or organizations that purchase goods/services.
• What is 'Customer engagement'?


  The relationship between the business and the customer focused on their requirements.
• What is 'Customer loyalty'?


  The likelihood that past customers will continue to buy from the business.
• What is 'Customer satisfaction'?


  Whether customers are pleased with the goods/services they receive.
• What does 'Decentralisation' mean?


  Where authority is spread widely through the organization.
• What is 'Delayering'?


  The reorganization of employees to reduce management levels.
• What is 'Delegation'?


  Allocating a task to someone who would not normally be responsible for it.
• What is 'Demand' in business?


  The quantity of a product that will be bought at a specific price.
• Who are 'Directors' in a business?


  People elected by shareholders to run the business.
• What are 'Diseconomies of scale'?


  When a business grows too large, leading to increased unit costs.
• What is 'Disposal of waste'?


  The removal, storage, or destruction of unwanted material.
• What is a 'Dividend'?


  A portion of after-tax profit paid to shareholders.
• What is 'E-commerce'?


  Business transactions carried out electronically on the internet.
• What are 'Economies of scale'?


  The cost advantage of producing on a large scale.