Business

• Risk for entrepreneur when starting new business (3)

  Main points:

  • financial risk
  • business needs financial investment
  • Risk of business failure so all money could be lost
• Add value to a product (3)


  Main points:

  • unique selling point
  • products stands out/differentiate from competitors
  • customers willing to pay extra - for convenience/aesthetic
• margin of safety = actual sales - break even
• disadvantage for using overdraft as a source of finance (3)


  main points:

  • high interest rates
  • expensive
  • increases business costs
• impact on business for increase in unemployment (3)

  main points:

  • decrease in spending
  • slows down economy and business
  • low consumer spending affects profitability and turnover
  • lead to job cuts
• How business can reduce variable cost (3)

  Main points:

  • find cheaper suppliers
  • pay less for raw materials
  • so lower cost of production per unit
• advantage to good employment legislation (3)

  main points:

  • makes staff feel valued
  • increases motivation and effieceny
  • increases productivity/quality of work
• conflicts between employees and owners affect profit (6)

  main points:

  • employees demand high wages —-> so staff work less hard to protest ——> lower productivity —-> so decrease profits—> can lower profit margins (converse)
  • staff may feel less valued and less obligated to perform jobs to the highest quality
  • lower profits
• Autonomy - The independence a worker has within their job
• Average rate of return - The annual percentage profit that an investment makes compared to the cost of the investment
• Batch production - Method of production where groups or types of products are made at several stages
• Break even - Where total revenue is the same as total costs and no profit or loss is made
• Buffer stock - A quantity of stock kept in store to safeguard against unforeseen shortages or demands
• Capacity - The maximum production output a business can achieve with its existing resources
• Capital - The initial money that is needed to start a business that is normally linked to purchases of machinery

  and premises
• Centralised - Where business decision making and implementation take place at and from the business headquarters
• Chains of command - Hierarchy within an organisation which shows who reports to whom
• Consumer law - Legal constraints that protect the consumer from unfair business practice
• Consumer rights - Where consumers are protected by laws in terms of product quality, returning goods, repairs and

  Rights replacements, digital content and delivery
• Curriculum Vitae - A document summarising the personal details, qualifications and experiences of an individual.

  Often used to apply for a job
• Customer loyalty - Whether customers return to a business on a regular basis to purchase more of the same goods

  loyalty or other goods that they produce
• Decentralised - A business structure and its decision-making is spread out to include more junior managers

  as well as individual business units or locations
• Delayering - A method of saving costs in an organisation by reducing the number of layers
• Digital communication - Sending messages using mobile or internet technology
• Distribution - How a product gets from the producer to the consumer
• Dividend - The share of the profit received by a shareholder
• Economic climate - How a business is affected by economic variables such as interest rates or inflation in a country or in other countries
• Efficiency - Measures of how much output is being produced per unit of input
• Environmental considerations - The business takes into account consumer and producer concerns about the environment
• E-tailer - An electronic retailer i.e. sells goods using the internet
• Ethical objectives - Where businesses have as an aim what is morally right rather than necessarily the most profitable option
• Excessive communication - When too much communication can lead to workers being ineffective or inefficient because of

  unnecessary work acknowledging and responding to communications
• Exchange rate - The amount of foreign currency that can be purchased with another currency
• Exports - Goods or services that are produced in this country and sold to other countries
• Extension strategy - Methods of prolonging the product life cycle to extend the life of a product
• External influence - Factors that affect a business but they cannot control
• External recruitment - Where a business aims to finds new workers from outside of its current workforce
• Financial objectives - Quantifiable targets for a business including profit, sales and costs
• Fixed premises - Where business premises are located in a building; the use has decreased with the rise of the

  internet increasing home or teleworking
• Flat structure - Where the organisational structure has few layers, short chains of command and wide spans of control