Business paper 2

• Aim


  The intention to reach a goal.
• Asset


  Something the business owns; it has a value.
• Air pollution


  The presence or introduction of harmful substances into the air causing disease, allergies or damage to humans, animals, plants or the built environment.
• Advertising


  A method of communicating information about the product; the business pays for advertising time/space.
• Consumer law


  Laws designed to ensure that businesses make products that are safe and of good quality, and that they deal with customers honestly and fairly.
• Brand image


  The consumers' perception of the brand; its character, qualities and shortcomings. It is developed over time and operates as a consistent theme through advertising campaigns.
• Average rate of return

  The average profit for the year as a percentage of the original investment.
• Business plan


  A detailed statement of how the business intends to operate, either at start-up or during a given period of time.
• Competition


  The rivalry between businesses looking to sell their goods/services in the same market.
• Consumer spending


  The money spent by households on goods and services to satisfy their needs and wants.
• Channels of distribution


  The route the ownership of the product transfers from the seller to the buyer; it may be a single transaction or pass through others such as wholesalers, distributors, agents and retailers.
• Break-even chart


  A diagrammatic representation of the costs and revenue for a product; it plots total costs against total sales revenue, showing the break-even point where they cross.
• Break-even output


  The point at which the business' total sales equals the total costs. There is neither profit nor loss.
• Cost


  The money spent by a business on goods and services.
• Competitive pricing


  Setting the price of a product so that it is in line with competitors' prices.
• Contracts of employment


  A legal document that sets out the terms and conditions of the job for the employer and the employee.
• Customer


  Individuals, businesses or organisations that purchase goods/services and make decisions about which supplier to choose.
• Disposal of waste


  The removal, storage or destruction of unwanted material. Methods include recycling, burning and landfill sites.
• Cost-plus pricing


  Setting the price of a good or service at an amount higher than the cost of producing it so that a profit is made.
• Cash


  Money that the business has in cash or at the bank.
• Cash flow forecast


  A financial planning tool that estimates the money coming into and going out of the business on a month-by-month basis; it allows the business to predict times when additional finance may be needed to maintain liquidity.
• Customer engagement


  The relationship between the business and the customer that puts the customer's requirements at the centre of the operation to build brand loyalty.
• E-commerce


  Business transactions carried out electronically on the internet
• Customer satisfaction


  Whether customers are pleased with the goods/services they receive; whether they would purchase again.
• Demand


  The quantity of a particular product that will be bought at particular price over a specific time.
• Extension strategies


  Methods that can be used to prolong the life of a product; could include price reductions, modifications to the product or relaunch.
• Cash inflow


  Money received by the business from its operations or investments.
• Employment law


  Rulings that relate to the rights and responsibilities of people who work for a business; they affect the recruitment and selection process and how the business deals with its workers.
• Focus groups


  A small number of people from the target market brought together to discuss a particular product; produces qualitative data about their preferences and opinions.
• Cash outflow


  Money paid out by the business to fund its operations or investment activities.
• Equality Act (2010)


  Protects people from discrimination in the workplace and in wider society. It sets out the different ways in which it is unlawful to treat someone.
• Directors


  The people who are elected by the shareholders to run the business on their behalf.
• Ethical objectives


  A business' goals that relate to fair business practice or moral guidelines and make a positive contribution to the business' reputation.
• Loss leader


  A good or service sold at below cost price to bring customers into the shop with the intention that, once there, they may purchase full-priced items too.
• Closing balance


  The amount that remains in the account at the end of an accounting period.
• Diseconomies of scale


  When a business grows too large, leading to a possible increase in unit cost.
• Dividend


  A portion of the after-tax profit that is paid to shareholders according to the number of shares they own.
• Ethics


  The moral principles that guide how a business operates.
• Market research


  Collecting information about the customers' needs, wants and preferences that will help the business to make design, production and marketing decisions.
• External sources of finance

  Obtaining funds from sources that are not part of the business; possibilities include bank loan, mortgage, overdraft, additional partner or share issue.