National 5 Business Management

Business
An organisation that provides goods and services
Needs
Basic requirements for survival — the goods and services a person must have (food, water, etc)
Wants
Goods that are purchased to add comfort or pleasure to life
Durable Good
Items with lasting value, the purchase of which is considered a form of savings
Non-Durable Good
goods that last a short period of time, such as food, light bulbs, and sneakers
Service
intangible things of value (haircuts, maid service, laundry, education, etc.)
Land
Any natural resource provided by nature and used in the production process
Labour
productive work (especially physical work done for wages)
Capital
Man made resources used to make a product
Enterprise
Combining the Factors of Production
Factors of Production
Land, Labour, Capital and Enterprise
Added Value
The increase in worth of a product or service as a result of a particular activity.
Primary Sector
The part of the economy that produces raw materials; examples include agriculture, fishing, mining, and forestry.
Secondary Sector
The portion of the economy concerned with manufacturing useful products through processing, transforming, and assembling raw materials.
Tertiary Sector
the part of the economy that involves services rather than goods
Sectors of Industry
Primary, Secondary & Tertiary
Sole Trader
a business owned by a single person
Partnership
A business in which two or more persons combine their assets and skills
Private Limited Company
A business organization owned by shareholders with limited liability but whose shares cannot be bought or sold to the general public.
Public Limited Company
a business with limited liability whose shares are available to the general public to buy on the stock market
Private Sector
Comprises businesses owned and controlled by individuals or groups of individuals
Public Sector
Comprises organisations accountable to and controlled by central or local government (the state)
Third Sector
The Not For Profit Sector
Dividend
A payment from profits by a company’s Board of Director’s to shareholders.
Unlimited Liability
The owner is personally and fully responsible for all losses and debts of the business
Social Enterprise
A business that is set up to help society rather than to make a profit.
Customer Satisfaction
the extent to which a product’s perceived performance matches a buyer’s expectations
After Sales Service
providing support for a product post purchase
Social Responsibility
An organization’s aim to have a positive impact on society.
PESTEC
Political, Economic, Social, Technological, Environmental, Competitive
Recession
A slowdown in a nation’s economy
Unemployment
Measures the number of people who are able to work, but do not have a job during a period of time.
Inflation
A rise in the general level of prices in an economy.
Legislation
A law or set of laws made by a government
Stakeholder
A person with a key interest in the success of a business
Customer
People who buy the product/service
Owner
Person who controls the company
Manager
Person who makes decisions for the company
Employees
People who work for the company
Suppliers
Companies that provide material, human, financial, and informational resources to other companies
Market
A place where buyers and sellers meet
Market Segmentation
Dividing a market into groups of similar customers
Marketing Mix
The 4 Ps
Product
The item made by the business and sold to customers
Price
How much you charge for your product
Place
Where the product is sold
Promotion
How customers are made aware of the product
Prototype
A working model of the test product
Product Life Cycle
Five stages that product goes through over its life: development, introduction, growth, maturity, and decline.
Branding
A firm uses a name, phrase, design, symbols, to distinguish itself from competitors.
Premium Pricing
Setting a high price for a quality product
Value Pricing
A low cost pricing strategy
Promotional Pricing
Temporarily pricing products below the list price, and sometimes even below cost, to increase short-run sales
Cost plus pricing
Adding a mark-up percentage to costs & expenses to determine selling price
Destroyer Pricing
Charging a deliberately low price to try to undermine competitors and put them out of business
Demand Oriented Pricing
Charging customers different prices for the same product or service depending on demand
Psychological Pricing
Setting prices that take account of customers’ perception of value of the product
Warehouse
a storehouse for goods and merchandise
Advertising
A paid form of communication sent out by a business about a product or service.
Public Relations
any activity designed to create a favourable image of a business, its products, or its policies
Sales Promotion
Short-term incentives to encourage the purchase or sale of a product or service
Merchandising
Using point of sale displays to attract customers into the store
Sponsorship
When a company pays money to have their name or logo used in association with an event or an activity
Celebrity Endorsement
use of famous people to promote a product
Trade Fair
an event at which many different companies show and sell their products
Market Research
The activity of gathering information about consumers’ needs and preferences.
Field Research
Data collected first hand
Desk Research
Data collected second hand
Questionnaire
A list of questions, usually printed, submitted for replies that can be analysed for information
Focus Group
A small group of individuals who are led in discussion by a facilitator in order to gather opinions on an issue
Hall Test
sampling products and offering feedback
IPO
Input Process Output
Stock
A supply of something available for future use.
Job Production
The manufacture of one-off goods tailor made to meet the specifications of the customer.
Batch Production
A production method that produces goods in groups
Flow Production
large quantities of a product are produced in a continuous process. Also called mass production because of the large quantity of a standardised product that is produced
Labour Intensive
Using a high proportion of employee effort rather than machinery in the production process.
Capital Intensive
Using a high proportion of machinery rather than employee effort in the production process
Quality
Consistently producing what the customer wants while reducing errors before and after delivery.
Quality Control
Checking the product at the end of production
Quality Assurance
Checking the product at each stage of production
Quality Circle
Voluntary groups of people drawn from various production teams who make suggestions about how to improve the product
Benchmarking
When a firm emulate the leading product in the field and try to improve upon it
Total Quality Management
Aims to have 100% customer satisfaction and aims for zero defects. Every employee is treated like a customer.
Recycling
Collecting and reprocessing a resource or product to make into new products.
Recruitment
Process of encouraging people to apply for a job vacancy
Selection
Process of choosing the best person for a job
Job Analysis
Looking at the tasks and duties in a position to see what it consists of
Job Description
A written statement listing duties and responsibilities of a specific role
Person Specification
Document which outlines the requirements, qualifications and expertise required by the ideal candidate
Leet
creating the shortlist for interview
Assessment Centre
A series of exercises in which management candidates perform realistic management tasks while being observed by appraisers.
Interview
A formal meeting arranged to evaluate an applicant
Induction
Training for new employees
On the job training
Training provided at the employee’s place of work
Off the job training
Training provided at college or a training centre
E-Learning
Delivery of formal and informal training and educational materials, processes, and programs via the use of electronic media
E-Commerce
Buying and selling online
Motivation
Encouraging employees to get the best out of them
Fringe Benefits
Any financial extras beyond the regular pay check, such as health insurance, life insurance, paid vacation retirement, and/or company car
Theory X
assumes that workers are basically lazy, error-prone, and extrinsically motivated by money and, thus, should be directed from above.
Theory Y
assumes that, given challenge and freedom, workers are motivated to achieve self-esteem and to demonstrate their competence and creativity.
Hierarchy of Needs
Maslow’s pyramid of human needs, beginning at the base with physiological needs that must first be satisfied before higher-level safety needs and then psychological needs become active
Salary
The money paid annually for employee services
Wages
An amount of money paid to an employee at a specified rate per hour worked
Piece Rate
rewarding employees for the number of items they produce.
Scientific Management
a management theory using efficiency experts to examine each work operations and find ways to minimize the time needed to complete it
Bonus
Receiving an extra payment for meeting a goal or target
Commission
Receiving a percentage of money based on the amount of sales they make
Time Rate
rate of pay based on an amount of time, usually per hour
Teleworking
Working from home but staying in touch with others with the help of technology
Job Share
one full-time job split between two employees, each working on a part-time basis
Flexitime
a system in which people work a particular number of hours each week or month, but can change the times at which they start and finish each day
Industrial Action
Measures taken by the workforce or trade union to put pressure on management to settle an industrial dispute in favour of employees.
Strike
An organized work stoppage intended to force an employer to address union demands.
Work to Rule
A job action in which workers cause a slowdown by doing only the minimum amount required by the rules of the workplace
Go Slow
a form of industrial action when the employees do their normal tasks but more slowly than usual
Sit in
form of protest where employees occupy the workplace and refuse to leave
Overtime ban
a form of industrial action when employees refuse to work longer than their normal working hours
Equality Act
Legislation that brings together all discrimination acts
National Minimum Wage
the amount by law that firms are must pay their workers
Health and Safety at Work Act
Legislation that protects the working conditions of employees from danger or exploitation