CCEA Business Studies AS Unit 1|GUARANTEED SUCCESS.(A+)

CCEA Business Studies AS Unit 1|GUARANTEED SUCCESS. Business Enterprise Any operation established to produce or supply goods/services desired by consumers generally with a view to making profit. Factors of Production The inputs of land, labor, capital and enterprise required to produce or supply goods/services. Entrepreneur Someone who starts and runs a business and has the responsibility of the risks involved. Entrepreneurial Characteristics These are common traits found in successful entrepreneurs and examples may include innovative, visionary, flexibility, knowledgeable, risk taker, decisiveness, goal orientated, motivated and committed. Adding Value A business will add value to raw materials used in its production process so that there will be a significant difference between the cost of purchasing raw materials and the selling prices of the finished article. Competitive Advantage A favorable situation that a business organization has over its rivals arising from a marketing opportunity such as price or cost or both. Its strengths and positions a business better within the business environment. Sole Trader A business organization which has a single owner and in which there is no legal distinction between the owner and the business. The owner receives all the profits and has unlimited responsibility for all losses and debts. Partnership A business relationship of two or more entities conducting business for mutual benefit. They manage the business and share equal responsibility for the company's profits and losses, and its debts and liabilities. Deed of Partnership A binding legal document which states the formal rights of partners in the business. Sleeping Partner A partner who contributes capital and shares in profits/losses but does not participate in decision making. Limited Partnership A partnership which has at least one ordinary partner who has unlimited liability. A limited partner contributes capital, share in profits but has limited liability. A limited partner cannot participate in decision making. Limited Company A business organization which has separate legal entity from those of its owners. The liability of the members of the company is limited to what they have invested to the company. Shareholders Investors who have bought a share in the company. Limited Liability Each shareholder is only liable for the original amount of money invested in the business. Franchise An agreement between two parties, which gives one party the rights to market a product or service using the trademark of another business. Social Enterprise A business venture established to address a social issue within a community or to improve the quality of life for citizens or the environment. All profit made is reinvested to help achieve the social objective of the business. Stakeholder Groups Specific groups of people who have a genuine interest in the activities of a particular business and who will be affected by the activities of the business. Examples include owners, employees, customers, lenders, government, suppliers, management and community. Consumer Goods and Services Market This is where households purchase the goods/services they desire and businesses try to meet their demand by selling the goods/services in store, online etc. Capital Goods Market This in an industrial market selling tangible goods required by businesses who supply the consumer goods market. Items include machinery, equipment, vehicles and tools. Labor Market This is where those seeking work can interact with employers who are competing to hire them. Demand The desire to own anything, the ability to pay for it, and the willingness to pay. Supply The quantity of products which suppliers make available to the market at any given price. Equilibrium Price The price at which the quantity demanded by consumers is equal to the quantity supplied. Mass Market A broad, non-targeted, non-segmented market. Niche Market A business aims their product at a narrow or focused subset of a larger market sector. Quality Providing goods/services that satisfy the consumers’ needs and expectations. TQM (Total Quality Management) A culture of quality embraced by everyone within an organization. The emphasis is on 'getting it right' first time to make the organization more cost efficient and to build up a good reputation for high quality products/services. Quality Assurance Processes established throughout the organization to ensure that all activities associated with producing/supplying goods or services meet the highest possible standard of quality for customers. Quality Control Operational checks carried out at various stages of the products manufacture to ensure all errors are eliminated and the highest standards of quality has maintained. ISO 9000 A series of quality standards developed by the International Organizations for Standardization that are designed as a guide to ensure quality of products, services and management in a wide range of organizations. Productivity This is a measure of how efficient a firm is in providing its product/service. Investment This refers to the purchase of capital goods which are used to produce further wealth. It can also refer to expenditure by a business that is likely to yield a return in the future e.g. research and development. Job Production A method of production which involves employing all factors to complete one unit of output at a time to customer specifications. Batch Production A method of production which involves completing one operation at a time on all units before performing the next. Flow Production Very large production of a standard product, where one unit of production is performed continuously, one after the other, usually on a production line. Business Structure The way in which a business is organized. Hierarchy This refers to the order or levels of management in a business from the lowest to the highest. Chain of Command The system of reporting relationships within the organization. Span of Control The number of subordinates working under a superior. Organization Chart A diagram illustrating the structure of an organization. Delegation The authority/responsibility passed down from a superior to a subordinate. Centralization The process by which the activities of an organization, particularly those regarding planning and decision-making, become concentrated within a particular location and/or group. De-Centralization The policy of delegating decision-making authority down the lower levels in an organization, relatively away from lower in a central authority. It shows fewer tiers in the organizational structure, wider span of control, and a bottom to top flow of decision making and flow of ideas. De-Layering The removal of managerial layers in the hierarchical structure of an organization. Downsizing The process of reducing capacity, this is done usually by making staff redundant. Outsourcing Transferring the responsibility for some business activities to an outside firm e.g. catering/cleaning service. Succession Planning This is undertaken by the Human Resources department to ensure the organization has the correct number of staff with the appropriate level of qualifications, skills and experience to meet its objectives in the future. Skills Audit This is a process undertaken by a business to help them identify any skills gaps within the organization. This information is used to develop future training programs. Induction Training New recruits will undergo a programme to welcome them into the business. This can include a tour of the organization, health and safety training, security systems, meeting key personnel, rules and regulations and terms of employment. On-the-job Training Learning the job by observing an experienced worker i.e. sitting next to Nellie. Off-the-job Training Employee education relating to the job is carried out away from the normal working environment. Continuous Professional Development (CPD) A process of tracking and recording the knowledge, skills and experience gained by an employee. This may be formal/informal and internal/external to the business. Labor Turnover The number of employees leaving the organization. It may be calculated by expressing the number of staff leaving the organization during a period in time by the average number of staff in post during the period. Effective Recruitment The selection and retention of the best candidate for the job. Internal Recruitment Filling a vacancy by appointing someone from within the organization. External Recruitment Filling a vacancy by appointing someone from outside the organization. Job Analysis A study of what the job entails such as the skills, tasks and performance expected. Job Description A general outline of the duties to be undertaken, the reporting relationships and reference may be made to remuneration for the successful candidate. Person Specification A list of all the qualifications, skills, qualities and experience required from a suitable applicant. Psychometric Testing A selection strategy used to assess the suitability of a candidate for higher positions with the organization. The test may include knowledge, verbal and numerical reasoning and personality traits. Appraisal The process used by management to examine and evaluate employee performance against pre-set standards. Motivation This is the process of encouraging people to think and want to achieve the objectives set by management. Maslow He producing a theory based on the classification of needs and their relationship with each other. He placed these in a Hierarchy of Needs and presented it as a pyramid. Herzberg He developed the Two Factor theory consisting of Hygiene Factors and Motivators. The theory was based around the design of the actual job. Taylor He developed the Scientific Management theory as a way of increasing productivity and lowering costs. Motivators Incentives given to workers to encourage greater productivity and satisfaction at work. Monetary Motivators Financial incentives used to encourage greater productivity. Performance-Related Pay Remuneration paid to an employee based on pre-agreed targets usually in the form of a bonus or an increase in salary. Time Rates A system of rewarding employees for the amount of time spent doing a particular job based on a specific rate per hour. Commission Money paid to an employee based on the number of products sold or for completing a particular task. Fees A payment made in return for professional advice or service to the business. Profit Sharing A bonus paid to an employee which is calculated on the level of profit made by the business. Non-Monetary Motivators Incentives that focus on job design used by management to encourage greater productivity. Fringe Benefits Additional benefits given to workers e.g. company car for executives, private health care, company pension, car parking or luncheon vouchers. Job Enlargement The increase in scope of the role of an employee i.e. doing more of the same. It simply increases the number of tasks without changing the challenge. Job Rotation Transferring between jobs allows employees to gain more experience and become multi-skilled. Empowerment Official authority given by managers to employees to make decision and control their own activities. Quality Circles Small groups of workers in the same area of production who meet regularly to study and solve problems related to their job. Team Working Work carried out by a group of motivated, multi-skilled employees who have a shared team objective. Management People in authority who are responsible for 'getting things done' usually through other people. Leadership A manager may have a leadership style, but not always, as this involves demonstrating the ability to adapt to changing situations and persuading others to follow. Authoritarian The manager has total power over decision making and communication is only one way. Paternalistic The manager dictates what has to be done but indicates the benefits of the employees of a particular course of action. Democratic The manager provides opportunities and encourages employees to participate in decision making. Laissez-Faire Translated, this means 'leave well alone', so the manager encourages employees to make their own decisions with few restrictions. Cost Advantage The ability of a particular firms to produce a good/service at a lower cost than its rivals. Economies of Scale Those advantages of increased size that lead to falling average costs. The cost advantages that a firm receives from operating on a large scale. Differentiation Advantage The firm's ability to separate itself and its products from that of its main competitors and therefore make its offering more attractive to a particular target market. Unique Selling Point (USP) Something that sets one firms product/service apart from that of its competitors. Sustainable Competitive Advantage A long-term advantage possessed by an organization, which is not easily copied or eroded by its competitors. Business Any activity carried out by one or more people with the intention of producing goods/services that can then be sold onto others. Market Any place where buyers and sellers come together to exchange goods and services. Production The process by which businesses provide goods/services which are required by consumers in their particular market. Cell Production A production technique that groups workers into multi-skilled cells, with each cell taking responsibility for the production of a particular product or part of a product. Lean Production A production technique which attempts to produce goods and service while stripping out waste. It entails doing more work with less labor, less time, less space, less inventory and as a result lower cost. Tall Organizational Structure A structure where there are a number of layers of management. Each manager has a narrow span of control. Flat Organizational Structure A structure where there are fewer layers of management, meaning each manager has a wider span of control. Functional Structure This involves arranging the business according to what each section or department does. e.g. Human Resources, Finance and Marketing. Matrix Structure Contains teams of people created from various sections of the business and it is led by a project manager. The teams are created for the purpose of specific project and will often only exist for the duration of the project. They are usually deployed to develop new product and services. Piece Work Employees are paid for each unit they produce. It enables an organization to reward employees for their effort. Job Enrichment Gives employees the opportunity to complete interesting complex and challenging tasks which are related to a particular piece of work.