Definitions

1. Entrepreneurs are individuals who invested money in the business, are involved in managing other factors of production and bear the risks of profit and loss. Explained in more detail here.
2. Sole Trader - A single owner business who is the sole investor, decision maker and enjoys the whole profit of the business alone
3. Partnership - These are businesses that has two to twenty owners who will invest money, take decisions and share the profit or loss of the business. Since different owners form the business each one of them might be skilled in various fields
4. Private Limited -These are companies registered under the registrar of joint stock companies; they sell shares to known groups of people mostly among family, friends or close peers. The shareholders of the company deny any external involvement when it comes to selling shares or taking decisions. The ownership of the company will strictly remain within a closed group
5. Public Limited - These are companies registered under the registrar of joint stock companies; they sell shares to any member of the public through the stock market. Normally, these companies are larger in size as they can attract funds from external investors
6. Co-operative Society - An independent organisation, which works for the benefit of their members
7. Friendly Societies - independent organisations providing financial services to its members by attracting deposits and providing loans with lower interest rates to its members
8. Charity - works for social welfare by attracting money from donations
9. Pressure Groups - an organisation which uses various forms of advocacy to influence public opinion in their favour. Normally they force businesses to act ethically
10. Holding company - a company which holds multiple majority shares in other ventures
11. Stakeholders - These are groups of individuals or institutions that are affected directly or indirectly by the decisions undertaken by the business. There are two types of stakeholders, internal and external.
12. Marketing is the management process involved in identifying, anticipating and satisfying consumer requirements profitably
13. Product orientation - an approach to business which places the main focus of attention upon the production process and the product itself
14. Market orientation - an approach to business which places the main focus of attention upon understanding the individual needs of customers and including them in the design of the new product
15. Market research is the collection, collation and analysis of data relating to the marketing and consumption of goods and services
16. Quantitative - the collection of data that can be quantified. Based on numbers - 56% of 18 year olds drink milk at least 4 times a week - doesn't tell you why, when or how
17. Qualitative - the collection of data about attitudes, beliefs and intentions in more detail. It tells you why, when and how
18. Primary research - the gathering of new data which was not collected before. Also known as field research
19. Secondary research - the collection of data that has already been collected for another purpose. Also known as desk research
20. Population is the whole group who are the subjects of market research
21. Sample is the part of the population who is going to participate in the research
22. Market segmentation - breaking down a large market into different sub groups who share similar characteristics
23. Market positioning - the perception that customers have about a product or brand
24. Market map - a two dimensional diagram which shows two of the attributes or characteristics of a brand and those of rival brands in a market
25. A competitive advantage is a clear performance differential over the competition on factors that are important to customers
26. Added value - the difference between cost price and selling price is the added value of a product
27. Mass marketing is a market coverage strategy in which a firm decides to ignore market segment differences and appeal to the whole market with one offer or one strategy 
28. A niche market is the subset of the market on which a specific product is focused. The market niche is defined with the product features aimed at satisfying specific market needs, as well as the price range, production quality and the demographics that it is intended to impact. It is also a small market segment.
29. Demand is the quantity of goods that a certain group of customers are willing and able to purchase at a given price and at a given time
30. Supply is the quantity of goods that a supplier is willing to sell at a given price and at a given time
31. Sources of Finance are various points of generating funds to fulfil business objectives. Explained in more detail here.
32. Retained profit - profit reserve from previous years of operations
33. Sale of Unutilized Fixed Assets is done in order to liquidize it to cover the day-to-day expenses of the business
34. Working Capital is the amount of money that circulates within a business to cover the day to day expenses and short term debts
35. A bank loan is the most common form of loan capital for a business. A bank loan provides medium or long term finance. The bank sets the fixed period over which the loan is provided(3, 5 0r 10 years, for example), the rate of interest and the timing and amount of repayments
36. A bank overdraft is an extension of credit from a lending institution when an account reaches zero. An overdraft allows the individual to continue withdrawing money even if the account has no funds in it. Basically the bank allows people to borrow a set amount of money
37. Leasing - renting a fixed asset when there is a shortage of funds
38. Hire purchase (abbreviated HP, colloquially sometimes never-never) is the legal term for a contract, in which a purchaser agrees to pay for goods in parts or a percentage over a number of months
39. Venture capital is capital invested in a project in which there is a substantial element of risk, typically a new or expanding business
40. A debenture is a long term security from the public yielding a fixed rate of interest issued by a company and secured against assets
41. Share Capital is money raised from the stock market by selling shares to the general public
42. Debt Factoring refers to selling off debts to a financial institutes before maturity at a discounted rate
43. Trade Credit is an essential tool for financial growth. Trade credit is the credit extended to the business by suppliers who let the firm buy then and pay later. Any instance when delivery of materials, equipment or other valuables is made without paying cash on the spot, it is trade credit
44. Peer to Peer Financing or crowd funding, commonly abbreviated as P2PL is the practice of lending money to unrelated individuals or "peers" without going through a traditional financial intermediary such as a bank or any other traditional financial institution
45. Break Even Point pinpoints the number of output a business will need to sell to cover its total cost. At this level of output, a business will neither make profit or loss, it will break even
46. Cash Flow Forecast or Cash Flow Management is a key aspect of financial management of a business, planning its future cash requirements to avoid a crisis of liquidity. Cash flow forecasting is important because, if a business runs out of cash and is not able to obtain new finance, it will become insolvent
47. Marketing is the process of identifying, anticipating and satisfying consumer demand profitably
48. Marketing Objectives are goals that a business is trying to achieve
49. Mass Marketing is a market coverage strategy in which a firm decides to ignore market segment differences and appeal to the whole market with one offer or strategy
50. A niche market is the subset of the market on which a specific product is focused. The market niche is defined with the product features aimed at satisfying specific market needs, as well as the price range, production quality and the demographics that it is intended to impact. It is also a small market segment.
51. The Marketing Mix refers to the tools available to a business to gain the reaction it is seeking from its target market in relation to its marketing objective
52. Product Life Cycle shows the stages that products go through from development to withdrawal in the market
53. The Product Portfolio shows the range of products a company has in development or available for customers at any one time
54. The Boston Matrix is a means of analysing the product portfolio and informing decision making about possible marketing strategies
55. A brand is a product with unique character, for instance in design or image. It is consistent and well recognised
56. Place refers to the means by which products and services get from producer to consumer and where they can be accessed by the consumer
57. PED stands for price elasticity of demand and measures the responsiveness of quantity demanded to a change in price
58. YED refers to income elasticity of demand and measures the responsiveness of quantity demanded to a change in income
59. Productivity is the amount of output generated by each unit of input
60. Capital Intensive Production is when a business focuses more on machineries and automation process of production and uses few labourers as operators
61. Labour Intensive Production is when a business focuses mores on usage of labour than machines for their production process
62. Capacity Utilization is the percentage of the firm's total possible production capacity that is actually being used
63. Lean Production is an approach to production where the aim is to eliminate all forms of waste in the production process and hence produce more by using fewer input
64. Kaizen(continuous improvement) - Kaizen is a Japanese word for an approach to work where workers are told that they have two jobs to do, the first being to carry out their tasks and the second being coming up with ways of improving the task
65. JIT stands for just in time production and refers to a method of production where the stock arrives on the production line just as it is needed. This minimises the amount of stock that has to be stored, reducing storage cost.
66. Total Quality Management is a process of enhancing quality where quality will be checked in every stage of production in order to prevent wastage and rectify the stage where defects are taking place
67. A budget is a quantitative statement, for a defined period of time, which may include planned revenues, expenses, assets, liabilities and cash flows. A budget provides focus for the organisation and aids the co-ordination of activities and facilitates control
68. A historical budget is a budget prepared using a previous period's budget or actual performance as a basis with incremental amounts added for the new budget period
69. Sales forecasting is the process of a company predicting what its future sales will be
70. Working Capital is the amount of money that a circulates within a business which is used to pay the day to day expenses and short term debts
71. Organization structure is the formal way of arranging the position within a business and assigning authority and responsibility to each of the positions
72. Recruitment and selection is the process of identifying the need for a job, defining the requirements of the position and the job holder, advertising the position and choosing the most appropriate person for the job
73. Internal recruitment is when the business looks to fill the vacancy from within its existing workforce
74. External recruitment is when the business looks to fill the vacancy from any suitable applicant outside the business
75. Motivation is the willpower to work. This comes from the enjoyment of the work itself and/or from the desire to achieve certain goals, e.g. earn more money or achieve promotion
76. Multiskilled workers - it is a term used to describe the process of enhancing the skills of employees so that they can handle multiple tasks of similar nature
77. A flexible workforce is a workforce that can respond in any quantity and type to changes in demand a business might face

Quality

1. Quality Assurance includes customers' desires in the quality of the product do that customers remain satisfied
2. Quality Control is the technique which is applied in order to meet proper quality standard. In this system, quality of the product is checked at the end of the production line where defective goods are removed from the lot
3. Total Quality Management(TQM) is a managerial approach where the quality of the product is checked at every stage of production in order to minimize defective goods

Advantages of TQM

• Helps improve quality and reduce defective goods
• Helps improve overall work practice
• Increases sincerity of the workers as they know defective goods will come back to them for correction

Disadvantages of TQM

• Includes high training cost and requires full commitment
• Improves the production process but not the product. The product can only improve with better raw materials and machinery
• It may create conflicts among workers

Lean Production

Lean production is an approach to production which aims to produce the highest level of output with the lowest level of input. This is possible only when a business efficiently reduces wastage. Therefore, by reducing wastage, a business will be able to reduce their cost of production and improve quality

Techniques of Lean Production

1. Kaizen
2. Just in Time Production
3. Cell Production

Kaizen

Kaizen refers to significant or insignificant changes in the production process which will reduce lead time.

Lead time is the time difference between two activities.

Advantages

• The business will improve in all departments as Kaizen is not focused on the product or the production process, rather it focuses on improving the overall business
• Kaizen helps reduce boredom and monotony by giving them different working patterns,environments and different benefits.
• Kaizen helps a business develop a competetive advantage

Disadvantages

• Constant improvement can be expensive to design and implement
• Following Kaizen is difficult as it demands fixed improvement

Just in Time

Just in Time is a technique of lean production which focuses on reducing the cost of production by eliminating warehouses. In this concept, there will be no warehouse to store the stock of finished goods or raw materials. When orders are received, suppliers will be contacted to deliver raw materials.After delivery, the production will start. Under this system, the location of the factory is going to be near the suppliers which will save transport time.

Cell Production

Cell production involves making a group of efficient and inefficient workers who will work together in order to produce products from scratch. This inspires teamwork and inefficient workers will learn from the efficient workers.

Advantages

• It develops team spirit which motivates workers to work more efficiently and learn from observing other workers
• The system is flexible where one worker can replace another worker if they need to make changes
• Communication improves due to teamwork

Disadvantages

• Conflicts may arise
• Inefficient workers may hamper productivity

Multi-skilled workers are those that specialize in more than one task. As a result, they can be used whenever a company has a temporary shortage of particular workers. 

Technology & The Business

The impact of technology on tertiary sector can be evaluated from 2 perspectives:

1. B2C[Business to customers]
2. B2B[Business to business]

B2C is usually seen in various retail websites where the consumers can purchase the products online and receive home deliveries
B2B is often seen when companies are designing,advertising or online software solution in various applications 

Electronic Commerce or E Commerce refers to trading goods and services using the internet.

Advantages of E Commerce

• The operating cost is less as the firm does not need a fancy store where the goods are regularly displayed and transactions take place
• The cost of developing a website is less than the cost of setting up a store
• Consumers that are not able to go to the stores will develop a brand loyalty towards electronic commerce because it gives them a solution
• E Commerce can enable a business to take multiple orders without opening a single store

Disadvantages of E Commerce

• Delivery cost is involved, especially for people living far away
• Difficult to understand credit card forgery

Productivity

Productivity measures the amount of output produced in relation to the resources used. While calculating productivity, the amount of output produced by each worker is considered. Higher productivity means that workers are more efficient.

Methods of improving productivity

• Providing proper training
• Ensuring proper incentives are given(both financial and non financial)
• Improving working practices
• Improving labor flexibility(allowing workers to set their own hours)

Other methods of improving productivity

• Downsizing(firing inefficient workers)
• Work study - a production technique involving carefully planning the production so that the best technique can be applied
• Relocation - changing location to reduce cost of production
• Outsourcing - giving full or partial production to another company in order to reduce the cost of minimizing capacity

Diseconomies of Scale

Diseconomies of Scale take place when a business produces goods in such a large scale that, as a result, more wastage or obsolescence will take place, which increases average cost.

Reasons for Diseconomies of Scale

• Poor relationship between employers and employees
• Delays in taking decisions or slow decision making process
• Lack of control or management in reference to their workers

Economies of Scale are discussed in detail in Rob Jones' Edexcel International GCSE Business Studies book.

Methods of Production

Job Production

Job production focuses on the production of a single product at a time. Products can be customized according to preference of customers. As a result eac product is going to be different and therefore unit cost is higher.

Batch Production

Batch production takes place when a group of products go through the same process at a time. All products are going to be treated in the same way but there is room for a little bit of customization

Flow Production

Flow production occurs when continuous processes are used to produce goods in bulk amount targeted for a mass market. In Flow Production, a business can achieve economies of scale thus the average cost is comparatively lower than any other prouduction methods

Process Production

Process Production is a form of flow production where materials pass through a plant where a series of processes are carried out in order to change the product. It is also known as mass customization