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81 Cards in this Set
- Front
- Back
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Niche product |
A product that is produced and marketed for use/consumption in a small and specialised (but still profitable) market |
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Venture capital |
Money/capital for small to medium sized companies involved in innovative products. Only usually invested when there is great growth potential |
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Economic agents |
Those with an interest in a specific business (employers, customers, government, owners, shareholders, pressure groups) |
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Corporate social responsibility |
Business behaving in an ethical way and accepting responsibility for its effects on all stakeholders (including wider community and the environment) |
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Creative destruction |
The process of industrial mutation. The way in which quality improving innovations lead to economic growth |
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Adding value |
When a business increases the value of a product. Selling the output for more that the cost of inputs (from production, branding, after sales) |
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Social entrepreneurs |
Those that innovate solutions to societies most pressing social problems |
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Entrepreneur |
An individual who takes an idea and attempts to make an economic profit from it by combining all factors of production. They take risks and rewards from the business |
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Factors or production |
Term to describe the inputs used in the production of goods or services in attempt to make and economic profit (land, labour, capital and enterprise) |
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Land (factor of production) |
Represents all natural resources used in production (timber, gold or even land business is on) |
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Labour (factor of production) |
Represents the human capital available to transform raw resources into consumer goods (includes managers and employees) |
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Capital (factor of production) |
FINANCIAL CAPITAL: used to purchase physical capital PHYSICAL CAPITAL: consists of premises, machinery, equipment |
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Enterprise (factor of production) |
(Definition of entrepreneur) |
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Specialisation |
Process by which individuals, firms and economies concentrate on the production of goods and services in which they have an advantage |
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Division of labour |
Process whereby production is broken down into a sequence of stages with workers assigned to a particular stage |
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Interest rates |
Cost of borrowing and reward for lending/saving |
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Working capital |
The finance needed by a business to cover production costs (e.g. rent, wages) |
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Unemployed |
Those able, available and willing to work at the going wage but cannot find a job despite an active search for work |
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Full employment |
When everyone that wants a job has one |
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Exchange rates |
The value of one currency against another |
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SPICED |
Strong Pound Imports Cheap Exports Dear |
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Exports |
Goods and services sold to foreigners by UK firms (money received into UK) |
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Imports |
Goods and services bought by UK residents and firms from foreigners (money paid leaves UK) |
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Currency depreciation |
The loss of value of a currency against one or more other currency |
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Currency appreciation |
Increase in value of a currency against one or more other currency |
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Inflation |
A sustained increase in prices over time |
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Deflation |
Sustained decrease in prices over time |
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Economic environment |
Totality of all economic factors |
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Demand |
The amount of a good or service consumers are willing and able to buy at the given price |
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Ceteribus paribus |
"All other things being equal" |
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Supply |
How many goods firms are willing and able to put on the market at any given price |
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Market equilibrium |
The price and quantity when demand equals supply |
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The price mechanism |
Where the free markets allocate resources through the interaction of supply and demand |
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Signalling function (the price mechanism) |
Change in what goods are preferred (demand and price changes - signalling consumer demand and signalling availability to consumers) |
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Incentive function (the price mechanism) |
Changes in prices influencing how much is produced (incentives for producers - high demand, incentives for consumers - after high supply - price lower) |
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Rationing function (the price mechanism) |
Who buys is determined by whi wants and can afford it |
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Market |
Where buyers and sellers meet to exchange goods and services (physically or online) |
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Consumer soverency |
The statement that consumers ultimately decide what will be produced |
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Structural unemployment |
Result of changing patterns of demand in the economy; can be caused by creative destruction or international competition |
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Niche market |
A market that targets a specialised segment of a larger market seperated by specific needs and preferences |
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Market segmentation |
Identifying different groups within the market (geographic, demographic, psychoyraphic and behavioural) |
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Market research |
Process of gathering data to understand current and future customer needs and nature of the market |
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Primary research |
Market research obtained first hand by the business (questionnaires/surveys, observations, test marketing, focus groups - group discussion) |
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Secondary research |
Also known as desk research; where questions about new ideas have already been answered by other (market reports, government data, economic historic and forecast, online) |
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Qualitative research |
Examines opinions and feelings |
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Quantitative research |
Results are numerical and analysed statistically |
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Market segment |
Group of individuals who share certain characteristics and thus have similar product needs |
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Market positioning |
Way the product is perceived in comparison with competing products |
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Added value |
Factors of production are used to make material inputs more valuable to customers; the difference between price and to at cost of inputs needed to make profit |
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Market mapping |
Illustrate the range of positions a product can take in a market based on two dimensions that are important to customers (e.g. price, quality) |
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Competitive advantage |
Having an edge over rival products gained by offering consumers greater value, either with lower prices of greater quality/benefits that justify higher prices |
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Differentiation |
Entails unique features which distinguish a product from rivals (special characteristics, distinct image) |
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Financial crises |
A situation in which the value of financial institutions or assets drops rapidly |
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Leverage |
Using borrowed capital for an investment, expecting the profit will be more than the interest payable; or simply, using something to its maximum advantage |
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Sub-prime mortgages |
Loan granted to people with low credit histories |
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Limited liability |
Protects shareholders through incorporation in that as individuals, they adrenaline legally seperate from the business - only liable for money they invested |
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Unlimited liability |
The individual has no legal separation from the business and therefore personally responsible for debts of the business |
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Uncorporated business |
-sole trader -partnership -unlimited liability |
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Incorporated business |
-private limited companies (family business ect) -public limited companies (owned by shareholders) -limited liability |
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Retained profit (internal) |
Made by the business and kept back for its own use (60% business investment comes from this) |
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Sales of assets (internal) |
Selling off (turning into cash) something that the business owns |
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Working capital (internal) |
Also known as liquidity - keeps day to day business going in short term |
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Overdraft (external) |
An arrangement with the bank that allows the company to withdraw more money that it has (short term finance with daily interest) |
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Trade credit (external) |
When businesses buy from other business and pay later (usually 30-60 days) |
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Ordinary share capital (external) |
Only used by public limited companies - sell shares in the company to raise money |
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Market failure |
Pareto sub-optimum allocation of resources |
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Externalities |
The spill over effects of production or consumption that have consequences for third parties |
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Merit goods |
Underconsumed and underproduced if no interference |
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Demerits goods |
Overconsumed and overproduced if no interference |
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Regulation |
Applying rules to businesses/organisations |
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Legislation |
Applying laws and policies to businesses/organisations (e.g. banning) |
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Indirect taxes |
An excise tax on the sale or production of specific goods |
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Internalising the cost |
Where the price of a product reflects its social costs (privante costs + external costs). This can be achieved through legislation, regulation or taxation |
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Subsidies |
A payment per unit sold which effectively shifts supply curve downwards |
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Grant |
A sum of money given by a government/organisation for a particular purpose |
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Voluntary agreements |
An alternative to taxation; government/businesses introduce either formal (legally binding) or informal voluntary agreements |
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Government failure |
Occurs when a policy intervention leads to a deepening of a market failure or an even worse new failure |
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Tradeable permits |
Used often as a way of reducing pollution; the government issues a restricted number of permits equal to desired level of emissions |
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Regressive tax |
A levy unrelated to income, usually apon a demerits good, that often bears hardest on those least able to pay |
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General taxation |
Includes taxes such as income tax, corporation tax and other indirect taxes |
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Sales revenue |
Sometimes known as turnover; the total of incoming payments for products sold - price x quantity sold |
