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1. Business and its environment (AS levels)

front 1 Customer	back 1 An individual consumer or organisation that purchases goods or services from a business.
front 2 Consumer	back 2 An individual who purchases goods and services for personal use
front 3 Consumer goods	back 3 The physical and tangible goods sold to consumers that are not intended for resale. These include durable consumer goods, such as cars and washing machines, and non-durable consumer goods, such as food, drinks and sweets, that can only be used once
front 4 Consumer Services	back 4 The non-tangible products sold to consumers that are not intended for resale. These include hotel accommodation, insurance services and train journeys

front 5 Capital Goods	back 5 The physical goods used by industry to aid in the production of other goods and services, such as machines and commercial vehicles
front 6 Enterprise	back 6 The action of showing initiative to take the risk to set up a business
front 7 Branding	back 7 The process of differentiating a product by developing a symbol, name, image or trademark for it.
front 8 Mixed Economy	back 8 Economic resources are owned and controlled by both private and public sectors

front 9 Free-Market Economy	back 9 Economic resources are owned largely by the private sector with very little state intervention
front 10 Command Economy	back 10 Economic resources are owned, planned and controlled by the state
front 11 Adv. of Public Corporations	back 11 Managed with social objectives rather than solely with profit objectives Loss-making services might still be kept operating if the social benefit is great enough Finance is raised mainly from the government
front 12 Disadv. of Public Corporations	back 12 inefficiency due to lack of strict profit targets Subsidies = encouraged inefficiencies Government interference in business decisions = political reasons

front 13 Adv. of Sole Traders	back 13 Easy to set up (no legal formalities) Owner has complete control Owner keeps all profits Owner can choose times and patterns of working Owner can establish close relationships with staff and customers Business can be based on the interests or skills of the owner
front 14 Disadv. of Sole Traders	back 14 Unlimited liability Intense competition Owner is unable to specialise in areas of the business that are most interesting Difficult to raise additional capital Long hours are often necessary to make the business pay lack of continuity
front 15 Continuity	back 15 Process-driven approach to maintaining operations in the event of an unplanned disruption such as cyber attack or natural disaster.
front 16 Adv. of Partnerships	back 16 Partners may specialise in different aspects of a business Share decision-making Additional capital is given by each partner Business losses are shared Greater privacy Fewer legal formalities

front 17 Disadv. of Partnerships	back 17 Unlimited liability Profits are shared No continuity All partners are bound by the decisions of any one of them It is not possible to raise capital from selling shares A sole trader, taking on partners, will lose decision-making independence
front 18 Share	back 18 A certificate confirming part-ownership of a company and entitling the shareholder owner to dividends and certain shareholders
front 19 Shareholder	back 19 A person or institution owning shares in a limited company
front 20 Adv. of Private Limited Companies	back 20 Limited liability Company has a separate legal personality continuity (event of a death) Original owner is able to retain control company is able to raise capital from the sales of shares to family, friends and employees company has greater status than an unincorporated business

front 21 Disadv. of Private Limited Companies	back 21 Legal formalities Capital cannot be raised by the sale of shares to the general public Difficult for shareholders to sell shares End-of-year accounts must be sent to the government office responsible for companies Available for public inspection
front 22 Adv. of Public Limited Companies	back 22 Limited liability Company has separate legal identity Continuity Easy for shareholders to buy and sell shares Substantial capital sources can be accessed
front 23 Disadv. of Public Limited Companies	back 23 Legal formalities High cost of paying for advice from business consultants when creating a plc.
front 24 Franchiser	back 24 A person or business that sells the right to open stores and sell products or services, using the brand name and brand identity

front 25 Franchisee	back 25 A person or business that buys the right from the franchiser to operate the franchise
front 26 Adv. of Franchises	back 26 Fewer chances of a new business failing as it is using an established brand name and product Advice + training are offered by the franchiser The franchiser plays for national advertising Supplies are obtained from established and quality-checked suppliers The franchiser agrees not to open another branch in local area
front 27 Disadv. of Franchises	back 27 A share of profits or revenue has to be paid to the franchiser each year Initial franchise license fee can be expensive Local promotions may still have to be paid for the franchisee The franchisee cannot choose which supplies or suppliers to use Strict rules over pricing and layout of the outlet reduce the franchisee’s control over their own business
front 28 Revenue	back 28 The total value of sales made during the trading period = selling price x quantity sold

front 29 Capital Employed	back 29 The total value of all long-term finance invested in the business
front 30 Market Capitalisation	back 30 Shows how much a company is worth as determined by the total market value. The total value of a company’s issued shares
front 31 Market Share	back 31 Sales of the business as a proportion of total market shares Market share provides a general idea of the size of a company in relation to its market and competitors.
front 32 Adv. of Small Businesses	back 32 Managed + controlled by the owner(s) - little risk of losing control Adapt quickly to meet changing customer needs Personal service to customers to help build company loyalty Less workers, easier to get to know each other Family business = business culture is informal, employees are well motivated + family members perform multiple roles started and operated with low capital investment

front 33 Disadv. of Small Businesses	back 33 Limited access to source of finance Owner has to carry a large burden of responsibility Owners are usually unable to afford to employ specialist managers Not every worker may be multi-skilled May not be diversified, so there is a greater risk of external change having a negative impact Few opportunities for economies of scale (less workers = lower production > cannot buy bulk)
front 34 External Growth	back 34 Business expansion achieved by integrating with another business by either merger or takeover
front 35 Conglomerate Integration	back 35 Integration with a business in a different industry i.e. wine farm x supermarket
front 36 Horizontal Integration	back 36 Integration with a business in the same industry and at the same stage of production i.e. donut x donut shops

front 37 Vertical integration	back 37 Integration with a business in the same industry i.e. Apple designs its own hardware and software, and sells its products directly to consumers through its own retail stores.
front 38 Forward (vertical) Integration	back 38 Vertical integration with a customer business i.e. primary x secondary, a factory purchasing materials from a farm.
front 39 Backward (vertical) Integration	back 39 Vertical integration with a supplier business i.e. A bakery that purchases a wheat processor or a wheat farm
front 40 Adv. of Horizontal Integration	back 40 Eliminates one competitor increases market share Potential economies of scale Scope for rationalising production, concentrating all output on one site as opposed to two Increased power over supplies to obtain lower prices

front 41 Disadv. of Horizontal Integration	back 41 Rationalisation may bring bad publicity and redundancies There may be customer opposition to less competition + less choice May lead to monopoly investigation if combined business exceeds certain market share limits
front 42 Adv. of Forward (vertical) Integration	back 42 Business is now able to control promotion and pricing of its own products Gives a secure outlet for the products of the business May now exclude competitors’ products from retail outlets
front 43 Disadv. of Forward (vertical) Integration	back 43 Consumers may suspect an attempt to act uncompetitively + react negatively Business may lack experience in this sector of the industry (successful manufacturer does not necessarily make a good retailer
front 44 Adv. of Backward (vertical) Integration	back 44 Gives control over quality, price + delivery times of supplies Encourages joint research + development into improved quality of components Business may not control supplies of materials to competitors

front 45 Disadv. of Backward (vertical) Integration	back 45 Business may lack experience of managing a supplying company Supplying business may become complacent due to having a guaranteed customer
front 46 Adv. of Conglomerate Integration	back 46 It diversifies the business away from its original industry and markets Should spread risk and may take the the business into a faster-growing market
front 47 Disadv. of Conglomerate Integration	back 47 May be lack of management experience in the acquired business sector lack of clear focus and direction now that the business is spread across more than one industry
front 48 Synergy	back 48 ‘The whole is greater than the sum of parts’ - it is often assumed that the new business will be more successful than the original separate businesses.

front 49 Pressure Groups	back 49 Organisations created by people with a common interest or aim, who put pressure on businesses and governments to change policies so that an objective is reached.
front 50 Business Aims	back 50 A long-term goal that a business hopes to achieve
front 51 Mission Statement	back 51 A brief statement of the business’s core aims, phrased in a way to motivate employees and to stimulate interest from outside groups
front 52 Business Strategy	back 52 A long term plan of action for a business, designed to achieve a particular objective

front 53 Tactic	back 53 A short-term action as part of an overall strategy
front 54 Target	back 54 A short-term goal that must be reached before an overall objective can be achieved
front 55 Budget	back 55 A detailed financial plan for the future
front 56 Stakeholders	back 56 Individuals or groups who can be affected by and have an interest in, any action taken by an organisation

front 57 External Stakeholders	back 57 Individuals or groups who are separate from the business but are affected by or interested in its operations
front 58 Internal Stakeholders	back 58 Individuals or groups who work within the business, or own it, and are affected by the operations of the business
front 59 Trade Union	back 59 An organisation of working people with the objective of improving the pay and working conditions of its members and providing them with support and legal services
front 60 Stakeholder Concept	back 60 The view that businesses and their managers have responsibilities to a wide range of groups, not just shareholders

front 61

Unincorporated business

back 61

A business that hasn’t been registered as a legal entity separate from its owner