Botswana BGCSE Business Studies flashcards

32 cards. Read the term and the definition here. The deck at the top of this page is optional.

Factors of production

The four inputs used to create goods and services: land (natural resources), labour (workers), capital (machinery and money) and enterprise (risk-taking organisers).

Opportunity cost

The value of the next best alternative given up when a choice is made about how to use scarce resources.

Added value

The difference between the selling price of a product and the cost of the bought-in materials and components used to make it.

Division of labour

Splitting production into separate tasks so each worker specialises in one task, raising output per worker but risking boredom.

Unlimited liability

A legal position where the owner is personally responsible for all business debts, so personal assets may be used to pay creditors.

Private limited company

A business owned by shareholders whose shares are sold privately with restrictions and cannot be offered to the general public.

Franchise

An arrangement where a franchisee pays an initial fee and royalties to use a franchisor's brand, products, systems and training.

Diseconomies of scale

Rising average costs as a firm grows too large, caused by poor communication, slower decisions and lower staff motivation.

Span of control

The number of subordinates directly supervised by one manager; a wide span gives a flatter structure with fewer management levels.

SMART objective

A target that is specific, measurable, achievable, relevant and time-bound, allowing performance to be checked.

Stakeholder

Any individual or group with an interest in a business, such as owners, employees, customers, suppliers, lenders, government and the community.

Social enterprise

A business that trades to achieve social or environmental aims and reinvests most or all of its surplus rather than distributing it to owners.

Market segmentation

Dividing a market into groups of buyers with similar characteristics, such as age, income or lifestyle, so products can be targeted.

Primary market research

First-hand data collected for a specific purpose through surveys, interviews, observation or focus groups; accurate but costly.

Penetration pricing

Setting a low launch price to attract customers quickly and build market share, later raised once demand is established.

Marketing mix

The combination of product, price, place and promotion (the 4Ps) used to meet the needs of a target market.

Buffer stock

The minimum level of inventory held to cover unexpected changes in demand or delays in delivery from suppliers.

Just-in-time production

A system where materials arrive only as needed for production, minimising storage costs but requiring reliable suppliers.

Break-even output

The quantity of sales at which total revenue equals total costs, calculated as fixed costs divided by contribution per unit.

Quality assurance

A system that builds quality into every stage of production through standards and checks, rather than inspecting only finished output.

Retained profit

Profit kept in the business instead of being distributed to owners, providing an internal source of finance with no interest cost.

Cash flow forecast

A plan of expected cash inflows and outflows over a period; closing balance equals opening balance plus net cash flow.

Gross profit margin

Gross profit divided by revenue, multiplied by 100; it shows the percentage of sales left after cost of sales.

Current ratio

Current assets divided by current liabilities; it measures whether a firm can pay its short-term debts as they fall due.

Person specification

A document listing the qualifications, skills, experience and personal qualities required of the person to fill a vacancy.

Herzberg's hygiene factors

Elements such as pay, working conditions and company policy that prevent dissatisfaction but do not by themselves motivate employees.

Labour turnover

The percentage of staff leaving a business in a period, calculated as leavers divided by average number employed, times 100.

Inflation

A sustained rise in the general price level, which reduces the purchasing power of money and can raise business costs.

Exchange rate

The price of one currency expressed in another; changes affect the cost of imports and the competitiveness of exports.

Business plan

A written document setting out the business idea, objectives, market analysis, marketing and operations plans, financial forecasts and risks.

Feasibility study

An assessment of whether a business idea is practical and profitable, examining demand, costs, skills and legal requirements before investment.

Entrepreneur

A person who identifies a business opportunity, takes financial risk, organises the factors of production and innovates to create a venture.