FTCE Business Education 6-12 flashcards

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

Opportunity cost

The value of the next best alternative given up when a choice is made. For a business, it is the benefit forgone by using scarce resources such as finance or land in one way rather than another.

Scarcity

The condition in which resources such as labour, capital and raw materials are limited while wants are unlimited. It forces businesses and consumers to choose between competing uses of those resources.

Factors of production

The inputs used to create goods and services: land, labour, capital and enterprise. The quantity, quality and cost of these inputs shape what a business can produce and how efficiently it can do so.

Division of labour

Breaking a production process into separate tasks, each performed by a different worker or team. It raises output per worker through repetition and specialisation but can cause boredom and reduced flexibility.

Specialisation

When an individual, firm or country concentrates on producing a narrow range of goods or services in which it is relatively efficient, then trades for the rest. It increases output but raises dependence on others.

Business objective

A target that guides what a firm tries to achieve, such as profit maximisation, growth, survival or market share. Objectives direct decisions and provide a benchmark for judging performance.

Stakeholder

Any individual or group affected by, or with an interest in, a business's activities, including owners, employees, customers, suppliers, lenders and the local community. Different stakeholders often want conflicting outcomes.

Corporate social responsibility

A business's voluntary commitment to act in ways that consider social, ethical and environmental effects beyond legal minimum requirements. It can improve reputation but adds cost and may be seen as image-building.

SMART objective

A goal framed to be Specific, Measurable, Achievable, Relevant and Time-bound. This format makes targets easier to communicate, monitor and evaluate than vague aims such as 'do better'.

Sustainability

Operating so that resources are used no faster than they can be replaced and environmental damage is minimised, allowing future generations to meet their needs. It affects sourcing, production and investment decisions.

Span of control

The number of employees reporting directly to one manager. Its width can affect workload, communication and supervision, but does not alone determine every layer or the degree of delegation.

Hierarchical structure

An organisational design with several layers of management and a clear chain of command from senior to junior staff. It offers clear authority and promotion paths but can slow communication and raise costs.

Delayering

Removing one or more levels of management from an organisation's hierarchy to cut costs and shorten communication channels. It widens spans of control and may reduce promotion opportunities, affecting morale.

Delegation

Passing authority to a subordinate to carry out a task while the manager keeps overall accountability. It develops staff and frees managers' time but risks poor decisions if training and control are inadequate.

Recruitment

The process of identifying a vacancy and attracting suitable applicants, through internal promotion or external methods such as advertising and agencies. The chosen method affects cost, speed and the quality of candidates.

Job description

A document stating the duties, responsibilities and reporting relationships of a post. It is used to advertise a vacancy and to set expectations, and it supports later appraisal and training decisions.

Person specification

A profile of the qualifications, skills, experience and personal qualities required for a job. It helps shortlist applicants objectively and reduces bias, though poorly written criteria can exclude suitable candidates.

Selection

Choosing the best applicant for a vacancy using tools such as interviews, tests, references and assessment centres. Reliable selection reduces costly staff turnover but methods vary in validity and expense.

Induction training

Introductory training given to new employees covering the organisation, its rules, health and safety and their role. It helps newcomers settle quickly and reduces early resignation, but takes time away from work.

On-the-job training

Teaching skills while the employee performs real tasks at the workplace, often under supervision. It is relatively cheap and job-relevant but can pass on poor habits and disrupt normal output.

Market segmentation

Dividing a market into groups of buyers with similar characteristics or needs, such as by age, income, location or lifestyle. It lets a firm target its marketing mix more precisely and avoid wasted spending.

Target market

The specific group of customers a business aims its product and marketing effort at. A clearly defined target market guides pricing, promotion and distribution choices, but the wrong choice can limit sales.

Niche market

A small, specialised segment with particular needs that mass-market firms often ignore. It can offer high margins and customer loyalty, but sales volumes are limited and the niche may attract new competitors.

Marketing mix

The combination of product, price, place and promotion (the 4Ps) used to position an offer in its target market. The elements must be consistent with each other and with the chosen positioning.

Product life cycle

The stages a product passes through: development, introduction, growth, maturity and decline. Sales and profit patterns differ at each stage, so pricing, promotion and product decisions should change accordingly.

Extension strategy

An attempt to lengthen a product's maturity stage and delay decline, for example through redesign, new markets or new promotional appeals. It can extend sales but may not succeed if demand is fundamentally falling.

Price elasticity of demand

The responsiveness of quantity demanded to a change in price, calculated as percentage change in quantity divided by percentage change in price. Elastic demand means revenue falls when price rises; inelastic demand means revenue rises.

Pricing strategy

The approach used to set prices, such as cost-plus, penetration, skimming, competitive or loss-leader pricing. The choice affects sales volume, profit margin and the perceived image of the product.

Market share

A firm's sales expressed as a percentage of total sales in its market. Rising share can indicate competitive strength, though it may be bought through low prices that reduce profit.

Economies of scale

Falls in long-run average cost as the scale of the enterprise expands, potentially through specialization, purchasing or technical advantages. This differs from merely spreading fixed cost by raising utilization of an unchanged plant.