NSSCO Business Studies (6144) flashcards

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

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. Businesses add value through processing, branding, design and convenience.

Opportunity cost

The value of the next best alternative forgone when a choice is made. A firm investing in new machinery gives up the returns it could have earned from an alternative use of the same funds.

Division of labour

Splitting production into separate tasks performed by different workers. It raises productivity through repetition and skill, but creates dependence between stages of the production process.

Primary sector

The part of the economy that extracts raw materials directly from nature, including mining, fishing, farming and forestry. Namibia's economy relies heavily on this sector.

Unlimited liability

A legal position in which the owner of a business is personally responsible for all its debts. If the business fails, personal assets such as a house may be sold to pay creditors.

Limited liability

A legal position in which owners of an incorporated business can lose only the capital they invested. Their personal assets are protected if the company becomes insolvent.

Sole trader

A business owned and controlled by one person, with unlimited liability and no separate legal personality. It is simple and cheap to establish but limited in capital and continuity.

Cooperative

A business owned and democratically controlled by its members, usually applying one member one vote. Profits are shared as patronage dividends, and it serves member needs rather than outside shareholders.

Public corporation

A business owned by the state and run by a board appointed by government. It is funded by taxes and user charges and aims at service delivery rather than profit maximisation.

SMART objective

A goal that is Specific, Measurable, Achievable, Relevant and Time-bound. This form makes objectives verifiable and allows managers to judge whether targets have been met.

Horizontal integration

Growth by merging with or taking over a firm at the same stage of production in the same industry. It increases market share and may create economies of scale but can reduce competition.

Stakeholder

Any individual or group affected by or interested in a business, such as employees, customers, suppliers, owners, lenders, government and the local community. Stakeholder aims often conflict.

Diseconomies of scale

Rising average costs that occur when a firm grows too large. They arise from communication problems, slower decision-making, poor coordination and falling staff motivation in big organisations.

Market segmentation

Dividing a market into groups of buyers with similar characteristics or needs, such as by age, income, location or lifestyle, so that products and marketing can be aimed at each group.

Penetration pricing

Setting a low introductory price to attract customers quickly and build market share. Once established, the firm may raise the price; it works best where demand is price-sensitive.

Price skimming

Setting a high initial price for a new or innovative product to recover development costs from early adopters. The price is lowered later as competitors enter the market.

Marketing mix

The combination of product, price, place and promotion used to meet the needs of a target market. Service businesses add people, process and physical evidence.

Product life cycle

The stages a product passes through: introduction, growth, maturity and decline. Sales and profit patterns change at each stage, so pricing and promotion must be adapted.

Batch production

Producing a limited quantity of identical items before switching to another batch. It offers flexibility and moderate unit costs but involves changeover time and stock holding between batches.

Just-in-time stock control

A system in which materials arrive exactly when needed for production, so little or no stock is held. It reduces storage costs but requires reliable suppliers and accurate planning.

Break-even output

The quantity of output at which total revenue equals total cost, giving neither profit nor loss. It is calculated as fixed costs divided by contribution per unit.

Quality assurance

A system that builds quality into every stage of production by setting standards and checking processes, rather than inspecting and rejecting finished goods after manufacture.

Working capital

The money available for day-to-day operations, calculated as current assets minus current liabilities. Adequate working capital allows a firm to pay wages, suppliers and other short-term obligations.

Cash flow forecast

A statement of expected receipts and payments over a future period. It shows the expected closing balance each period and warns of cash shortages before they occur.

Trade credit

An arrangement in which a supplier allows a business to pay for goods at a later date, usually 30 to 90 days. It is a short-term source of finance that helps manage working capital.

Gross profit

Sales revenue minus the cost of sales. It measures profit before operating expenses such as rent, wages and advertising are deducted, and is expressed as a figure or a percentage of revenue.

Induction training

Introductory training given to new employees about the organisation, its rules, safety procedures, colleagues and job expectations. It helps new staff settle in and reduces early resignation.

Herzberg hygiene factors

Elements such as pay, working conditions and company policy that prevent dissatisfaction when adequate but do not motivate. Motivators such as achievement and responsibility create real satisfaction.

Trade union

An organisation of employees formed to protect members' interests. It negotiates collectively with employers over pay, hours and conditions and may organise industrial action.

Intranet

A private computer network available only to people inside an organisation. It shares policies, forms and news securely, unlike the public internet, and can restrict access by department.

Corporate social responsibility

A business voluntarily acting to benefit society and stakeholders, for example by protecting the environment, supporting community projects and treating employees fairly, beyond what the law requires.

Balance of trade

The difference between the value of a country's exports and its imports of goods over a period. A deficit means imports exceed exports; a surplus means exports exceed imports.