Unit 1 Key Terms

Edexcel Unit 1 Key terms
Topic 1.1 Spotting a business opportunity
Customer Needs
Market research
Primary (or field)
Focus Group
Secondary (or desk)
Qualitative data
Quantitative data
Market segment
Price sensitive
Market Map (or
perceptual map or
Positioning map)
Gap in the market
Product range
Brand image
Added Value
Unique Selling point
or USP
A business which sells (or supplies) a produ7cts to another business
Any person or organisation which buys or is supplied with a product by a
The person who ultimately uses (or consumes) a product
Where buyers and sellers meet to exchange goods and services
The wants and desires of buyers of a product or the customers of a business
The process of gaining information about customers, competitors and market
trends through collecting primary and secondary data.
The gathering of new information, called primary data, which has not been
collected before
Research involving asking questions of people or organisations
Those who provide data for a survey usually by answering questions in a
questionnaire or interview.
A list of questions to be answered by respondents, designed to gather
information about consumers’ tastes.
In market research, a group of people brought together to answer questions
and discuss a product, band or issue.
The process of gathering secondary data, which is information that has
already been gathered such as sales records, government statistics,
newspaper articles or reports from market research groups
Information about opinions, judgements and attitudes.
Data that can be expressed as a numbers and can be statistically analysed
Part of a market that contains a group of buyers with similar buying habits,
such as age or income.
When the price is very important in the decision about whether or not to buy
A diagram that shows the range of possible positions for two features of a
product, such as low to high price and low to high quality.
Occurs when no business is currently serving needs of customers for a
particular product.
A group of similar products made by a business, like a number of different
soap powders.
A named product which customers see as being different from other
products and which they can associate or identify with.
The idea/impression/image that customers have in their minds about the
The increased worth that a business crates for a product; it is the difference
between what a business pays its suppliers and the price that it is able to
charge for the product/service.
A characteristic of a product that makes it different from other similar
products being sold in the market such as design, quality or image.
The right given by one business to another to sell goods or services using its
A business that agrees to manufacture, distribute or provide a branded
product, under licence by a franchisor
The business that gives franchisees the right to sell its product, in return for a
fixed sum of money or a royalty payment.
Topic 1.2 Showing Enterprise
Thinking creatively
(or creative
Deliberate creativity
Lateral thinking
Blue skies thinking
Blue skies thinking
Calculated risk
A person who owns and runs their own business and takes risks
Another word for businesses.
A willingness by an individual or a business to take risks, show initiative and
undertake new ventures
The chance of damage or loss occurring as a result of making a decision
Physical, tangible products like a car, a pair of scissors or television set.
Non-physical, intangible products like a taxi journey, a haircut or a television
Coming up with new and unique ideas
An advantage a business has that enables it to perform better than its rivals
in the market and which is both distinctive and defensible.
The international creation of new ideas through recognised and accepted
Thinking differently to try and find new and unexpected ideas.
Thinking differently to try and find new and unexpected ideas
A technique of creative thinking where participants are encouraged to think
of as many ideas as possible about an issue or a problem.
The discovery of new processes and potential new products, typically after a
period of research
The process of transforming inventions into the products that can be sold to
Right of ownership of an invention or process when it is registered with the
Legal ownership of material such as books, music and films which prevents
these being copied by others
The symbol, sign, or other features of a product or business that can be
protected in law.
The probability of a negative event occurring
The disadvantages of a course of action, including what can go wrong
The advantages of a course of action, including what can go right
Topic 1.3 Putting a business idea into practice
Financial objectives
Revenues or sales
revenue or turnover or
sales turnover
Sales volume
Fixed costs
Total costs
Variable costs
Cash flow
Net cash flow
Cash flow forecast
Opening balance
Closing balance
Cumulative cash flow
Business plan
Long-term finance
Short-term finance
Personal savings
Share capital
Venture Capitalist
Security (or collateral)
Targets expressed in money terms such as making profit, earning income
or building wealth.
The amount of income received from selling goods or services over a
period of time.
The number of items or products or services sold by a business over a
period or time.
Costs which do not vary with the output produced such as rent, business
rates, advertising costs, administration costs and salaries
All the costs of a business; it is equal to fixed costs plus variable costs
Costs which change directly with the number of products made by a
business such as the costs of buying raw materials
Occurs when the revenues of a business are greater than its costs over a
period of time
Occurs when the revenues of a business are less than its costs over a
period of time
Notes, coins and money in the bank.
The flow of cash into and out a business
The cash flowing into a business, its receipts.
The cash flowing out of a business, its payments
The receipts of a business minus its payments
When a business can no longer pay its depts.
A prediction of how cash will flow through a business in a period of time
in future
The amount of money in a business at the start of a month.
The amount of money in a business at the end of a month
The sum of cash that flows into a business over time
A plan for the development of a business giving forecasts of times such as
sales, costs and cash flow
Sources of money for businesses that are borrowed or invested typically
for more than a year
Sources of money for businesses that may have to be repaid either
immediately or fairly quickly, such as an overdraft, usually within a year.
A part ownership in a business; for example a shareholder owning 25 per
cent of the shares of a business owns a quarter of the business.
Money that has been set aside and not spent by individuals and
The monetary value of a company which belongs to its shareholders; for
example, if five people each invest £10,000 into a business, the share
capital will be £50,000.
The owners of a company
An individual or company which buys shares in what they hope will be a
fast growing company with a long-term view of selling the shares at a
Borrowing a sum of money which has to be repaid with interest over a
period of time, such as 1-5 years.
Assets owned by a business which are used to guarantee repayments of a
loan; if the business fails to pay off the loan, the lender can sell what has
Retained profit
Overdraft facility
been offered as security.
A share of the profits of a company received by shareholders who own
Profits which is kept back in the business and used to pay for investment
in the business
Renting equipment or premises
Borrowing money from a bank by drawing more money than is actually in
a current account. Interest is charged on the amount overdrawn.
A source of finance where a business is able to receive cash immediately
for the invoices it has issued from a factor, such as a bank, instead of
waiting the typical 30 days to be paid.
Topic 1.4 Making the start-up effective
Marketing mix
Sole trade (or sole proprietor)
Unlimited liability
Limited liability
HM Revenue & customers
VAT (Value Added Tax) Income tax
National insurance contribution
Corporation tax
Customer service
Customer satisfaction
Repeat Purchases (or repeat
Job applicant
Job description
Person specification
The combination of factors which help the business to take
into the account customers needs when selling a product –
usually summarised as the 4 Ps, which are price, product,
promotion and place
The amount of money customers have to give up to acquire a
product, promotion and place.
A good or service produced by a business or organisation and
made available to customers for consumption
Communication between the business and customer, making
the customer aware of the product is for sale, telling or
explaining to them what is the product, making the customers
aware of how the product will meet the customers’ needs and
persuading them to buy it for the first time or again.
The way in which a product is distributed – how it gets from
the producer to the consumer
The only owner of a business which has unlimited liability
A legal obligation on the owner of a business to settle (pay off)
all debts of the business. In law , there is no distinction
between what the business owes and owns and what the
business owner owes and owns.
When shareholders of a company are not personally liable for
the company: the most they can lose is the value of their
investment in shares of the company
Businesses whose shareholders have limited liability
Evidence of what has happened in the past; records could be
kept in paper form or in computer files for example.
The government authorities in the UK responsible for
collecting tax.
A tax on the value of sales; it is paid by businesses to
A tax on the value of income earned by workers; this includes
sole traders who have to pay income tax on their net earnings
A tax on the earnings of workers; Employers’ National
Insurance contributions are paid by employers on the wage of
their workers; employees and sole traders have to pay
National Insurance a contributions on their earnings
A tax on the profits of limited companies
The experience that a customer gets when dealing with a
business and the extent to which that experience meets and
exceeds customer needs and expectations
A measure of how much products meet customers’
Orders or sales that occur form customers who have bought
the product or service in the past
A person who shows they would like to be considered for
appointment to a particular job with a business.
Document that describes the duties of a worker and his or her
status in the organisation
A profile of the type of person needed for a job – their skills
Application form
Curriculum vitae
and qualities
Document to be filled in with personal details
A brief list of the main details about a person, including name,
address, qualifications and experience
In work, the desire to complete a task, and meet the needs of
the business consistently.
Topic 1.5 Understanding the economic context
What is the difference between a
fixed and a variable interest rate?
The amount of buying and selling that goes on in a country in a
period of time
What are commodity markets?
All the people in a country who engage in buying and selling
What are imports?
They are raw materials, such as wheat, rice, coco-beans, gold
ore, etc.
What is supply?
Demand is what people are willing and able to purchase at
different prices
What are commodities’?
Supply is the amount that business are prepared to offer for sale
at different prices
What is credit?
Organised markets where buyers and sellers meet to agree
prices and sales, for example the London Metal Exchange.
What is economic activity?
Normal markets for finished goods such as crisps, computers
and magazines are more likely to have stable prices
What are savings?
It is the term used to refer to borrowing money to buy
something now – it can be long term – a loan that lasts more
than a year, or short term – a loan that lasts less than a year.
What is the economy?
A short-term source of finance that allows businesses and
individuals to withdraw money that they do not have from their
bank account
What are exports?
An interest rate is the price of money. It is the amount of extra
money you have to pay back if you borrow money
What is demand?
A fixed interest rate stays the same over the life of a loan,
whereas a variable rate can go up or down
Which is more likely to have stable
prices – commodity markets – like
the market for crude oil – or normal
markets – like the market for cars or
This is money that people have stored in the bank to spend
another time. You will often get interest on your savings
What is an overdraft?
Goods and services that are sold overseas for which businesses
are paid
What are interest rates?
Good and services that companies in Britain buy that are made
overseas. Money leaves the UK to pay for them
What happens if the exchange rate
goes down (ie you can less foreign
currency with £1)? (What does
WeakPECID stand for?)
It is what countries use as money. For example Britain uses the
£ as its currency and many European countries use the Euro
What is a stakeholder? (How does
‘LoCo BaGS COW Man’ help?)
The value of one currency against another – ie how many £1
you would need to buy 1 Euro
What is currency?
Strong Pound – Imports Cheaper, Exports Dearer
What are the 4 stages of the business
Export prices go up – demand for exports fall
What are exchange rates?
Export prices go down – demand for exports INCREASES –
import prices go up – demand for imported goods falls. Weak
Pound = exports Cheaper, Imports Dearer
What is the impact of economic
The increase in the value of goods and services produced in an
economy in a year
What happens if the exchange rate
goes up (ie you can buy more foreign
currency with £1)?
There will be more employment, high incomes and a higher
standard of living. There will also be an increase in pollution
and global warming. It is likely that the level of inequality
between countries and people in a country will have increased
What is the business cycle?
The business cycle shows the level of demand for all goods and
services in an economy over time. It tends to go up and down
What do we call it when the business
cycle shows that demand for goods
and services is low?
Recession or bust
What is economic growth?
Boom, or growth
What do we call it when the business
cycle shows that demand for goods
and service is high?
Growth, Downturn, Recession and Recovery
Import prices go down – demand for imported goods rises
What does the mnemonic SPICED
help you to remember?
Any individual or group with an interest in a business, eg
owners, managers, workers, customers, suppliers, Government,
banks and local community (