Equations and Definitions

Equations

Revenue- Price x QuantityTotal Costs- Fixed Costs + Variable CostsProfit or Lose- Total revenue-Total CostsClosing Balance- net cash flow + opening balanceTotal receipts- Total costs + profitProductivity- Total output / number of workersBreak-even point- Fixed costs / (price per item - variable cost per item)Contribution- Price - variable costs

Definitions

Business: An organisation whos purpose is to produce goods and services to meet the needs of customers.Supplier: A business that sells (supplies) products to another business.Production: Using raw materials, labour and materials to make products.Customer: A person or organisation that buys the product or service.Consumer: The person that uses (consumes) the product.Primary research: is collecting information that did not exist before.Secondary research: is the process of gathering secondary data, information that already exists.Qualitive data: Information about opinions, judgements and attitudes.Quantitative data: Data that can be expressed as numbers and statistically analysed.Market segments: Is a group of buyers with similar characteristics and buying habits.Branding: Is a named product that customers see as being different from other products and that they can associate or identify with.Added value: Is the increased worth that a business creates for the product.Franchise: Is the right given by one business to other to sell goods or services using its name.Franchisor: The business that gives franchisees the right to sell its product or service.Franchisee: A business that agrees to manufacture, distribute or provide a branded product, under licence by a franchisor.Entrepreneur: A person who owns and runs their own business and takes risks.Enterprise: The initial spark and idea for business and the willingness by an individual to show initiative take a risk and undertake a new venture.Enterprises: Another word used for businesses.Deliberate creativity: Is the intentional creational of new ideas through recognised and accepted techniques.Blue skies thinking: Is coming up with as many ideas as possible to solve a problem.Lateral thinking: Involves thinking differently to try to find new and unexpected ideas.Invention: Coming up with a product.Innovation: Bringing a product to the market.Patents: Right of ownership of an invention, design or process when it is registered with the government.Copyright: Legal ownership of material such as books, music and films which prevent these being copied by others.Trademarks: The logo, symbol, sign or other features of a product or business that cannot be copied by others.Planning: Identifying a direction and plan of action for the business.Drive: Being hardworking and motivated to achieve success.Thinking ahead- Having the foresight to identify potential problems.Seeing Opportunities: Having the creativity and imagination to do things differently.Profit: Occurs when revenues of a business are greater than its total costs.Revenue: Money going in to the business.Costs: Money going out of the business.Cash flow: Is the money flowing into and out of a business on a day to day basis.Business Plan: Is a plan for the development of a business.Customer focused: Understanding customers and focusing on their needs is a vital if a business intends to attract people to buy their products.Unlimited Liability: The owner is legally responsible for any debts of the business.Limited Liability: The owners and the business are seperate legal entities.Customer satisfaction: Is a measure of how much a business or its products meet customers expectations.Supply: Is the amount that sellers are willing and able to sell at any given price.Demand: Is the amount that buyers are willing and able to purchase.Market: Is where buyers and sellers meet to exchange products and services.Commodity markets: Markets for raw materials such as oil used in the production of other goods.Goods markets: Are markets for everyday products such as clothes.Interest rate: Is the percentage reward or payment over a period of time that is given to savers on savings or paid by borrowers on loan.Exchange rate: Is the price of buying foreign currency.Stakeholder: An individual or a group that has an interest in and is affected by the activities of a business.Market research: Gathering information about customers, competitors and market trends by collecting primary and secondary data.Product trial: When consumers buy a product for the first time to access whether or not they want to buy it again.Product differentiation: About making a product different from others in some way.Function: This is about how well a product does what it is meant to.Just in Time stock control: Where stock is delivered only when it is needed by the production system and so no stock is kept by a business.Just in Case stock control: Involves having a backup of stock at all times.Quality Control: Seen as one part of the chain of production.Quality Assurance: Involves focusing on quality at every stage of the production process.Productivity: Is output per worker.Margin of Safety: Amount of output between the actual level of output where profit is being made and the break even level of output.Remuneration: Is the payments system adopted by a business to pay and reward employees.Trade-Off: Is when something is given up in order to gain or achieve something else. Pressure Groups: Are organisations that try to get businesses to change what they are doing.

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