LEVEL BUSINESS PAPER 3 - EDEXCEL A, Exams of Advanced Education

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LEVEL BUSINESS PAPER 3 - EDEXCEL A

Pricing strategy - A plan for the medium to long term where a price is set with the intention of meeting marketing objectives Pricing strategy - cost plus pricing - A strategy where the prices is set by applying a percentage margin to the unit cost. For example, adding 50% to the cost of producing the product Pricing strategy - price skimming - A strategy where a business charges a premium price when the product is first launched to maximise revenue per unit Pricing strategy - penetration pricing - A strategy where a business offers a significantly lower price than normal to maximise volume sold and build a loyal consumer base Pricing strategy - dynamic pricing - A strategy where a business sets flexible prices for products based on current market demand Recruitment - The process of inviting people to apply for a vacancy in a business Selection - The process of choosing the appropriate new member of staff Training - The process of developing skills in workers through specifically design training programmes Internal recruitment - Recruiting for a vacancy from within the business External recruitment - Recruiting for a vacancy from outside of the business Induction training - The training programme designed for when an employee is new to a business On-the-job training - Training that is carried out at the place of work by carrying out the responsibilities of the job

Off-the-job training - Training that is carried out away from the place of work, such as through a lecture or college course Production capacity - The measure of how much output it can achieve in a given time Capacity utilisation - The proportion of a business' capacity that is being used within a specific time period. What percentage of the total capacity was produced? Spare (excess) capacity - Where actual output is less than capacity Excess demand - Where demand for a business' products or services is more than their capacity The economy - The state of a country or region in terms of the production and consumption of goods and services and the supply of money The business cycle - The cycle that every economy goes through - from boom to bust and recessions - as GDP changes from one quarter to the next. GDP - Gross Domestic Product, the value of national output in a country. PESTLE Analysis - An analytical tool used to analyse the external environment Political factors - External factors arising from decisions made by government in policies and regulation Economic factors - External factors arising from changes in the economy Social factors - External factors arising from changes in demographics and tastes / trends

Technological factors - External factors arising from advancements in technology available to both businesses and consumers Legal factors - External factors arising from changes to laws that affect businesses and consumers Environmental factors - External factors arising from changes involving caring for the environment Interest rates - The reward for saving and cost of borrowing as a percentage of the money saved or borrowed. Exchange rates - The price of one currency expressed in terms of another currency Appreciation of currency - Where the value of a currency increases Depreciation of currency - Where the value of a currency decreases Inflation - A sustained increase in the average price level of an economy. Usually expressed by an annual percentage change in the level of prices. Fiscal policy - The policy outlining the use of government spending, taxation and borrowing to affect the level and growth of economic activity Taxation - Taxes levied on business in order to raise revenue for government spending. These can be direct (on income, wealth, profit) or indirect (on spending) Government spending - The act of a Government investing in public services to provide welfare Business legislation - Law that is set to ensure businesses are regulated Employee protection - Law that is written with the aim of providing legal rights to employees

Equal pay legislation - Law designed to ensure that both men and women in the same jobs receive the same pay Minimum wage legislation - Law designed to ensure that every employee is paid a minimum amount of money Anti-discrimination legislation - Law designed to ensure that people are not discriminated against due to their ethnicity, gender or age. Industrial relations - Relationships between employees, employers and trade unions. This offers protection for unfair dismissal. Consumer protection - Law providing a wide variety of protection to consumers Environmental protection - Law providing a variety of protections against unethical use of the environment Competition policy - Laws designed to regulate market competition Health and safety - Preventing people from being harmed at work of becoming ill, by providing the right precautions and a safe working environment Investment appraisal - An evaluation of the attractiveness of an investment proposal, using methods such as average rate of return (ARR), net present value (NPV), or payback period. Investment - The act of committing money or capital to a business project with the expectation of obtaining an additional income or profit. Payback period - The time it takes for a project to repay its initial investment cost.

Average rate of return - The total accounting return for a project to see if it meets a target. Or the average amount of profit the project returns per year as a percentage of the initial investment cost. ((Net return / Number of years) / Initial Cost)) x 100 Discounted cash flow / Net present value - Calculates the monetary value now, of the projects future cash flows. Using discount factors to show that £100 in 3 years is not worth the same as £100 now. Stakeholder - Any individual or group effected by the activities of an organisations. Shareholder - Someone who owns a proportion of the company's share capital. Internal stakeholder - Someone who has an interest in a business and is involved directly in the day to day running of the business. External stakeholder - Someone who has an interest in a business but has no part of the day to day running of the business, yet is still affected by the decisions made Trade liberalisation - Where governments decide to remove international trade barriers, such as tariffs, quotas and regulations. Protectionism - Giving preference to home producers by making it harder and more expensive for overseas companies to export to your country. Tariff - A tax imposed on imports into a country. Quota - A limit in the number of units or a particular good/service that can be imported into a country from a specific country. Subsidy - A sum of money given by the government to producers of a particular product. This could be to make it more cost effective to produce, if there is a need for it.

Legislation - Law put in place to protect. This could be: consumer protection, environmental protection, employee protection. Home market - The number of consumers that can reached without having to jump administrative hurdles. Push factors - Factors that encourage a business to leave their domestic market Pull factors - Factors that attract a business into new opportunities abroad Economies of scale - Where extending operations and increasing output causes unit costs to fall. Infrastructure - The quality of necessary resources in a country, i.e. roads, railways, water, electricity, broadband Political stability - How likely a government is to change, which will have an impact on legislation and tax. Exchange rate - The amount of one currency you will receive in exchange for another. Labour productivity - A measurement of how much output a workforce or workforce member produces in a given period of time. Labour force skills - The level of skill a workforce possesses Labour force supply - The amount of suitably skilled workers available for a business to potentially recruit.