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Business flashcards

80 cards covering every topic of the 7137 syllabus (For first teaching from September 2026). Study one topic or mix them all, turn each card, and mark yourself honestly.

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Topic 3.1: What is business? Managing marketing and finance

Reasons for setting up in business: Financial (profit, income) and non-financial (independence, turning a passion into a career, filling a gap noticed in the market).
Characteristics of entrepreneurs named in the specification: Risk taker, resilient, focused, passionate, innovative, adaptable.
Challenges of setting up in business: Funding, competition, uncertainty, limited track record.
How does an entrepreneur's role change as the business grows?: From doing everything personally to delegating and managing others.
Purpose and value of a business plan: Raising finance, setting direction, and testing an idea before committing resources.
Competitiveness: How attractive a business's offer is to customers compared with rivals (price, quality, service, brand). A new business must be competitive to win customers from established firms.
The seven influences on business decisions in the specification: Objectives, risk, reward, resources, market conditions, ethics, opportunity costs.
Why must risk and reward be judged together?: A higher possible reward usually brings higher risk, so a decision is rarely judged on potential reward alone; the business must be able to survive the downside.
Opportunity cost: The value of the next best alternative given up when a choice is made.
Ethical dilemma: profit versus ethics: A choice where the most profitable option conflicts with acting morally, for example using a cheaper supplier with poor labour practices. Ethical choices may cost profit now but protect reputation.
SMART objectives in the 7137 specification: Specific, Measurable, Accountable, Realistic, Time specific. Trap: the specification uses "Accountable", not "Achievable".
Turn "we want to grow" into a SMART objective: For example: "increase market share by 5% within two years", with a named manager accountable. A general aim cannot be judged; a SMART one can.
Purpose and value of setting business objectives: They give direction and a target, let performance be measured against results, guide decisions and other functions, and make managers accountable.
Sole trader vs private limited company (Ltd): liability, finance and control: Sole trader: unlimited liability, limited access to finance, full control. Ltd: limited liability, more access to finance, reduced control and must publish accounts.
Public limited company (plc): A company whose shares can be sold to the public on stock markets: limited liability and the most access to finance, but the most diluted control.
Co-operatives: the three types and their features: Worker, consumer and producer co-operatives. Owned and controlled by members, usually with limited liability; finance is limited and member-based.
Social enterprise: A business that trades to meet a social or environmental mission, not just profit. Liability depends on the legal form chosen; access to finance is often limited.
Unlimited vs limited liability: Unlimited: the owner's personal assets can be used to pay business debts. Limited: a shareholder can lose only the amount invested.
Issues to consider when comparing forms of business: Control, objectives, sources of finance, distribution of profits, and unlimited or limited liability.
Market capitalisation, dividend per share and dividend yield: Market capitalisation = number of issued shares × share price. Dividend per share = total dividend ÷ number of ordinary shares. Dividend yield (%) = dividend per share ÷ share price × 100.
2,000,000 shares at 150p; total dividend £160,000. Dividend per share, yield and market capitalisation?: Dividend per share = £160,000 ÷ 2,000,000 = 8p. Yield = 8 ÷ 150 × 100 = 5.33%. Market capitalisation = 2,000,000 × £1.50 = £3,000,000.
Exam trap: dividend per share vs dividend yield: Dividend per share is an absolute amount (in pence). Dividend yield is a percentage of the share price.
Reasons to buy shares, and influences on share price: Reasons: dividends, capital growth, a say through voting. Influences: trading performance and forecasts, market sentiment, the wider economy and interest rates, news such as takeovers.
Internal stakeholders: Employees, owners/shareholders.
External stakeholders: Customers, suppliers, other creditors, community, government.
Ethical responsibilities to stakeholders: examples: Fair pay and safe conditions for employees; honest products and pricing for customers; paying suppliers and creditors on time; limiting harm to the community and environment; paying tax.
Purpose of market research: To reduce risk and to understand and anticipate customer needs. Influences on how it is done: risk, cost, time and the need for reliability.
Confidence interval vs confidence level: Confidence interval: the range likely to hold the true figure; narrower means more precise (a larger sample usually narrows it). Confidence level: how sure we are the range holds it, for example 95%.
B2B, B2C and C2C markets: B2B: few, large business buyers; account managers. B2C: many consumer buyers; branding. C2C: individuals trading with each other, often online.
Market share, market growth and sales growth: Market share = firm's sales ÷ total market sales × 100. Market growth = change in market size ÷ original size × 100. Sales growth = change in sales ÷ original sales × 100. A firm can grow sales yet lose share if the market grows faster.
Return on marketing spend and index numbers: Return on marketing spend = profit from marketing activities ÷ marketing spend × 100 (£10,000 ÷ £8,000 = 125%). Index number = value ÷ base value × 100 (92 ÷ 80 × 100 = 115).
Price up 5%, quantity down 2%. PED and revenue effect?: PED = −2 ÷ 5 = −0.4: inelastic, so revenue rises (1.05 × 0.98 = 1.029 of the original).
YED: normal and inferior goods: YED = % change in quantity ÷ % change in income. Positive: normal good (above 1, demand grows faster than income). Negative: inferior good, demand falls as income rises.
The four segmentation bases in 7137: Demographic, geographic, psychographic, behavioural.
Marketing objectives listed in 7137: Lead generation, sales, market share, brand awareness, customer retention, engagement and conversion.
Boston Matrix: categories and actions: Stars (high share, high growth): invest. Cash cows (high share, low growth): fund others. Question marks (low share, high growth): invest or withdraw. Dogs (low share, low growth): consider dropping.
Product life cycle and extension strategies: Stages: development, introduction, growth, maturity, decline. Extension strategies: advertising, rebranding, lowering the price, adapting the product.
Pricing methods in 7137: Cost-based. Demand-based: penetration, price skimming, dynamic pricing. Competition-based: premium, going rate, discount.
Direct distribution vs intermediaries: Direct (including e-commerce): control, customer data and the full margin, but the firm pays its own delivery costs. Intermediaries (wholesalers, retailers): reach and storage, but they take a margin and the firm has less control.
Click-through rate and conversion rate: 50,000 views, 1,000 clicks, 50 sales: Click-through rate = clicks ÷ views × 100 = 2%. Conversion rate (on clicks) = buyers ÷ clicks × 100 = 5%.
Financial objectives named in 7137: Profit, profitability, cash flow, liquidity and levels of borrowing. Influences include owners and their attitude to risk, available cash, interest rates, competitors and the economy.
Cash flow vs profit: Profit is revenue minus costs over a period, counted when earned, even on credit. Cash flow records only money actually moving. Cash can arrive from a loan with no profit; profit can be earned long before cash arrives.
Return on investment and gearing: ROI = profit from the investment ÷ cost of the investment × 100 (£8,400 ÷ £60,000 = 14%). Gearing = non-current liabilities ÷ (total equity + non-current liabilities) × 100 (£80,000 ÷ £320,000 = 25%).
Gross profit, operating profit and profit for the year: Gross profit = revenue − cost of sales. Operating profit = gross profit − operating expenses. Profit for the year = operating profit + profit from other activities − net finance costs − tax.
Revenue £90,000; cost of sales £54,000; operating expenses £25,200. Margins?: Gross profit £36,000: gross margin 40%. Operating profit £10,800: operating margin 12%.
Reading profit margins: what does a fall in each margin point to?: A fall in gross margin points to higher cost of sales or lower prices. A fall in operating margin with a steady gross margin points to rising operating expenses. A widening gap down to profit for the year points to finance costs and tax.
Budget variance: formula and how to label it: Budget variance = budgeted figure − actual figure, labelled by its effect on profit: higher revenue or lower cost is favourable; lower revenue or higher cost is adverse. Example: materials budget £18,000, actual £16,200 → £1,800 favourable.
Value and limits of budgeting: Value: sets targets, controls spending, gives responsibility, coordinates departments, flags problems early. Limits: forecasts may be wrong; rigid budgets discourage flexibility; variances show what changed, not why.
Cash-flow forecast: method: Cash in − cash out = net cash flow. Closing balance = opening balance + net cash flow, carried forward as next month's opening balance. Credit sales count only when paid.
Price £40, variable cost £24, fixed costs £56,000, planned 4,200 units. Break-even and profit?: Contribution £16. Break-even = 56,000 ÷ 16 = 3,500 units. Margin of safety 700 units (16.7%). Profit = 16 × 4,200 − 56,000 = £11,200.
Effect on break-even output of a price rise, a variable cost rise and a fixed cost rise: Price rises: break-even falls (revenue line steeper). Variable cost rises: break-even rises (total cost line steeper). Fixed costs rise: break-even rises (total cost line starts higher).
Internal and external sources of finance in 7137: Internal: owners' investment, retained profits, sale of assets, sale and leaseback, working capital. External: trade credit, share capital, overdraft, loans, business angels, private equity, crowd funding.
Ways of improving cash flow named in 7137: Debt factoring, shortening payment time from customers, early payment incentives, credit checks, increasing payment time to suppliers, reducing outgoings, better invoice management. Risks: fees, lost income or customers, strained supplier relations.

Topic 3.2: Managing people and operations

HR objectives: Targets for the number and skills of employees, turnover and retention, engagement, employee costs, and equality, diversity, inclusion and belonging.
HR planning: Matching the workforce to future needs through recruitment, training, retention, redeployment and redundancy.
Flexible employment: A mix of employment types and patterns so the workforce can change with demand.
Zero-hours and freelance contracts: main plus and minus: Zero-hours: hours track demand, but insecurity and higher turnover. Freelance: specialist skill on demand, but little control.
Productivity, sales per employee and employee turnover: Productivity = output ÷ employees. Sales per employee = revenue ÷ employees. Employee turnover = leavers ÷ average employees × 100 (9 of an average 60 = 15%).
Employee costs as a percentage of revenue: Employee costs ÷ revenue × 100. Example: £84,000 ÷ £420,000 × 100 = 20%.
Delayering: Removing one or more levels of hierarchy.
Tall vs flat structures: Tall: many levels, narrow spans, close supervision, many promotion steps, but slow communication and high management cost. Flat: few levels, wide spans, faster communication and lower cost, but limited supervision.
Centralised vs decentralised: Centralised: decisions at the top; consistency and control, but slow and demotivating. Decentralised: decisions lower down; speed, local knowledge and staff development, but less control.
Autocratic, democratic and transformational leadership: Autocratic: leader decides; fits a crisis or unskilled team; risks resentment. Democratic: leader consults; fits a skilled team; slow. Transformational: vision and inspiration for change; depends on the leader.
Hackman's five conditions for team effectiveness: A real team; compelling direction; enabling structure; supportive context; expert coaching.
Taylor, Maslow and Herzberg: Taylor: pay is the main motivator; simple timed tasks and piece rate. Maslow: hierarchy of physiological, safety, social, esteem, self-actualisation needs. Herzberg: hygiene factors (such as pay) prevent dissatisfaction; motivators raise motivation.
Financial and non-financial rewards: Financial: wages, salaries, piece rate, commission, performance-related pay, shares, fringe benefits. Non-financial: delegation, empowerment, job enrichment, training, remote, hybrid and flexible working.
Individual vs collective representation: Individual: flexible and personal, but low bargaining power. Collective (trade unions, employee forums): strong voice and protection, but may bring conflict and delay.
Operations objectives named in 7137: Efficiency, quality, volume of goods and services, flexibility, and environmental impact.
Added value: Selling price less the cost of bought-in inputs. Example: price £85, bought-in materials £52 → £33, which is 38.8% of the price.
Employee productivity, unit costs and capacity utilisation: Employee productivity = output over a time period ÷ number of employees. Unit costs = total costs ÷ number of units of output. Capacity utilisation = actual output ÷ maximum possible output × 100.
7,200 units, 18 staff, total cost £28,800, capacity 9,000. Productivity, unit cost, utilisation?: Productivity = 400 per employee. Unit cost = £4.00. Utilisation = 80%.
Ways to increase productivity, and difficulties: Training, motivation, better equipment, workflow changes, less waste, technology. Difficulties: costs come before gains, staff resistance, pressure on quality, extra output may not sell.
Lean production in 7137: Reducing inventory, re-works, waiting times and transportation times; kaizen (continuous small improvements suggested by staff); and standardised processes.
Benefits and difficulties of JIT: Benefits: lower holding costs, less storage, less cash tied up, less obsolete stock. Difficulties: needs reliable suppliers; delays stop output; no cover for demand spikes; lost bulk discounts.
Network analysis: float time and the critical path: Float time = latest finish time − duration − earliest start time. Example: LFT 9, duration 3, EST 4 → float 2 days. Activities with zero float form the critical path, which sets the shortest project time.
Quality assurance vs checking finished goods: Quality assurance builds quality into every stage to prevent faults. Checking finished goods only detects faults after they are made.
Consequences of poor quality: Returns, wasted materials, lost sales, damaged reputation, compensation, and low staff morale.
Ways of matching output to demand in 7137: Changing production scheduling; increasing or decreasing inventory; part-time, temporary, zero-hours or freelance staff; outsourcing; investment in capital and technology; increasing or decreasing capacity.
Inventory turnover: formula and example: Inventory turnover = cost of sales ÷ average inventories held. Cost of sales £300,000; inventory £22,000 at the start and £28,000 at the end, so average £25,000: turnover = 12 times a year.
Economies and diseconomies of scale in 7137: Economies (unit costs fall with size): technical, purchasing, financial. Diseconomies (unit costs rise with size): problems of control, communication and coordination.

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Written for AQA AS Business (7137), syllabus 7137 (For first teaching from September 2026).

Cards by Marlbridge Academic Team; 9 restate definitions from the 7137 revision notes. This deck was reviewed by Salman Ahmad on 2026-11-05. Report an error.

All 7137 notes, practice and topics