Business activty Flashcards
A need
A good or service essential for living
A want
A good or service that people would like to have but is not essential for living `
Economic problem
Unlimited wants but limited resources
Scarcity
Lack of resources to meat the demand
Opportunity cost
The next best item given up by choosing another
Factors of production
Resources needed to produce goods and services
- land
- enterprise
- labor
- capital
Business
An organization that combines factors of production to satisfy peoples’ needs and wants
Specialization
People and business focus on what they are best at
Division of labor
Production is split into seperate tasks and each worker specializes in one task
Added value
The difference between selling price and cost of materials
Primary sector
Businesses that extract and use natural resources to produce raw materials
Secondary sector
Businesses that manufacture goods using raw materials from the primary sector
Tertiary sector
Businesses that provided services to consumers and other firms
Deindustrialization
The decline in the importance of the secondary manufacturing industry
Mixed economy
Has both public and private sector
Public sector
Businesses owned by the government
Private sector
Businesses owned by people, not by government
Privatization
The sale of a business in the public sector to the private sector
Entrepreneur
Some one who organizes, operates, and takes the risk of a new business venture
Business plan
The objectives and details of operations, finance, and owners of a new business
Capital employed
The total value of capital used in a business
Internal growth
The business expands its existing operations
External growth
The business expands by merging with or taking over another business
Takeover
A business buys out the owners of another business
Merger
The owners of two businesses agree to join their business together to form one
Horizontal integration
A business integrates with another business in the same industry and level of production
Vertical integration (backwards and forwards)
A business integrates with another business in the same industry but on a different level of production
Conglomerate integration (diversification)
A business integrates with another in a different industry
Sole trader
The business is owned by one person
Partnership
The business is jointly owned by two or more people
Limited liability
The liability of owners and shareholder is limited to the amount invested, personal possessions are not at risk
Incorperted business
A business with a seperate idenity from its owners
Private limited company
A business owned by shareholders but it can not sell shares to the public
Public limtted company
A business owned by shareholder but it can sell shares which are tradable on the stock exchange.
Shareholders
The owners of a limited company
Dividends
The payments which must be made to share holders from the profits of a company
Franchise
A business that licenses its brand name, logo, trading methods and brand image and sells it to franchises
Joint Venture
Two or more people start a new product together sharing capital, profits and risks
Public corperation
A business in the public sector that is owned and controlled by the government
Business objectives
The aims or targets that a business works towards
Profit
Revenue-costs
Market share
The percentage of market sales held by a brand (sales by business/total sales in market) x 100
Social enterprise
An organization with profit, environmental and social objectives
Stakeholder
A person with direct interest in the performance of a business
