Business and its environment Flashcards
Consumer goods
Physical and tangible goods sold to the public
Consumer services
Non-tangible goods or products sold to the public
Capital goods
Physical goods used by the industry to aid in the production of other goods and services
Creating value
Increasing the difference between the cost of purchasing bought in materials and the price at which finished goods are sold for
Added value
The difference between the cost of purchasing bought in goods and the price for which goods are sold for
Opportunity cost
The benefit of the next most desired option which is given up
Entrepreneur
Someone who takes the financial risk of starting and managing a new venture
Social enterprise
Business with many social objectives that reinvest most of its profit into benefiting society rather than maximising returns to owners
Triple bottom line
Three objectives of social enterprises : economic, social and environmental
Primary sector business activity
Industries of firms that extract natural resources so that they can be processed by other firms
Secondary sector business activity
Manufacture and process products from natural resources
Tertiary sector business activity
Firms that provide service to consumers and other businesses
Public sectors
Organisations accountable to and controlled by a central local government
Private sector
Businesses owned and controlled by individuals or group of Individuals
Mixed economy
Economic resources are owned and controlled by both government and private individuals – public and private sector
Free-market economy
Economic resources are largely owned by the private sector with very little state intervention
Command economy
Economic resources owned, planned and controlled by the state
Sole trader
Business in which one person provides the permanent finance and in return has full control of the business and keep all the profits
Partnership
Business formed by two or more people to carry on a business together with shared capital investment and shared responsibility
Limited liability
The only liability or potential loss a shareholder has if the company fails is the amount invested in a company, not the total wealth of the shareholder
Private limited company
A business that is owned by shareholders who are often members of the same family – cannot sell shares to public
Public limited company
A business with a legal right to sell shares to the general public – share prices quoted on national stock exchange
Shares
Certificate confirmation part ownership of a company and entitling the shareholder owner to dividends and certain shareholder rights
Shareholder
A person/institution owning shares in a limited company
Memorandum of association
States company name, address of head office through which it can be contacted, maximum share capital for which company seeks authorisation and clear aims of the business
Articles of association
The document covers the internal workings and control of the business
Franchise
Business uses the same name, logo, trading systems of an existing successful business
Joint-venture
Two or more businesses agreed to work closely together on a project and create a separate business Collaboration to do so
Public corporation
Business enterprise owned and controlled by the state – nationalised industry
Holding company
Business organisations that owns and controls several businesses, but does not unite them into one unified company
Capital employed
Total value of all long-term finance invested in the business
Market capitalisation
Total value of a companies issued shares
Current share price x by total number of shares issued
Revenue
Total value of sales made by a business in a period
Internal growth
Expansion of the business by means of opening new branches, shops or franchises – organic growth
Mission statement
Statement of a businesses aims phrased in a way to motivate employees and stimulate interest by outside groups
Corporate social responsibility – CSR
Businesses that consider the interests of society by taking responsibility for the impact of their decisions/activities on consumers, employees, communities and the environment
Management by objectives – MBO
Method of coordinating and motivating all staff in an organisation by dividing its overall aim in to specific targets for each department, manager and employee
Ethical code – Code of conduct
Document detailing the companies rules and guidelines on staff behaviour that must be followed by all employees
Business
Any organisation that uses resources to meet the needs of a customer by providing a product or service they demand
Want
Good
Need
Services
Something you would like to have but do you not need in order to live
Something you can see touch or smell
Something you require in order to survive
Something another person does for you
Factors of production – CELL
C – capital
Equipment and finances; that which is used to utilise the resources
E– Enterprise
Ability and enthusiasm to combine all factors of production to create a business
L – labour
Work provided by people or machinery in order to complete a job
L – land
Everything that occurs naturally and can be seen in nature
Industrialisation
The growing importance of the secondary sector manufacturing industries in developing countries
The opposite is de-industrialisation
Market share
Sales of the business as a proportion of total market share
Total business sales
Total industry sales X100
Objectives
Ensures ability to direct, control and review businesses success
