Definitions 2 Flashcards
Private sector
Comprises businesses owned and controlled by individuals or groups of individuals
Public sector
Comprises organisationsaccountable to and controlled by central or local government
Mixed economy
Economic resources are owned and controlled by both private and public sectors
Free-Market economy
Economic resources are largely owned by the private sector, with very little state intervention
Command economy
Economic resources are owned, planned and controlled by the state
Privatisation
The sale of public sector organisations to the private sector
Sole Trader
A business that is exclusively owned by one person who has full control and is entitled to all profits(after tax)
Partnership
Business formed by two or more people to carry on a business together, with shared capital investment and, usually, shared responsibilities
Primary sector
Extraction/production of raw materials from the Earth
Secondary sector
Manufacturing and processing, where raw materials are made into products for sale
Tertiary Sector
Any business that sells a service or goods
Quarternary sector
Refers to services that focus on knowledge
Profit
Total financial gain of an organisation. Total Revenue-Total Costs
Revenue
Total income generated by sale of a good or service
Four main concepts
Sustainability, ethics, change and creativity
System
A group of related parts that work together for a purpose
Physical resources
Raw materials
Financial resources
Funds required to set up and maintain a business
4 Processes of Business Management
Human resource Management
Finance and accounts
Marketing
Operations
HR Management
Makes sure the business employs the correct number of skilled employees
Operations
Plans how and in what quantity goods and services are to be produced
Marketing
Responsible for ensuring the right product is sold to the right customer for the right price
The economy
A system for producing and distributing goods and services among people
Integrated business
A business that involves two or more sectors
Business plan
A tool used to describe a businesses approach, reduces risk
Charity
An organisation set up to raise money to help people in need or to support causes that require funding
Triple bottom line
The three objectives of social enterprises: social, economic, environmental
Public corporation
A business enterprise owned and controlled by the state
Market share
Sales of a business as a proportion of total market size in a given period
Shareholder value
The financial gains recieved by the owners of a company’s shares
Ethical code
A document detailing a company’s rules and guidelines on staff behaviours that must be followed by all employees
STEEPLE
Social, technological, economic, environmental, political, legal, ethical
Acquisition
When a company purchases at least 50% of the shares of another company and becomes the controlling owner
Synergy
The concept that following an acquisition or merger, the combined value and performance of two businesses will be greater than the sum of two seperate businesses
Scale of operation
The maximum output that can be achieved using the available inputs
Internal economies of scale
Reductions in average unit costs of production that result from an increase in the scale of operations of a business
External economies of scale
Reductions in average unit costs of production of a business. Business enhancing factors that occur outside a company but within the same industry
Internal diseconomies of scale
Factors that cause average unit costs of production to rise when the scale of business operation is increased
External diseconomies of scale
Fcators causing average unit costs of production for a bsuiness to rise as an industry expands
Multinantional Company
A company that operates in more than one company
Foreign direct investment
Long-term investment by multinational companies in a foreign company
Internal sources of finance
Money that is raised from the business’s or owner’s existing assets
Personal funds
The money invested by the owner or owners of a business
Retained profit
Money that a company has at the end of the trading year after paying all expenses, dividends and taxes. Also a businesses primary source of finance
