Definitions AS Flashcards
Consumer goods
The physical and tangible goods sold to the general public
Consumer services
The non-tangible products sold to the general public
Capital goods
The physical goods used bu the industry to aid in the production of other goods and services
Creating value
The process of increasing the difference between the cost of the bought-in materials and the price at which the finished good is sold for
Added value
The difference between the cost of the bought-in materials and the price at which the finished good is 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
A business with mainly social objectives that reinvests most of its profits into benefiting society rather than maximising returns to owners
Triple bottom line
The three objectives of social enterprises: economic, social and environmental
Primary sector business activity
Firms engaged in industries that extract natural resources so that they can be used and processed by other firms
Secondary sector business activity
Firms that manufacture and process products from natural resources
Tertiary sector business activity
Firms that provide services to consumers and other businesses
Public sector
Comprises organisations accountable to and controlled by the state
Private sector
Comprises businesses owned and controlled by individuals or groups of individuals
Sole trader
A business in which one person provides the permanent finance and, in return has full control of the business and is able to keep all of the profits
Partnership
A business formed by two or more individuals to carry on a business together, with shared capital investment and usually, shared responsibilities
Limited liability
The liability the shareholder has that if the company fails, the amount invested into the company is lost, not he shareholder’s total wealth
Private limited company
A small to medium sized business that a is owned by shareholders who are often members of the same family (employees or friends but cant sell to general public)
Share
A certificate confirming part ownership of a company and entitling the shareholder owner to dividends and certain shareholder rights
Shareholder
A person or institution owning shares in a limited company
Public limited company
A limited company, often large, with he legal rights to sell shares to the general public
Memorandum of association
This states the name of the company, the address of the head of dice through which it can be contacted, the maximum share capital for which the company seeks authorisation and the declared aims of the business
Articles of association
This document covers the internal workings and control of the business e.g. the names of directors, the procedures that will be followed at meeting etc.
Franchise
A business that uses the name, logo and trading systems of an existing successful business
Joint venture
Two or more business agree to work together on a particular project and create a separate business division to do so
Holding company
A business organisation that owns and controls a number of separate businesses, but does not unite the into one unified company
Public corporations
A business enterprise owned and controlled bu the state - aka nationalised industry
capital employed
The total value of all long-term finance invested in the business
Market capitalisation
The total value of a company’s issued shares
share price x number of shares issued
Market share
The sales of the business as a proportion fo total market sales
If it has 25% or more it is a monopoly
(Company’s revenue/ industry revenue x 100)
Internal growth
The expansion of a business by means of opening new branches, shops or factories
Aka organic growth
Mission statement
A statement of the business’ core aims, phrased in a way to motivate employees and stimulate interest by outside groups
Corporate social responsibility (CSR)
the concept businesses that consider the interests of society carry out, by taking responsibility for the impact of their decisions on different stakeholders and the environment
Management by objectives
A method of coordinating and motivating allo staff in an organisation by dividing its overall aim into specific targets for each department, manager and employee
Ethical code (code of conduct)
A document detailing a company’s rules and guidelines on staff behaviour that must be followed by all employees
Stakeholders
People or groups who can be affected by and therefore have an interest in any action taken by an organisation
Stakeholder concept
The view that businesses and their managers have responsibilities to a wide range of groups, not just shareholders
