Glossary Flashcards
Goods
Is a tangible product that can be seen or taken home e.g. iPhone.
Service
Is an intangible product that the consumer does not physically take home e.g. yoga classes.
Brick and Mortar Business
Selling a physical product in a physical store.
International Online Media Empire
Running a multi-pronged business that brings in revenue and operates across multiple platforms.
Land (Physical Input)
These are natural resources needed to produce goods and services.
Labour (Human Input)
This refers to human effort used to produce goods and services.
Capital (Physical Input)
This refers to non-natural (or man-made) resources used in the production process.
Entrepreneurship (Enterprise & Human Inputs)
This refers to the knowledge, skills and experiences of individuals who have the capability to manage the overall production process. Entrepreneurs have the ability and willingness to take risks in order to produce goods and provide services to customers, profitably.
Adding Value
The practice of producing a good or service that is worth more than the cost of the resources used in the production process (e.g. production: 1.50, price: 2.50).
Value Added
The difference between the production cost and selling price. (E.g. production cost: 1.50, selling price: 2.50, value added: 1).
Needs
The basic necessities that a person must have to survive, including food, water, warmth, shelter and clothing.
Wants
People’s desires, e.g. the things they would like to have, such as new clothes, smartphones, overseas holidays and jewellery.
Consumers
Are the people or organisations that actually use/consume a product.
Customers
Are the people or organisations that buy the product.
Note: Customers can also be the consumers OR the consumers can be different from the customers. E.g. A company buys multiple work laptops (customer), their employees use these work laptops daily (consumers).
Consumer Goods
Are products sold to the general public; durable and non-durable.
Capital Goods
Are physical products bought by businesses to produce other goods and/or services.
Primary Sector (Goods)
Involves acquiring raw materials. For example, metals and coal have to be mined, oil drilled from the ground, fruits farmed and animals raised.
Secondary Sector (Goods)
Manufactures and assembles products. They transform raw materials into finished goods. For example, cookies, cars, cell phones, etc.
Tertiary Sector (Services)
Provides services to customers, which sometimes includes tangible goods. Examples include banks, education, transportation, insurance, etc.
Quaternary Sector (Services)
Provides services that are focused on knowledge. This includes IT, research and development, consultancy, the media, etc.
Entrepreneur
An individual who develops and runs a business, assuming all the risks and rewards of that given business.
Change
The modification or transformation in the way business is conducted as a response to internal factors or external influences.
Ethics
The moral principles and values that form the basis of how business activity is conducted.
Creativity
Generating new ideas. The ability to create, design, or produce a new idea.
Sustainability
Meeting the needs of the present without compromising the ability of future generations to meet their own needs.
Private Sector
Businesses owned and run by private individuals and organisations that usually, but not always, aim to earn a profit are part of the private sector. They operate independently from the government, although they need to operate within the rules and regulations in the country.
Public Sector
Public sector business organisations are controlled by a regional and/or national government. Their main aim is to provide essential goods and services for the general public. Such businesses can, but do not always, directly charge customers for such services. In some cases, such as government housing or state-funded education, the service is provided and/or funded by the government.
Limited Liability
Investors can only lose the money they invested but not personal property or money (hybrid entities that combine the characteristics of a corporation with those of a partnership or sole proprietorship have limited liability).
Unlimited Liability
Investors can lose their personal property and money to help pay the debts of the company (involves general partners and sole proprietors who are equally responsible for all debt and liabilities accrued by the business).
Privately Held Corporation
Owned by shareholders however shares are not advertised or traded on stock exchange.The number of shareholders is limited.
Publicly Held Corporation
Owned by shareholders however shares are advertised or traded on stock exchange. The number of shareholders is unlimited.
For-profit Company
Operates with the goal of making money.
Non-profit Company
Operates with the primary objective of benefiting the society as a whole (and making some profit to invest into the business).
Cooperatives
An association of persons (organisation) that is owned and controlled by the people to meet their common economic, social, and/or cultural needs and aspirations.
Company
A legal entity formed by a group of individuals to engage in and operate a business—commercial or industrial—enterprise.
Incorporation
When a business is registered with a state so that it becomes a separate legal entity.
Initial Public Offering
The first time a company sells shares publicly.
Stock Exchange
A marketplace where securities, such as stocks and bonds, are bought and sold.
Social Enterprises
Business with specific social objectives that serve its primary purpose.
Non-government Organisations (NGO)
A non-profit, private organisation that operates outside of government control.
Business Ownership
The legal structure that a business chooses to operate with (it is a crucial element).
Sole Trader
Self employed or sole proprietor (any business that is owned and controlled by one person). Ex. plumbers, hairdressers, photographers (typically for skilled specialists). Legally there is no distinction between a business owner’s personal and professional assets (unlimited liability).
Partnership
A business legally owned by two or more people. Ex. Trades people, dentists, solicitors (skilled and professional). Requires a partnership agreement which covers key legal issues such as how management decisions are made and how profits are shared. UNLIMITED LIABILITY
Limited Partneship
Just like a normal partnership apart from the fact it limits personal liability for SOME partners.
Limited Liability Partnership
Same as normal partnership but instead ALL partners have limited liability.
Private Limited Company
Owned by shareholders who are typically the directors of the business. Shares cannot be offered to the general public. (Ltd). It is an incorporated business (company classification, has its own separate entity in the eyes of the law). Owners are not necessarily involved in the running of the business.
Franchising
Acquisition of a proven business model and use of its brand and product, etc to open up a new store. Two key stakeholders: franchisee (person who purchases the rights to the franchise from the franchisor) and franchisor (person or company that owns the trademarks and business model and receives payments from the franchisee).
Corporate Social Responsibility (CSR)
Refers to the values, decisions and actions that impact society in a positive way. It is about an organisation’s moral obligations to its stakeholders, the community, society as a whole and the environment.
Strategic Objectives
Medium to long term objectives set up by senior managers to guide the company in the right direction to achieve the aims. These may be risky, a large investment is required, and cannot be easily reversed.
Tactical Objectives
Medium to short term objectives set by middle managers to achieve the strategic objectives. The risk is relatively low, likely to require few resources, and easy to change.
Operational Objectives
Day-to-day objectives set by floor managers (and sometimes workers themselves) so that the company can reach its tactical objectives.
Market Penetration
A growth strategy where the business focuses on selling existing products into existing markets.
Market Development
A growth strategy where the business seeks to sell its existing products into new markets.
Product Development
A growth strategy where a business aims to introduce new products into existing markets. This strategy may require the development of new competencies and requires the business to develop modified products which can appeal to existing markets.
Diversification
A growth strategy where a business markets new products in new markets. This is an inherently more risky strategy because the business is moving into markets in which it has little or no experience.
Arbitration
Arbitration is a method of settling disputes between individuals, groups, or countries. The two parties choose some disinterested and qualified person or people—the arbitrator—to judge the matter. The arbitrator listens to what the two parties have to say, considers the facts, and then makes a decision.
Competitors
Other businesses who can offer the same or similar goods and services to your customers.
Conciliation
A voluntary process in which a professional facilitator assists employers and employees to resolve disputes when their own unassisted efforts have not succeeded.
Conflict
A state of discord caused by the actual or perceived opposition of needs, values and interests between people working together.
Internal Stakeholder
People whose interest in a company comes through a direct relationship, such as employment, ownership, or investment.
External Stakeholders
People who do not directly work with a company but are affected somehow by the actions and outcomes of the business. Suppliers, creditors, and public groups are all considered external stakeholders.
Employees
Someone you hire and pay regular wages to perform a specific job, with the employer controlling how the work is performed.
Shareholders
A person or institution that has invested money in a corporation in exchange for a “share” of the ownership.
Financiers
A person, company, or government that provides money for projects or businesses.
Business
An organisation or enterprising entity engaged in commercial, industrial, or professional activities.
Entrepreneur
Someone who has an idea and who works to create a product or service that people will buy, as well as an organisation to support that effort.
Pressure Groups
Any group of individuals who work together to exert an influence upon the decision-making of a company to achieve some specific outcome.
Managers
An individual within an organisation who is in charge of coordinating the efforts of individuals or the allocation of resources.
Local Communities
The local community is made up of the people who live in the area where the business is located. Though not necessarily customers of the business they are all neighbours to the business.
Directors
The group of senior managers who are legally responsible for the overall running of a company on behalf of their shareholders (the legal co-owners of the company).
Demerger
When a company splits off one or more divisions to operate independently or be sold off.
Conglomerate
A corporation made up of several different, independent businesses.
Vertical Integration
The business arrangement in which a company controls different stages along the supply chain.
Forward Vertical Integration
Happens when a business improves its production cycle by taking control of all the stages in the supply chain to create its product.
Backward Vertical Integration
A form of vertical integration in which a company expands its role to fulfil tasks formerly completed by businesses up the supply chain. In other words, backward integration is when a company buys another company that supplies the products or services needed for production.
Acquisition
A business transaction that occurs when one company purchases and gains control over another company.
Diseconomies of Scale
Happens when a company or business grows so large that the costs per unit increase. It takes place when economies of scale are no longer functional for a firm.
External Growth
Focuses on the areas you don’t have direct control over, including capturing new customers. Generally, this means acquiring another business, merging with another competitor, or looking at strategic alliances and partnerships to achieve your overall growth goals.
Financial Economies of Scale
Cost advantages that can occur when a company increases their scale of production and becomes more efficient, resulting in a decreased cost-per-unit.
Joint Ventures
When two or more businesses agree to work together.
Franchise
Method of distributing products or services involving a franchisor, who establishes the brand’s trademark or trade name and a business system, and a franchisee, who pays a royalty and often an initial fee for the right to do business under the franchisor’s name and system.
Synergy
The concept that the value and performance of two companies combined will be greater than the sum of the separate individual parts.
External Economies of Scale
Business-enhancing factors that occur outside a company but within the same industry. In addition, to lower production and operating costs, external economies of scale may also reduce a company’s variable cost per unit because of operational efficiencies and synergies.
Takeover
Occurs when one company makes a successful bid to assume control of or acquire another.
Risk-bearing
Risk-bearing in entrepreneurship means taking responsibility for risks taken and accepting potential losses.
Capacity Utilisation
The manufacturing and production capabilities that are being utilised by a nation or enterprise at any given time.
Friendly Acquisition
When the target company’s management and shareholders agree to be purchased.