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IGSCE Business Studies > IGSCE Definitions - 1.Understanding Business Activity > Flashcards

IGSCE Definitions - 1.Understanding Business Activity Flashcards

Understanding Business Activity

1
Q

A need

A

A need is a good or service essential for living

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2
Q

A want

A

A want is a good or service which people would like to have but which is not essential for living. People’s wants are unlimited.

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3
Q

Economic Problem

A

There exist unlimited wants but limited resources to produce the goods and services to satisfy those wants. This creates scarcity

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4
Q

Factors of production

A

are those resources needed to produce goods and services. There are four factors of production, and they are in limited supply.

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5
Q

Scarcity

A

Scarcity is the lack of sufficient products to fulfil the total wants of the population.

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6
Q

Opportunity cost

A

Opportunity cost is the next best alternative given up by choosing another item

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7
Q

Specialization

A

occurs when people and businesses concentrate on what they are best at

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8
Q

Division of labour

A

is when the production process is split up into different tasks and each worker performs one of those tasks. It is a form of specialization

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9
Q

Businesses

A

Businesses combine the factors of production to make goods and services which satisfy people’s wants.

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10
Q

Added value

A

is the difference between the selling price and the cost of bought-in materials and components

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11
Q

The primary sector of industry

A

The primary sector of industry extracts and uses the natural resources of Earth to produce raw materials used by other businesses

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12
Q

The secondary sector

A

The secondary sector of industry manufactures goods using the raw materials provided by the primary sector.

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13
Q

The tertiary sector

A

The tertiary sector of the industry provides services to consumers and other sectors of industry.

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14
Q

De-industrialisation

A

De-industrialisation occurs when there is a decline in the importance of the secondary manufacturing sector of industry in a country

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15
Q

A mixed economy

A

A mixed economy has both a private sector and a public (state) sector

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16
Q

Capital

A

Capital is the money invested into the business by the owners

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17
Q

An entrepreneur

A

An entrepreneur is a person who organises, operates and takes the risk for a new business venture

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18
Q

Capital employed

A

Capital employed is the total value of capital used in the business

19
Q

Internal Growth

A

Internal Growth occurs when a business expands its existing operations

20
Q

External Growth

A

External Growth is when a business takes over or merges with another business. It is often called integration, as one business is integrated into another one

21
Q

A takeover or acquisition

A

A takeover or acquisition is when one business buys out the owners of another business, which then becomes part of the ‘predator’ business [the business which has taken it over]

22
Q

A merger

A

A merger is when the owners of two businesses agree to join their businesses together to make one business

23
Q

Horizontal integration

A

Horizontal integration is when one business merges with or takes over another one in the same industry at the same stage of production

24
Q

Vertical integration

A

Vertical integration is when one business merges with or takes over another one in the same industry but at a different stage of production. Vertical integration can be forward or backwards.

25
Q

Conglomerate integration

A

Conglomerate integration is when one business merges with or takes over a business in a completely different industry. This is also known as diversification.

26
Q

A sole trader

A

A sole trader is a business owned by one person.

27
Q

Limited liability

A

Limited liability means that the liability of shareholders in a company is limited to only the amount they invested

28
Q

Unlimited liability

A

Unlimited liability means that the owners of a business can be held responsible for the debts of the business they own. Their liability is not limited to the investment they made in the business

29
Q

Partnership

A

Partnership is a form of business in which two or more people agree to own a business jointly

30
Q

Unincorporated businesses

A

Unincorporated businesses do not have a separate legal identity. Sole traders and partnerships are unincorporated businesses

31
Q

Incorporated businesses

A

incorporated businesses are companies that have separate legal status from their owners

32
Q

Shareholders

A

Shareholders are the owners of a limited company. They buy shares, which represent part-ownership of the company.

33
Q

Private limited companies

A

Private limited companies are businesses owned by shareholders, but they cannot sell shares to the public.

34
Q

Public limited companies

A

Public limited companies are businesses owned by shareholders but they can sell shares to the public and their shares are tradable on the Stock Exchange

35
Q

Dividends

A

Dividends are payments made to shareholders from the profits [after tax] of a company. They are the returns to shareholders for investing in the company.

36
Q

A franchise

A

A franchise is a business based upon the use of the brand names, promotional logos and trading methods of an existing successful business. The franchisee buys the license to operate this business from the franchisor.

37
Q

A joint venture

A

A joint venture is where two or more businesses start a new project together, sharing capital, risks and profits.

38
Q

A public corporation

A

A public corporation is a business in the public sector that is owned and controlled by the state [government]

39
Q

Business objectives

A

Business objectives are the aims or targets that a business works towards

40
Q

Profit

A

Profit is the total income of a business [revenue] minus total costs

41
Q

Market share

A

Market share is the percentage of total market sales held by one brand or business

42
Q

A social enterprise

A

A social enterprise has social objectives as well as an aim to make a profit to reinvest back into the business

43
Q

A stakeholder

A

A stakeholder is any person or group with a direct interest in the performance and activities of a business

IGSCE Business Studies (3 decks)

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