Section 1 - Business Activity and the Changing Environment Flashcards
This section examines the objectives of businesses, the changing environment and the criteria for judging success. The focus is on the importance of having clear business objectives and how the business environment provides opportunities for, and imposes constraints on, the pursuit of those objectives.
Business
An organisation which produces goods and services.
Consumer goods
Goods and services sold to ordinary people (consumers) rather than businesses.
Entrepreneurs
People who take risks and set up businesses.
Goods
Physical products like a mobile phone, packet of crisps or shoes.
Needs
Basic requirements for human survival.
Private sector
Business organisations owned by individuals or groups of individuals.
Public sector
Business organisations owned by central or local government.
Scarce resources
The amount of resources available is limited.
Services
Non-physical products like banking, car washing and waste disposal.
Stakeholder
An individual or group with an interest in the operation of a business.
Wants
People’s desires for goods and services.
Mission statement
A brief summary of a firm’s aims and objectives.
Objectives
The goals or targets set by a business.
Profit maximisation
Making as much profit as possible in a given time period.
Deed of partnership
A binding legal document which states the formal rights of partners.
Franchise
Where a business (the franchisor) allows another operator (the franchisee) to trade under their name.
Incorporated businesses
Where a business has a separate legal identity from that of its owners.
Limited liability
Where a business owner is only liable for the original amount of money invested in the business.
Limited liability partnership
A partnership where all partners have limited liability.
Limited partnership
A partnership where some partners contribute capital and enjoy a share of the profit but do not take part in the running of the business.
Partnership
A business owned by between 2-20 people.
Sole trader
A business owned by a single person.
Unincorporated business
Those businesses where there is no legal difference between the owner and the business.
Unlimited liability
Where the owner of the business is personally liable for all business debts.
Flotation
The process of a company ‘going public’.
Joint venture
Where two or more companies share the cost, responsibility and profits from a business venture.
Limited company
A business organisation which has a separate legal identity from that of its owners.
Stock market
A market for shares in plcs.
Globalisation
The growing integration of the world’s economies.
Multinational
A large business with markets and production facilities in several different countries.
Repatriation of profit
Where a multinational returns the profits from an overseas venture to the country where it is based.
Capital-intensive production
Production methods that make more use of machinery relative to labour.
Division of labour
Specialisation in specific tasks or skills by an individual.
Entrepreneur
An individual who organises the other factors of production and risks their own money in the business venture.
Factors of production
The resources used to produce goods and services. They include land, labour, capital and enterprise.
Fixed capital
The stock of ‘man-made’ resources such as machines and tools used to help make goods and service.
Labour
The people used in production.
Labour-intensive production
Production methods that make more use of labour relative to machinery.
Production
The transformation of resources into goods or services.
Specialisation
In business the production of a limited range of goods.
De-industrialisation
The decline in manufacturing.
Primary industry
Production involving the extraction of raw materials from the earth.
Secondary industry
Production involving the conversion of raw materials into finished and semi-finished goods.
Tertiary industry
The production of services in the economy.
Economic growth
An increase in income, output and expenditure over a period of time.
Fiscal policy
Using changes in taxation and government expenditure to manage the economy.
Inflation
A rise in the general price level.
Interest
The price of borrowed money.
Monetary policy
Using changes in interest rates and the money supply to manage the economy.
Monopoly
Where one business dominates the whole market.
Unemployment
When people are out of work and cannot find a job.
Anti-competitive practices or restrictive trade practices
An attempt by firms to prevent or restrict competition.
Barriers to entry
Obstacles that make it difficult for new firms to enter a market.
Balance of trade or visible balance
The difference between visible exports and visible imports.
Devaluation
The depreciation or fall in value of a currency.
Exchange rate
The price of one currency in terms of another.
Exports
Goods and services sold overseas.
Free trade
Trade between nations that is completely without government restrictions.
Imports
Goods and services bought from overseas.
Invisible trade
Trade in services.
Visible trade
Trade in physical goods.
Protectionism
An approach used by a government to protect domestic producers.
Quota
A physical limit on the quantity of imports allowed into a country.
Subsidy
Financial support given to a domestic producer to help compete with overseas firms.
Tariff
A tax on imports to make them more expensive.
Trade barriers
Measures designed to restrict trade.
Assisted Areas
Areas that are designated by the UK or EU as having economic problems and are eligible for support in a variety of forms.
Brownfield Site
Areas of land which were once used for urban development.
Greenfield Site
Areas of land, usually on the outskirts of towns and cities, where businesses develop for the first time.
Regional Policy
Measures used by the government to attract businesses to regions where unemployment and a low standard of living prevail.
Business Ethics
Ideas, in business, about what is morally right or wrong.
Pressure Groups
Groups of people without political power who seek to influence decision makers in politics, society and businesses.
Sustainable Development
The idea that people should satisfy their basic needs and enjoy improved living standards without compromising the quality of life of future generations.
Social Audit
The collection of information and reporting on the impact that a business has on society and the environment.
