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Business Definitions > Section 1 Purpose of Business Activity > Flashcards

Section 1 Purpose of Business Activity Flashcards

1
Q

NEED

A

A good or service essential for living

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2
Q

WANT

A

A good or service that people would like to have, but is not required for living

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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

Resources needed to produce goods or services

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5
Q

SCARCITY

A

A situation that exists when there are unlimited wants and limited resources to produce the goods and services to satisfy those wants.

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6
Q

OPPORTUNITY COST

A

The next best alternative after choosing another item

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7
Q

LAND

A

The natural resources that can be obtained from nature

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8
Q

LABOUR

A

The physical and mental efforts put in by the workers in the production process. The reward for labour is wage/salary

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9
Q

CAPITAL

A

The finance, machinery, and equipment needed for the production of goods & services

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10
Q

ENTERPRISE

A

The risk-taking ability of the person who brings the other factors of production together to produce a good or service. The reward is profit from the business

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11
Q

SPECIALIZATION

A

When a person or organization concentrates on a task which they are best at

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12
Q

DIVISION OF LABOUR

A

The production process is split up into different tasks and each worker performs one of these tasks. It is a form of specialization.

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13
Q

BUSINESS

A

Any organization that uses all the factors of production (resources) to create goods and services to satisfy human wants & needs

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14
Q

ADDED VALUE

A

The difference between the cost of materials bought in and the selling price of the product

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15
Q

PRIMARY SECTOR

A

The use/extraction of natural resources

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16
Q

SECONDARY SECTOR

A

The manufacture of goods using the resources from the primary sector

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17
Q

TERTIARY SECTOR

A

All the services provided in an economy

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18
Q

INDUSTRIALIZATION

A

A country moving from the primary sector to the secondary sector

19
Q

DE-INDUSTRIALIZATION

A

A country moving from the secondary to the tertiary sector

20
Q

MIXED ECONOMY

A

Has both a private and a public sector

21
Q

CAPITAL

A

The money invested into a business by the owners

22
Q

PRIVATE SECTOR

A

Private individuals own and run business ventures

23
Q

PUBLIC SECTOR

A

The government owns and runs business ventures.

24
Q

ENTREPRENEUR

A

A person who organizes, operates and takes risks for a new business venture

25
Q

BUSINESS PLAN

A

A document containing the business objectives and important details about the operations, finance and owners of the new business.

26
Q

CAPITAL EMPLOYED

A

The total value of capital used in the business

27
Q

INTERNAL GROWTH

A

When a business expands its existing operations

28
Q

EXTERNAL GROWTH / INTEGRATION

A

When a business takes over or merges with another business

29
Q

MERGER

A

When the owner of two business agree to join their firms together to make one business

30
Q

TAKEOVER

A

When one business buys out the owners of another business, which then becomes part of the ‘predator’ business

31
Q

HORIZONTAL INTEGRATION

A

When one firm merges with or takes over another one in the same industry at the same stage of production

32
Q

VERTICAL INTEGRATION

A

When one firm merges or takes over another firm in the same industry but ` a different stage of production

33
Q

CONGLOMERATE INTEGRATION

A

When one firm merges with or takes over a firm in a completely different industry. This is also known as diversification

34
Q

SOLE TRADER

A

A business organization owned and controlled by one person. Sole traders can employ other workers, but only he/she invests and owns the business.

35
Q

LIMITED LIABILITY

A

The liability of the shareholders in a company is limited to only the amount they invested

36
Q

UNLIMITED LIABILITY

A

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.

37
Q

PARTNERSHIP

A

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

38
Q

PARTNERSHIP AGREEMENT

A

A legal agreement between two or more (usually up to twenty) people to own, finance and a run a business jointly and to share all profits.

39
Q

UNINCORPORATED BUSINESS

A

A business that does not have a separate legal identity. Sole traders and partnerships are unincorporated businesses.

40
Q

PRIVATE LIMITED COMPANIES

A

One or more owners who can sell its shares to only the people known by the existing shareholders

41
Q

PUBLIC LIMITED COMPANIES

A

Two or more owners who can sell its shares to any individual/organization in the general public through stock exchanges

42
Q

FRANCHISES

A

The owner of a business (the franchisor) grants a license to another person or business (the franchisee) to use their business idea

43
Q

JOINT VENTURE

A

An agreement between two or more businesses to work together on a project

44
Q

STAKEHOLDERS

A

Any person or group that is interested in or directly affected by the performance or activities of a business

Business Definitions (3 decks)

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