section one Flashcards
need
good or service essential for living
want
good or service which people would like to have but is not essential for living
economic problem
unlimited wants exist but limited resources to produce goods and services
factors of production
land labour capital enterprise
resources needed to produce goods and services
scarcity
lack of sufficient products to fulfil populations needs and wants
opportunity cost
next best alternative given up by choosing another item
specialisation
people and the business do what they’re good at
division of labour
production process split into different parts and each worker does one of these tasks
business
a place where the factors of production are combined to make products
added value formula
difference between the selling price and the cost of bought-in materials and other components
Selling price - cost
primary sector
extraction natural resource from earth to produce raw materials
secondary sector
manufactures goods and services using the raw materials produced in the primary sector
tertiary sector
provides services to consumers and the other sectors of the industry
tertiary sector
provides services to consumers and the other sectors of the industry
tertiary sector
provides services to consumers and the other sectors of the industry
de-industrialisation
decline in the importance of secondary sector
mixed economy
both private sector and public sector
private sector
businesses not owned by government
public sector
business owned and controlled by government
capital
money invested into a business by the owners
entrepreneur
person who organises, operates and takes risk for a new business venture
capital employed
total value of capital used in the business
internal growth
business expands its existing operations
external growth / integration
a business takes over or merges with another business
takeover
business buys out the owners of another business
merger
owners of two businesses agree to join their business together to make one business
horizontal integration
one business merges with or takes over another business in the same industry at the same stage of production
vertical integration
business merges with or takes over another business in the same industry but at a different stage of production
conglomerate integration / diversification
business merges with or takes over another business in a completely different industry
why do some businesses remain small?
type of industry the business is in
market size
owners objectives
causes of business failure
lack of management skills
changes in the business environment
liquidity problems
over expansion
sole trader
business owned by one person - unlimited liability
limited liability
liability of the shareholders in a company is limited to only the amount they invested
unlimited liability
owners of a business can be held responsible for the debts of the business they own
liability not limited to investment
partnership
form of business in which two or more people agree to jointly own a business
unincorporated business
does not have a separate legal identity eg. sole traders and partnerships
incorporated business
companies that have separate legal status from their owners
shareholders
owners of a limited company. they buy shares which represent ownership of the company
private limited companies
businesses owned by shareholders but they can’t sell shares to the public- only friends and family
public limited companies
businesses owned by shareholders but they can sell their shares to the public and their shares are tradable on the stock exchange
dividends
payments made to shareholders from the businesses profits. return to the shareholders for investing in the company
franchise
business base uptown the brand names, promotional logos and trading methods of an existing successful business. the franchisee buys the licence to operate this business from the franchisor
joint venture
where two or more businesses start a new project together, sharing capital, risks and profits
public corporation
business in the public sector that is owned and controlled by the state government
business objectives
aims or targets that a business works towards
profit
total income of a business - total costs
pay a return to shareholders
provide finance
marketshare
percentage of total market sales held by one brand or business
social enterprise
social objective as well as aim to make a profit to reinvest back into the business
3 aims- social, environmental, financial
stakeholder
person or group with a direct interest in the performance and activities of a business
