topic 1 Business In The Real World Flashcards
Goods
A physical product (something you can touch)
Customer
Someone who pay/buys for the product
Entrepreneur
Someone who is willing to take risks involved in starting a business
Service
An intangible product (something you can’t touch) e.g. bus journey
Consumer
Someone who uses goods or services produced by businesses
Social entreprise
A business that is set up to help society rather than to make profit
Business
An organisation that provides a good or supplies and services
Types of liability
Unlimited and limited liability
Unlimited liability
If a problem occurs, the owners personal possessions will be lost
Limited liabilty
The owner only loses the amount invested in the business
What are the forms of business?
Sole trader, partnership, comapnies (PLC, LTD) and not-for-profit organisations
Private sector organisations
Owned by individuals. These businesses are driven by profit.
Public sector organisations
An organisation owned by the government they provide goods and services for the benefit of the community not for profit but instead they operate with money raised from taxes
What is an objective?
A specific target that turns the aim into something that is easier to measure and assess progress
What is aim?
A general goal of a business
Survival
A business that has survived even if they lowered the price and made lower profits
Profit maximisation
Earning a profit is how much a business makes (revenue) minus the cost (e.g. paying employees)
Growth
A business that grows and opens more stores to sell more products to increase revenue
Market share
A business that focuses to increase market share and put the business at a vantage point
Customer satisfaction
Business that focuses on achieving a particular level of customer satisfaction by providing a better service or a wider range of products than their competitors. Hoping they would get more profits in the long run (meaning customers would come back and tell their friends to gain more customers)
Internal Growth
(Also known as Organic Growth) occurs when a business gets bigger by selling more of its products
External Growth
(Also known as integration) occurs when a business gets bigger by joining or buying other businesses.
Franchise
A franchise occurs when a frachisor sells the right of its product to a frachisee; this is usually in return for a fee and a percentage of a turnover
Franchisee
A franchisee buys a franchise usually in return for a fee and percentage of turnover
Franchisor
A franchisor sells a franchise usually in return for a fee and percentage of turnover
Merger
A merger occurs when two or more businesses join together to form a new business
Takeover
A takeover (or acquisition) occurs when one firm gains control of another and buys it up.
Horizontal integration
It occurs when one firm joins with another firm at the same stage of the same production process
Vertical integration
It occurs when one firm joins with another firm at a different stage of the same production process
Backwards vertical integration
When a firm joins with its suppliers
Forward vertical integration
When a firm joins with its distributors
Conglomerate integration
Occurs when one firm joins together with another firm in a different type of production process
Economies of scale
Occurs when a business’s unit costs of production fall as its output rises and the business expands
Diseconomies of scale
Occurs when the cost per unit increases as a business expands
Organic growth
It is an expansion from within a business by expanding the number and/or range of products and/or locations
Interest
Money paid by banks as a reward to attract people to save woth them
Interest rates
Refer to the cost of borrowing money or the reward of saving money, expressed as a percentage
Inflation
Refers to the rate at which prices are increasing. ( e.g. if inflation is 2% prices are generally growing by 2% that year
Gross domestic product (GDP)
Measures all the income earned in a country’s economy in a year
