Unit 1 Flashcards
Consumer Goods
The physical and tangible goods sold to the general public- include durable and non-durable goods
Consumer Services
The non-tangible products sold to the general public
Capital Goods
The physical goods used by industry to aid in the production of other goods and services
Creating value
increasing the diference between the
cost of purchasing bough-in materials and the price the
finished goods are sold for.
Added value
the difference between the cost of purchasing raw materials and the price the finished goods are sold for
Opportunity cost
The benefit of the next most desired option which is given up
Entrepreneur
Someone who takes the financial risk of starting and managing a new venture
Social enterprise
A business with mainly social objectives that reinvests most of its profits into benefiting society rather than maximizing returns to owners
Triple bottom line
The three objectives of social enterprises: economic, social, and environmental
Primary Sector Business Activity
Firms engaged in industries that extract natural resources so that they can be used and processed by other firms`
Secondary sector business activity
Firms that manufacture and process products from natural resources
Tertiary sector business activity
Firms that provide services to consumers and other businesses
Public sector
Comprises organizations accountable to and controlled by central or local government
Private Sector
Comprises businesses owned and controlled by individuals or groups of individuals
Mixed economy
Economic resources are owned and controlled by both private and public sectors
Command economy
Economic resources owned, planned and controlled by the state
Free Market economy
Economic resources owned largely by the private sector with very little state intervention
Sole trader
A business in which one person provides the permanent finance and, in return, has full control of the business and is able to keep all the profits
Partnership
A business formed by two or more people to carry on a business together, with shared capital investment and, usually, shared responsibilities
Limited Liability
the only liability – or potential loss – a
shareholder has if the company fails is the amount invested
in the company, not the total wealth of the shareholder.
Private limited company
A small to medium-sized business that is owned by shareholders who are often members of the same family. This company cannot sell shares to the general public
Share
A certificate confirming part ownership of a company and entitling the shareholder owner to dividends and certain shareholder rights
Shareholder
A person or institution owning shares in a limited company
Public limited company
A limited company, often a large business, with the legal right to sell shares to the general public- share prices are quoted on the national stock exchange
Memorandum of association
This states the name of the company, the address of the head office through which it can be contacted, the maximum share capital for which the company seeks authorization and the declared aims of the business
Articles of association
This document covers the internal workings and control of the business, the names of the directors and the procedures to be followed at meetings.
Franchise
A business that uses the name, logo, and trading systems of an existing successful business
Joint venture
Two or more businesses agree to work closely together on a particular project and create a separate business division to do so
Holding company
a business organization that owns and controls a number of separate businesses, but does not unite the into one unified company
Public corporation
a business enterprise owned and controlled by the state - also known as nationalized industry
Privatization
Selling state-owned and controlled business organizations to investors in the private sector
Revenue
total value of sales made by a business in a
given time period.
Capital employed
The total value of all long-term finance invested in the business
Market capitalization
The total value of a company’s issued shares
Market share
Sales of the business as a proportion of total market sales
Internal growth
Expansion of a business by means of opening new branches, shops, or factories (AKA organic growth)
Mission statement
A statement of the business’ core objectives aims, phrased in a way to motivate employees and stimulate interest by outside groups
SMART
criteria for effective business objectives
Specific
Measurable
Achievable
Realistic/relevant
Time=specific
Corporate social responsibility
This concept applies to those businesses that consider the interests of society by taking responsibility for the impact of their decisions and activities on customers, employees, communities, and the environment
Management by objectives
A method of coordinating and motivating all staff in an organization by dividing its overall aim into specific targets for each department, manager, and employee
Ethics
The moral guidelines that determine decision making
Ethical code of conduct
A document detailing a company’s rules and guidelines on staff behavior that must be followed by all employees
Stakeholders
People or groups of people who can be affected by, and therefor have an interest in any action by an organization
Stakeholder concept
The view that businesses and their managers have responsibilities to a wide range of groups, not just shareholders
Social audit
A report on the impact a business has on society. This can cover pollution levels, health and safety record, sources of supplies, customer satisfaction, and contribution to the community
