Unit 1 Flashcards
Business
Any organisation that uses scarce resources to meet the needs of customers by providing a product or service that they demand
Activity
Is the condition in which things are happening or being done
Business activity
Provides consumers with goods and services that meet our needs and wants and uses scarce resources
Business plan
A written document that describes a business, it’s objectives, strategies, the market it is in and it’s financial forecast
Entrepreneur
Someone who takes the financial risk of starting and managing a new venture
Customer
An individual consumer or organisation that purchases goods or services from a business
Consumer
An individual who purchases goods and services for personal use
Consumer goods
The physical and tangible goods sold to consumers that are not for intended resale.
Includes: durable goods - cars, washing machines, and non-durable goods - food and drinks
Consumer services
The non-tangible products sold to consumers that are not intended for resale
Includes: hotel accomodation, insurance services, train journeys
Factors of production
The resources need by business to produce goods and services.
Includes - land, labour, capital, enterprise
Capital goods
The physical goods used by industry to aid in the production of other goods and services
Includes: machines and commercial vehicles
Enterprise
The action of showing initative to take the risk to set up a business
Creating (adding) value
Increasing the difference between the cost of purchasing bought-in materials and the price the finished goods are sold for (this is the aim)
Added value
The difference between the cost of purchasing bought-in materials and the price finished goods are sold for (this is the result)
Branding
The process of differentiating a product by developing a symbol, name, image or trademark for it
Opportunity cost
The benefit of the next most desired option which is given up (what you don’t get by choosing a different option)
Multinational business
A business organisation that has its headquarters in one country, but with operating branches, factories, and assembly plants in other countries
Intrapreneur
A business employee who takes direct responsibility for turning an idea into profitable new product
Private limited company
A business that is owned by shareholders who are often members of the same family; this company cannot sell shares to the general public
Public limited company
A company whose shares are traded on a stock exchange and can be brought of sole by the company
Primary sector
Firms engaged in farming, fishing, oil extraction and all other industries that exact natural resources so that they can be used and processed by other firms
Secondary sector
Firms that manufacture and process products from natural resources, including computers, baking, cloth making, construction
Tertiary sector
Firms provide services to consumers and other businesses, such as retailing, transport, insurance, hotels, tourist
Quaternary sector business
Businesses providing information services, such as computing, consultancy, and R&D (research and development)
Public sector
Comprises organisations accountable to and controlled by central or local government
Private sector
Comprises business owned and controlled by individuals or groups of individuals
Mixed economy
Economic resources are owned and controlled by both private and public sectors
Free-market economy
Economic resources that are owned largely by the private sector with very little state intervention
Command economy
Economic resources are owned, planned and controlled by the state
Public corporation
A business enterprise owned and controlled by the state — also known as a nationalised industry
Sole trader
A business in which one person provides the permanent finances and, in return, has full control of the business and is able to keep all of the profits
Unlimited liability
Business owners have full legal responsibility for the debts of the business
Partnership
A business formed by two or more people to carry on a business together, with shared capital investment and, usually, shared responsibility
Limited liability
The only potential loss a shareholder (or owner) has if the business fails is the amount they invested, not their personal wealth
Share
A certificate confirming part ownership of a company and entitling the shareholder dividends and certain shareholder rights
Initial public offering
An offer to the public to buy shares in a public limited company
Shareholder
A person or institution owning shares in a limited company
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 authorisation and the declared aims of the business
Articles of association
This document covers the internal workings and control of the business
E.G. the names of the directors and the procedures to be followed at meetings will be detailed
Co-operative
All members can contribute to the running of the business — workload to decision making. Profits are shared equally among members
E.G. Organic valley, co-op, mitre 10
Franchise
A business that’s used the name, logo, and trading systems of an existing successful business
E.G. McDonald’s, Baskin Robins
Franchiser
A person or business that’s sells the rights to open stores and sell products or services using the brand name and brand identity
Franchisee
A person or business that buys the right from a he franchiser to operate the franchise
Joint venture
Two or more businesses agree to work closely together on a particular project and create a separate business division to do so
E.G. BMW, Sony, google earth, samsung
Social enterprise
A business with mainly social objectives that reinvests most of its profits into benefiting society rather than maximising returns to its owners
Holding company
A business organisation that owns and controls a number of separate businesses, but does not unite them into one unified company
Revenue
The total value of sales made during the trading period
Capital employed
The total value of all long-term finance invested into the business
Market capitalisation
The total value of a company’s issued shares
Market share
Sales of the business as a proportion of total market sales
Organic (internal) growth
Expansion of a business by means of opening new branches, shop or factories
External growth
Business expansion achieved by integrating with another business either by merger or takeover
Merger
An agreement by owners and managers of two businesses to bring them together in a new combined business
Takeover
When a company buys over 50% of the shares of another company and becomes its controlling owner
Horizontal integration
Integration with a business in the same industry and at the same stage of production
Vertical integration
Integration with a business in the same industry
Forward vertical integration
Vertical integration with a customer business
Backward integration
Vertical integration with a supplier business
Conglomerate integration
Integration with a business in a different industry
Synergy
“The whole is greater than the sum of its parts”
Often assumed that the new business will be more successful than the original separate business
Strategic alliance
Agreement between two organisations to commit resources to achieving a specific objective while remaining independent
Business objective
A stated measurable target that a business plans to achieve
Corporate social responsibility
Businesses that consider the interests of society by taking responsibility for the impact of their decisions and activities in customers, employees, communities and the environment
Pressure group
Organisations created by people with a common interest or aim, who put pressure on businesses and governments to change policies so that an objective is reached
Triple bottom line
The three objectives of social enterprise:
Economic, Social, Environmental
SMART objectives
Sums that are Specific, Measurable, Achievable, Realistic and Time-limited
Business aim
A long term goal that a business hopes to achieve
Mission statement
A statement of the business’s core aims, phrased in a way to motivate employees and stimulate interest by outside groups
Annual (company) report
A document that gives details of a company’s activities over the year, including it s financial accounts
Business strategy
A long term plan of action for a business, designed to achieve a particular ibjective
Tactic
A short term action as part of an overall strategy
Target
A short term goal that must be reached before an overall objective can be achieved
Budget
A detailed financial plan for the future
Ethical code (code of conduct)
A document detailing a company’s rules and guidelines on staff behaviours that must be followed by all employees
Stakeholders
Individuals or groups of people who can be affected by - and therefore have an interest in - any action by an organisation
External stakeholders
Individuals/groups separate from the business but are affected by or interested in its operations
E.G. customers, shareholders, suppliers
Internal stakeholders
Individuals/groups who work within the business, or own it and are affected by the operations of the business
E.G. employees, managers
Trade union
An organisation of working people with the objective of improving the pay and working conditions of its members and providing them with support and legal services
Stakeholder concept
The view that businesses and their managers have responsibilities to a wide range of groups, not just stake holders (aka stakeholder theory)
