Unit 1 Business In The Real World Flashcards
Acquisition / takeover
One business takes control and ownership of another
Business Environment
The range of external factors that influence a business: PESTLE-C – Political, Economic, Social, Technological, Legal, Environmental and Ethical, and Competition
Capital
Investment in machinery, and the money required to start the business. One of the four Factors of Production.
Competition
The rivalry between businesses looking to sell their goods/services in the same market
Competitive market
Businesses compete for the same customers, no one business has more than 25% market share
Conglomerate
A business that owns brands in a range of different industries. For example, easyGroup own easyJet, easyHotel, easyPizza, easyGym, easyMoney, easyEnergy, and more
Costs
The money spent by a business on goods and services.
Fixed Costs: The costs that stay largely the same, regardless of the business’ output. Example: rent.
Variable Costs: The costs that vary with the level of trade. Costs
Fixed Costs: The costs that stay largely the same, regardless of the business’ output. Variable Costs
Total costs: These are calculated when all you fixed costs and variable costs are added together. Formular: TC = FC + VC
Creditor
These are people or organisations who have supplied goods or services to a firm but have not yet been paid for them.
Deed of Partnership
This is a legal document which shows how responsibilities, profits and workload are to be shared
Diseconomies of Scale
When a business grows too large, leading to a possible increase in unit cost
Dividend
A portion of the after-tax profit that is paid to shareholders according to the number of shares they own
E-Commerce
Business transactions carried out electronically on the internet
Economies of Scale
The cost advantage of producing on a large scale. As output increases the unit cost decreases.
Technical Economies of Scale: Being a larger organisation allows you access to more capital, with which you can buy larger machines that enable you to increase you output while lowering unit costs.
Purchasing Economies of Scale: Buying in larger quantities enables you to access higher price breaks which leads to a fall in the unit costs.
Enterprise
The ability to identify business ideas and opportunities to bring them to fruition and to take risks where appropriate. One of the four Factors of Production
Entrepreneur
A person who is willing to take a risk by investing money into a business, organising the resources and hoping to make a profit. e.g. Richard Branson. Usually they do this because; they are ambitious, dissatisfied with working for other people, to pursue an interest, or because they have seen an opportunity.
Entrepreneurship
The act of being an entrepreneur – starting your own business and taking risks.
Footloose
A business that can be set up virtually anywhere – it has no specific need to be close to any specific resource or set of customers
Integration
Businesses joining together through either a Merger or Acquisition / Takeover
Intrapreneurship
Encouraging your employees to take risks and act as if they were an entrepreneur – but while working for you
Labour
The work done by employees are those running the business. One of the four Factors of Production
Land
Land and buildings. One of the four Factors of Production.
Liability
The extent of the owner’s responsibility for the debts of the business.
Limited Liability: The owners are not responsible for the debts of the business. The limit of their liability for the business’ debts is the amount they have already invested.
Unlimited Liability: This means that the business and the owner are one legal entity. If the business goes into dept, the owner is in dept and their personal possetions like their car can be taken.
Merger
When two or more businesses agree to join together
Monopoly
Where a business has a market share of 25% or more. This allows them to dictate prices, their size in the market makes them difficult to compete with as they are able to achieve economies of scale
Objective
A specific statement that defines a precise goal that can be measured and delivered within a given time
Opportunity Cost
The cost of the next-best alternative that has to be given up when a choice is made
Outsourcing
Contracting another business to carry out some of the business’ activities, often to reduce costs
Primary Industry
Industries which extract natural resources. e.g. farming, oil drilling & mining
Private Sector
Businesses not owned by the state (government) but by individuals or groups
Profit / Loss
Profit: Where income is greater than expenditure.
Loss: Where expenditure is greater than income.
Public Sector
Organisations where the activities are carried out either by national or local government
Raw Materials
Materials and resources that are found / grown / extracted in the form that they will be used
Revenue
Income from the sale of goods and services over a period of time
Secondary Industry
Industries which manufacture, assemble, process and construct goods
Sleeping Partner
A partner who puts in finance but does not take part in running the business. They have limited liability.
Special Interest Group
A stakeholder in an organisation with a particular interest, such as the Environmental Lobby – a group with a specific interest in businesses operating in an environmentally friendly way.
Tertiary Industry
Industries which provide services both to individuals and other sectors of industry
Trade Union
An organisation who work to ensure that the interests and rights of their members (a group of workers) are protected
Unit Cost
The costs of the raw materials and components that have been combined to create a product.
Stakeholder
A Stakeholder is a person or organisation with a concern (an investment) or an interest in (they might be affected by) a business
Common Stakeholder Groups
Internal: Workers, Managers, Owners, Directors
External: Shareholders, Customers, Local Community, Government, Banks / Creditors, Suppliers, Trade Unions, Special Interest Groups
