unit 1 key terms Flashcards
Business Objectives
The goals or targets that a business aims to achieve, such as profit maximization, growth, or survival.
Profit
Total revenue minus total costs.
Mission Statement
A qualitative statement of an organization’s aims that guides its actions and decisions.
Vision Statement
A future-oriented declaration of a company’s purpose and aspirations.
Revenue (Turnover)
The total income a business earns from its sales before any costs are deducted (Revenue = Price × Quantity).
Costs
Expenditures incurred in the production of goods or services. Includes fixed costs and variable costs.
Fixed Costs
Costs that do not change with output (e.g., rent, salaries).
Variable Costs
Costs that vary with output (e.g., raw materials).
Goods and Services
Tangible products (goods) and intangible offerings (services) provided by businesses.
Entrepreneurship
The process of identifying business opportunities and taking risks to exploit them.
Stakeholders
Individuals or groups affected by a business’s operations, such as employees, customers, suppliers, and shareholders.
Sole Trader
A business owned and operated by one person.
Partnership
A business owned by two or more people who share profits and responsibilities.
Private Limited Company (Ltd)
A company owned by private shareholders with limited liability.
Public Limited Company (PLC)
A company that sells shares to the public on the stock exchange.
Limited Liability
Legal protection where the owner’s personal assets are not at risk if the business fails.
Unlimited Liability
The business owner is personally responsible for all debts incurred by the business.
Primary Sector
Businesses involved in the extraction of natural resources (e.g., farming, mining).
Secondary Sector
Businesses that manufacture or construct products.
Tertiary Sector
Businesses that provide services to consumers and other businesses (e.g., retail, finance).
Quaternary Sector
Knowledge-based services such as research and development or IT.
PESTLE Analysis
Political
Economic
Social
Technological
Legal
Environmental
Political
Government policies, tax laws, regulations.
Economic
Interest rates, inflation, unemployment, economic growth.
Social
Cultural trends, demographics, lifestyle changes.
Technological
Innovations, automation, digital transformation.
Legal
Legislation impacting business operations (e.g., employment law).
Environmental
Sustainability, climate change, and ecological concerns.
Market Share
The percentage of total sales in a market controlled by one business.
Customer Satisfaction
The degree to which customers are happy with a product or service.
Corporate Social Responsibility (CSR)
A business’s commitment to ethical practices, sustainability, and community welfare.
Competitiveness
A business’s ability to outperform rivals in the market.
Risk
Measurable likelihood of negative outcomes, often associated with business decisions.
Uncertainty
Situations where the outcome is unknown and cannot be measured.
Opportunity Cost
The value of the next best alternative foregone when a decision is made.
