Unit 1 What is Business Flashcards
Primary Sector of the Economy
The extraction of raw materials from the earth e.g. farming, fishing, mining
Secondary Sector of the Economy
Transforming of refining the raw materials e.g. manufacturing and construction
Tertiary Sector of the Economy
The service industry e.g. retail, hotels, and financial services
Mission Statement
A statement of an organisation’s general purpose and reason for existance
Corporate Aims
Long - term targets set to allow a business to develop and achieve its mission
Corporate Objectives
Goals of the whole organisation rather than different elements of the organisation
Functional Objectives
Goals of each of the functional areas of a business they are designed to ensure that the business achieves its corporate objective and thus its mission
Diversification
Establishing a USP, launching new products in new markets
Break - Even
Ensuring all costs are covered by the firm’s revenue
Strategy
The medium to long term plans through which an organisation intends to achieve its objectives
Cash Flow
The amount of money flowing into and out of a business over a period of time
Price
The amount paid by a consumer to purchase one unit of a product
Total Revenue
The income received from an organisations activities
Fixed Costs
Costs that do not vary with output in the short term for example rent
Variable Costs
Costs that vary directly with output in the short term for example raw materials
Semi - Variable Costs
Costs that combine elements of fixed and variable costs
Profit
The difference between the income of a business and its total costs
Limited Liability
The liability of the owners of a business is limited to the fully paid - up value of its share capital (public and private limited companies)
Private Sector Organisations
Organisations that are owned and run by private individuals.
Public Sector Organisations
Organisations that are owned and operated by the government whether at national or local level.
Unincorporated Business
There is no distinction in law between the individual owner and the business itself.
Incorporated Business
This has a legal identity that is separate from the individual owners.
Unlimited Liability
A situation in which the owners of a business are liable for all the debts that the business may incur
Sole Trader
A business owned by one person. The owner may operate on their own or may employ other people
Private Limited Company
A small to medium - sized business that is usually run by the family or the small group of individuals who own it.
Public Limited Company
A business with limited liability, share capital of over £50,000, at least two shareholders, two directors, a qualified company secretary and, usually, a wide spread of shareholders. It has PLC after the company name.
Ordinary Share Capital
Relates to private and public limited companies. Also known as risk capital or equity capital
Market Capitalisation
Is the total value of the issued ordinary shares of a public limited company
Dividend
A payment made by a company to its shareholders out of profits earned.
Shareholder
The owner of a limited company; any person, company or other institution that owns at least one share in a company
Share Price
The price of a single share in a company share prices are usually determined by the supply and demand for shares
Demand
The amount of a product (ie. a good or a service) that consumers are willing and able to buy at any given price over a period of time
Interest Rates
The cost of borrowing money and the return for lending money
Demographics
The characteristics of human populations and population groups; it includes analyses of a range of elements including migration trends, birth and death rates, trend in age, ethnicity and gender, levels of education, marital status and size of family
