Unit 1 - What is business - Keywords Flashcards
mission
an organisation’s aims or long-term intentions
it is the ultimate purpose of the business
is also the same as corporate aims
mission statement
a qualitative statement of the organisations aims that uses language to motivate employees and convince customers of the firms sincerity and commitment
business objectives
goals that must be achieved in order to realise the stated aims of an organisation, department or individual team.
they tend to be medium to long term
they can be corporate or functional objectives
corporate objectives
goals of the whole organisation.
they are set in order to co-ordinate the activities of, give a sense of direction to, guide the actions of the whole organisation. they are dictated by the mission or corporate aims.
functional objectives
goals of each of the functional areas.
they are designed to ensure that the business achieves its corporate objectives.
they are set in order to co-ordinate the activities of, give a sense of direction to and guide the actions of a division or department
strategy
the medium to long term plans through which an organisation intends to achieve its objectives
cash flow
the amounts 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
(turnover or sales revenue) - the income received from an organisation’s activities
total revenue=price per unit x quantity of units sold
fixed costs
costs that do not vary directly with output in the short run (rent)
variable costs
costs that vary directly with output in the short run (raw materials)
total costs (TC)
the sum of fixed costs and variable costs
profit
the difference between the income of a business and its total costs
private sector organisations
they are owned, financed and run by private individuals.
they range from small sole traders to huge organisations. most businesses sim to make a profit but some don’t like non-profit organisations
public sector
owned and run by the government. they aim to provide services to the public rather than make a profit.
they are funded by the UK tax system
unincorporated business
there is no distinction in law between the individual owner and the business itself. The identity of the business and the owner is the same. Such businesses tend to be sole traders or partnerships
incorporated business
this has a legal identity that is separate from the individual owners. these organisations can own their own assets, owe money and enter into contracts in their own right.
unlimited liability
a situation in which the owners of a business are liable for all the debts that the business may incur.
limited liability
a situation in which the liability of the owners of a business is limited to the fully paid up value of the share capital.
sole trader
a business owned by one person. The owner may operate on his or her 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. they are traded on the stock exchange which enables these businesses to raise finance more easily.
ordinary share capital
money given to a company by shareholders in return for a share certificate that gives them part ownership of the company
ordinary share capital is permanent, so a business will never be required to repay that value these shares to their owners
dividend
a payment made by a company to its shareholders out of profits earned. when a company earns a profit or surplus, it can either reinvest it in the business or it can distribute it to shareholders or allocate a proportion to reinvestment and a proportion as dividends. they are fixed amounts per share
market capitalisation
the value of outstanding shares in a public limited company. outstanding shares are the total of ordinary shares issued and fully paid.
total outstanding share x the current market price of an individual share
shareholder
the owner of a limited company - a shareholder must own at least one share in that 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 (good or 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, trends in age, ethnicity and gender, levels of education, marital status and size of family.
