chapter1-3 Flashcards
Business Activities
the process of producing goods and services to satisfy consumer demand.
Need
a good or service which is essential to living.
want
a good or service which people would like, but is not essential for living.
Economic problem
unlimited wants cannot be met because there are limited factors of production. this creates scarcity
4 Factors of Production
the resources needed to produce goods and services-land,labour,capital and enterprise
scarcity
there are not enough goods and services to meet the wants of population.
opportunity cost
the benefit that could have been gained from an alternative use of the same resource.
Specialisation
people and business concentrate on what they are best at
Division of labour
production is divided into separate tasks and each employee does just one of those tasks.
consumer goods
products which are sold to the final consumer. They can be seen and touched, for example computers and food,
consumer services
non-tangible products such as insurance services, transport.
capital goods
The physical goods such as machinery and delivery vehicles, used by other businesses to help produce other goods and services.
primary sector
firms whose business activity involves the extraction of natural resources.
secondary sector
firms that process and manufacture goods from natural resources.
tertiary sector
firms that supply a service to consumers and other businesses
chain of production
the production and supply of goods to final consumer involves activities fro primary, secondary and tertiary sector businesses.
mixed economy
an economy where the resources are owned and controlled by both the private and the public sectors.
private sector
the part of the economy that is owned and controlled by individuals and companies for profit.
public sector
the part of the economy that is controlled by the state or government
Entrepreneur
an individual who has an idea for a new business and takes the financial risk of starting up and managing it.
Business Plan
a detailed written document outlining the purpose and aims of a business which is often used to persuade lenders or investors to finance a business proposal.
Revenue
the amount a business earns from the sale of its products,
characteristics of successful entrepreneurs
innovative,self-motivated,self-confident,risk-taker and strong leadership qualities.
Business start-up
a newly formed business.They usually start small, but some might grow to become much bigger.
sole trader
a business that is owned and controlled by just one person.
who takes all of the risks and receives all of the profits.
scarcity
unlimited wants + Limited resources
Labour
is the number of people available to work
Land
is all the natural resources-minerals,ores,oil,forests and fields
capital
is machinery,equipment and finances needed for production of goods and services
examples of renewable energy
solar power, hydro power and wind turbines
Retailer
they sell products for someone
Whole sailors
supply in bulk
4 main ways of adding value to a business
Branding, Excellent service quality, product features and convenience
nationalisation
private sectors becoming public sectors
privatisation
Public sectors becoming private sectors
examples of private sectors
British Gas, Sainsburys,Thames Christian school
examples of public sectors
NHS, TFL, Jobcentre,chelsea Academy
Revenue
the amount a business earns from the sales
what do you size to measure Business size.
Capital employment,Value of output,Number of employees and Market Share.
examples of Internal growth
Producing more goods, Develop new products and find new markets
examples of External Growth
Horizontal integration, forward vertical integration, backward vertical integration and conglomerate integration.
Horizontal Integration
bringing two firms together who are in the same industry and same sector-stage of business activity.
e.g-two chocolate manufacturers
vertical integration
different stages of production
forward vertical integration
different stages of production the firm that is further behind the other on is expanding with the firm that is ahead.
Backward vertical integration
different stages of production the firm that is further ahead is expanding with one that is behind it in production.
example of Horizontal integration
primary+primary
secondary+secondary
Tertiary+Tertiary
example of Forward Vertical integration
manufacturer to retailer
External growth
this takes place when a business merges with or takes over another business in the same or different industry.The process is known as integration.
example of backward vertical integration
supplier to producer
example of conglomerate integration
Business in industry A + Business in industry B
