Workbook 1 Flashcards
Scarcity
Shortness of supply
Businesses
Offers goods or services
Factors of production
Labour
Enterprise
Land
Capital
Opportunity cost
Sacrificing the next best thing/best alternitave
Specialisation
Pursuing a particular line of work. Restricted to something specific
Devision of labour
To do more than one thing
Added value
The selling price of the product minus the cost of raw materials
Economic problem
An economy’s finite resources are insufficient to satisfy the demand
Private sector
Part of the economy which is run by private businesses
Public sector
Part of the economy run by the government
Mixed economy
An economic system combining both public and private entetprise
Service
Intangeble
Unable to touch
The act of a helpful activity
Goods
Tangible
Able to touch/product
Main features of business activity
Offer goods or services
How can you increase ADDED VALUE
- Add more components to the product
- Increase the selling price
- Use cheaper materials to make the product
Primary sector
The extraction of raw materials
E.g. Coal, Oil, Iron ore, wood/lumber.
Secondary sector
Process/Manufacture of raw materials to make a product.
E.g. Furnature, Steel, Glass.
Tertiary sector
Retail (goods or services)
The product is sold
De-industrialisation
A decrease in the secondary sector
Chain of priduction
Going from sector to sector.
E.g. Cow -> Mince/meat -> Mcdonalds
Monopoly
A company who has more than 30% of the market
Privatisation
To transfer from public to private enterprise
Internal growth
When a business expands it’s operations
External growth
When a company increases it’s profits by buying other companys
Merger
A combination of two things especially companies into one
Horizontal merger
A merger that occurs between firms that operate in the same space
Vertical merger
A merger between two companies that operate at different stages of production
Lateral Merger
When two businesses merge that make similar goods but aren’t in competition with each other
Conglomerate Integration
A process when a business acquires a number of unrelated businesses in order to form a large and highly diverse corporation
Take over
When one business buys another business
Economies of scale
A proportionate saving in cost gained by a increased level of production as output increases
Business plan
A formal statement of business goals and reasons that they are achievable and plans for reaching them
Entrepreneur
A person who sets up a business to make profit. They take financial risks to make their company succeed
Pro’s of an Entrepreneur
- Money
- Flexibility
- Freedom
- Success
- Own boss
Con’s of an Entrepreneur
- Financial risks
- Competition
- Admin
- Unpredictable work schedule
- Stress
Measures of business size
- Number of employees
- Market share
- Value of sales
- Value of capital gained
- XXXprofitsXXX
X Measuring size by profits X
Massive company, 20000 employees, 20 million
Small company, 100 employees, 50 million
Advantage of business growth
- Wider range of products
- More profit
- Advertisement of brand
- Couldn’t obtain economies of scale
Why businesses don’t grow
- Less legalities
- Smaller market size
- Don’t want to risk it
- Too much stress
Business failure reasons
- Bankrupt
- No land
- Failed business plan
- Natural disasters (farming)
- Lack of resources
Economic growth
A measure of how well a country is doing.
GDP
Environmentally friendly
Activities that conserve the environment and don’t pollute it
External cost
The costs paid by the rest of society other than the business
National wealth
The national resources and other productive assets of a country
Sustainability
Trying to achieve economic growth but without damaging the environment of depleting its natural resources for future generations
Pressure group
A group trying to protest against non-environmentally friendly companies/businesses
Non-renewable resources
Resources that aren’t renewable. E.g Oil, gas or resources that take many years to renew
Effective demand
The level of demand that is demanded by clients that can pay for it
CASE STUDY
USE THE DATA AND NUMBERS!!!!! AND READ IT WELL!!!
