UNDERSTANDING BUSINESS ACTIVITY
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- Created by: tella1204
- Created on: 19-12-19 04:54
Need
A good or service essential for living
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Want
A good or service which people would like to have, but is not essential for living; they are unlimited
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The Economic Problem
Unlimited wants and limited resources to satisfy those wants; creates scarcity
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Scarcity
Lack of sufficient products fo fulfil the total wants of the population
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Factors of Production
Resources needed to produce goods or services, they are Land, Labour, Capital and Enterprise
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Opportunity Cost
The next best alternative given up by choosing another item
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Specialisation
Occurs when people and businesses concentrate at what they are best at
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Division of Labour
The Production process is split up into different tasks and each worker performs one of these tasks
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Added Value
The difference between the selling price of a product and the cost of components
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Primary Sector
Extracts and uses natural resources to produce raw materials
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Secondary Sector
Manufactures goods using the raw materials provided by the primary sector
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Tertiary Sector
Provides services to consumers and other sectors of industry
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De-industrialisation
When there is a decline in the importance of the secondary sector
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Mixed Economy
Both a private sector and a public sector
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Business Plan
Document containing the business objectives and important details about the operations, finance and owners.
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Internal Growth
When a business expands its existing operations
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External Growth
When a business takes over or merges with another business
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Takeover
When one business buys out the owners of another business, which then becomes part of the original business
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Merger
When the owners of two businesses agree to join their businesses together to make one
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Horizontal Integration
When a business merges with or takes over another one in the SAME industry at the same stage of production
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Vertical Integration
When one business merges with or takes over one in the same industry but at a different stage of production, can be backwards or forwards
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Conglomerate Integration, Or Diversification
When one business merges with or takes over a business in a completely different industry
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Sole Trader
Business owned by one person, unlimited liability
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Partnership
2+ people agree to jointly own a business
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Partnership Agreement
Written and legal agreement between legal partners
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Limited Liability
Means that the liability of shareholders in a company is only limited to the amount that they invested
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Unlimited Liability
Means that the owners can be held responsible for the debts of the business the own, liability not limited to the investment they made, limited companies
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Unincorporated Business
Does not have a separate legal identity, eg sole traders and partnerships
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Incorporated Business
Companies that have a separate legal status from their owners, eg limited companies
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Shareholders
Owners of a limited company. They buy shares which represent part-ownership of the company
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Private Limited Companies
Business owned by shareholders but cannot sell shares to the general public
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Public Limited Companies
Businesses owned by shareholders but can sell shares to the public and are tradeable on the Stock Exchange
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Annual General Meeting
Legal requirement for all companies, shareholders may attend and vote on who they want to be on the Board of Directors (who make all the decisions) for the coming year
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Dividends
Payments made to shareholders from the profits of a company, returns for investing in the company
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Franchise
Business based upon the use of brand names, promotional logos and trading methods of an existing business, the franchisee buys the licence to operate this business from the franchisor
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Joint Venture
Where 2+ businesses start a new project together, sharing capital, risks and profits
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Public Corporation
A business in the public sector that is owned and controlled by the state
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Business Objectives
Aims or targets that a business works towards; they are Survival, Profit, Returns To Shareholders, Growth, Market Share, Providing a service to the community
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Market Share
The percentage of total market sales held by one business
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Social Enterprise
Social objectives as well as an aim to make a profit to reinvest back into the business
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Stakeholder
Any person or group with a direct interest in the performance and activities of a business
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Other cards in this set
Card 2
Front
A good or service which people would like to have, but is not essential for living; they are unlimited
Back
Want
Card 3
Front
Unlimited wants and limited resources to satisfy those wants; creates scarcity
Back
Card 4
Front
Lack of sufficient products fo fulfil the total wants of the population
Back
Card 5
Front
Resources needed to produce goods or services, they are Land, Labour, Capital and Enterprise
Back
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