Studied by 28 people
needs
things that are required in order to live
wants
things that add comfort and pleasure to your life that are not needed for survival
factors of production
Land, labor, and capital; the three groups of resources that are used to make all goods and services
land
all natural resources used to produce goods and services
capital
tools needed for factors of production
Enterprise
An undertaking or business organization; industrious
scarcity
Limited quantities of resources to meet unlimited wants
Opportunity cost
Cost of the next best alternative use of money, time, or resources when one choice is made rather than another
Specialisation
Occurs when people and businesses concentrate on what they are best at
division of labour
The specialisation of workers on specific tasks in the production process
adding value
A process through which a business increases the worth of the resources included in production so that customers perceive the product to be worth more than the cost of the inputs
primary sector
the part of the economy that draws raw materials from the natural environment
secondary sector
The portion of the economy concerned with manufacturing useful products through processing, transforming, and assembling raw materials.
Tertiary sector
The portion of the economy concerned with transportation, communications, and utilities, sometimes extended to the provision of all goods and services to people in exchange for payment.
Industrialisation
The process experienced by a country that moves away from primary production towards manufacturing as its principal sector for national output and employment
De-industrialisation
Occurs when there is a decline in the importance of the secondary, manufacturing sector of industry in a country.
private sector
the part of the economy that involves the transactions of individuals and businesses
public sector
the part of the economy that involves the transactions of the government
market share
the portion of a market controlled by a particular company or product.
internal growth
Occurs when a business expands its existing operations
external growth
Business expansion achieved by means of merging with or taking over another business, from either the same or a different industry
Horizontal Integration
Absorption into a single firm of several firms involved in the same level of production and sharing resources at that level
forward integration
takes information entered into a given system and sends it automatically to all downstream systems and processes
Backward integration
firm merging with another firm in the same type of business at earlier stage of production
conglomerate integration
When a merger or takeover occurs between two firms from unrelated areas of business.
Unincorporated business
A business that does not have legal identity separate from its owners. The owners have unlimited liability for business debts.
unlimited liability
The owner is personally and fully responsible for all losses and debts of the business
limited liability
the liability of a firm's owners for no more than the capital they have invested in the firm
sole trader
business owned and operated by one person
Parnership
a business organization owned by two or more persons who agree on a specific division of responsibilities and profits
limited company
A business organisation which has a separate legal identity from that of its owners.
public limited company
a limited company, often a large business, with the legal right to sell shares to the general public - share prices are quoted on the national stock exchange
private limited company
A business owned by shareholders with limited liability but whose shares cannot be bought by or sold to the general public.
joint venture
an agreement between two or more companies to share a business project
franchise
A business established or operated under an authorization to sell or distribute a company's goods or services in a particular area
Franchisor
A company that develops a product concept and sells others the rights to make and sell the products.
franchisee
an individual or business that is granted the right to sell another party's product
stake holder
a person or group that has an interest or concern in an organization
social enterprise
A business with mainly social objectives that reinvests most of its profits into benefiting society rather than maximising returns to owners
marketing
the activity, set of institutions, and processes for creating, communicating, delivering, and exchanging offerings that have value for customers, clients, partners, and society at large
target market
a set of buyers sharing common needs or characteristics that the company decides to serve
consumer market
all the individuals and households that buy or acquire goods and services for personal consumption
Industrial market
Businesses that buy products to use in their operations; also called the business-to-business market.
niche market
A smaller part of a larger market in which customers have more specific needs and wants
mass market
all possible customers in a market, regardless of the differences in their specific needs and wants
niche marketing
the process of finding small but profitable market segments and designing or finding products for them
mass marketing
use of a single marketing plan to reach all customers
market segment
a group of consumers who respond in a similar way to a given set of marketing efforts
market segmentation
the process of dividing a market into meaningful, relatively similar, and identifiable segments or groups
market research
The activity of gathering information about consumers' needs and preferences.
Market orintated
Firms that research into what the market needs and wants, and then develops products and services as a result of findings.
Product orintated
Firms that have a product idea and try to launch it, rather than finding out whether customers actuality want it.
primary research
research done firsthand for the first time
secondary research
past research which has already been performed and often already published
focus groups
A strategy to obtain data from a small group of people using interview questions
observation
the action or process of observing something or someone carefully or in order to gain information.
test market
offering a product in a limited market for a limited time
survey
the collection of data by having people answer a series of questions
sampling
The process of selecting representative units from a total population
Benefits of primary research
more accurate, up to date, specific to needs, effective at collecting qualitative data, direct customer contact
Disadvantages of Primary Data
expensive and time consuming
Benefits of secondary research
Often free and easy to obtain
Good source of market insights
Quick to access and use
Disadvantages of Secondary Data
May not give adequate detailed information
May not be on target with the research problem
Quality and accuracy of data may pose a problem
benefits of sole trader
Simple and quick to set up
Inexpensive to set up
Profit kept by owner
Owner has complete control of business
Working hours can be tailored
disadvantages of sole trader
Unlimited liability
Long hours, no cover for holidays/sickness
Capital may come from savings
Needs business skills
Business ends on death
advantages of surveys
Quick
Inexpensive
Efficient
Accurate
Disadvantages of surveys
Generally limited to scale or check listed questions.
No control over response rate.
Provides information more than understanding.
Difficult to explore in depth issues.
Advantages of test marketing
Test marketing allows for the most accurate method of forecasting future sales, and it allows firms the opportunity to pretest marketing-mix variables.
Disadvantages of test marketing
-cost
-time
-loss of secrecy
Advantages of Partnership
Two or more owners
More capital available
Relatively easy to start
Income taxed once as personal income
disadvantages of partnership
Unlimited liability
Management disagreements
Lack of continuity
Frozen investment
Advantages of niche marketing
prices are higher than in mass markets
demand is more price inelastic
product is distributed through specialist retailers or directly to the consumer
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