Business Activity and Organization Lecture Notes

Vocabulary terms and definitions covering business activity, sectors, growth, organization types, stakeholders, motivation, management, recruitment, communication, and marketing.

Need

Something necessary to survive.

Want

Something you would like to have.

Goods

Physical products.

Services

Actions performed for customers that are intangible (cannot be touched).

Opportunity Cost

The next best thing given up.

Added Value

The increase in value of a product which helps businesses earn more profit.

Specialisation

Workers focusing on one task to increase speed and efficiency.

Division of Labour

Splitting jobs into tasks.

Land

Natural resources used in production.

Labour

The workers involved in production.

Capital

The machinery, tools, and buildings used in production.

Enterprise

Taking risks and organising production.

Primary Sector

The sector that extracts natural resources, such as Farming, Fishing, and Mining.

Secondary Sector

The sector that manufactures products, such as Construction, Car factories, and Food production.

Tertiary Sector

The sector that provides services, such as Banks, Hotels, and Transport.

Public Sector

Government-owned businesses that aim to provide services rather than just profit.

Private Sector

Privately owned businesses.

Industrialisation

The growth of manufacturing industries.

Entrepreneur

A person who starts a business and is typically a creative, organised, and innovative risk taker.

Risk

The chance of failure.

Internal Growth

Expansion using a business's own resources.

External Growth

Growth achieved through mergers or takeovers.

Market Share

The percentage of total market sales held by a business.

Economies of Scale

Lower average costs resulting from business growth, such as buying in bulk.

Diseconomies of Scale

Higher costs resulting from a business becoming too large.

Sole Trader

A business owned by one person; easy to set up but carries unlimited liability.

Partnership

A business owned by $2-20$ people.

Limited Liability

A protection where owners only lose the money they invested if the business fails.

Unlimited Liability

A situation where the owner can lose personal possessions to pay business debts.

Shareholder

A person who owns shares in a company.

Franchise

Using another company’s business model to reduce risk.

Private Limited Company (Ltd)

A business with a separate legal identity and limited liability where shares cannot be sold publicly.

Public Limited Company (PLC)

A business that can raise large capital by selling shares publicly, but must publish accounts.

Stakeholder

A person or group interested in a business, such as owners, workers, customers, suppliers, government, and the local community.

Profit

$\text{revenue} - \text{costs}$.

Revenue

The money entering a business.

Objective

A business target, such as survival, profit, growth, market share, or customer satisfaction.

Wage

Hourly pay provided to employees.

Salary

A fixed regular payment provided to employees.

Bonus

An extra reward payment.

Commission

A payment based on the volume of sales.

Motivation

The willingness to work hard; it lowers labor turnover and boosts productivity.

Job Rotation

A non-financial motivation method where tasks are changed regularly.

Job Enrichment

Making jobs more interesting to increase motivation.

Maslow’s Hierarchy

A theory of five needs: Physical, Safety, Social, Esteem, and Self-actualisation.

Chain of Command

The levels of authority within an organization.

Span of Control

The number of workers a manager supervises.

Centralisation

When decisions are made exclusively by senior managers.

Decentralisation

When decision-making is shared with lower-level managers.

Delegation

Passing authority to others, which helps save a manager’s time.

Autocratic Leadership

A style where the leader decides everything.

Democratic Leadership

A style where workers are involved in decisions.

Laissez-faire Leadership

A leadership style where workers are given freedom.

Recruitment

The process of finding potential employees.

Selection

The process of choosing the best employee from applicants.

Job Description

A document providing the details about a specific job.

Person Specification

A document outlining the qualities and skills needed for a job.

On-the-job Training

Training that occurs while the employee is working.

Off-the-job Training

Training that occurs away from the workplace.

Internal Communication

Communication occurring within a business.

External Communication

Communication occurring outside of a business.

Feedback

The response to a communication.

Barrier

A problem affecting communication, such as noise, language issues, poor technology, or information overload.

Marketing

The process of satisfying customer needs profitably.

Market Research

The collection of information about customers to minimize risks.

Primary Research

Information collected directly from the source.

Secondary Research

Using information that already exists.

Market Segment

A group of customers with similar characteristics.

Niche Market

A small, specialised market.

Mass Market

A market for products aimed at everyone.

The 4Ps

The marketing mix consisting of Product, Price, Place, and Promotion.