business management chapter 1

consumer goods

physical and tangible goods sold to final users (cars, food, clothing)

secondary sector

businesses that manufacture and process products from natural resources

tertiary sector

businesses that provide services to consumers and other businesses

mixed economies

economies resources are owned and controlled by both private and public

command economies

economic resources are owned, planned and controlled by state

private sector

companies owned and controlled by individuals or groups of individuals

public sector

organisations accountable to and controlled by central or local government

partnerships

business formed by 2 or more people to carry on a business together with shared capital investment and shared responsibilities

privately held company

shared owned by sole trader, relatives, friends and employees (cannot be sold on open market to public)

stock market flotation

privately held to publicly held

non-profit organisation

organisation that has aims other than making and distributing profit

vision statement

statement of what organisation would like to achieve or accomplish in long term

mission statement

statement of a business's core aims, phrased in a way to motivate employees and stimulate interest from outside groups

market share

sale of business as a proportion of total market size in a given period

strategic objectives

long term target of the organisation designed to achieve corporate aims

external stakeholders

do not work within the company but are somehow affected by actions and outcomes of company

purchasing economies of scale

bulk-buying economies, substantial discounts for larger orders

external economies of scale

reductions of unit average costs of production of a business that result of growth of industry

takeover

acquisition that is contested (no intention of losing control)

merger

individual businesses decide to join resources together to create a new business entity (mutually agreed)

joint venture

2 or more businesses agree to work more closely together on a particular project

strategic alliance

arrangement between businesses in which each agrees to commit resources to achieve an agreed set of objectives

franchising

business that uses name, logo and trading system of an existing business

multinational companies (MNCs)

organisation that has its headquarters in one country but with operating branches, factories and assembly plants in other countries

consumer services

non-tangible products that are sold to final users (hotel accomodation, insurance)

primary sector

business engaged in farming, fishing and agriculture that require extraction of natural resources to be used and processed by other firms.

Quarternary Sector

this focuses on information technology (IT) businesses and information service providers such as research and development

free market economies

economies resourced owned largely by private sector with very little state intervention

privatisation

sale of public sector organisations to private sector

sole trader

business exclusively owned by 1 person who has full control of it and is entitled to all profits (after tax)

initial public offering (IPO)

generates publicity to enhance brand reputation for expansion, raises substantial sum for capital

cooperatives

a group of people acting together to meet common needs and aspirations of members, sharing ownership and making decisions democratically

NGOs

a legally constituted body that functions independently of any government and has a specific humanitarian or social aim, supports public good and advocates for a specific cause

charity

organisation set up to raise money to help people in need to support causes that require mission funding

tactical objectives

short term target aimed at resolving a particular problem or meeting a specific part of a longer term strategic objective

corporate social responsibility

consider interests in society by taking responsibility for the impact of their decisions and activities on their consumers, employees, environment and communities

social audits

independent report on impact a business has on society (pollution levels, health and safety records)

internal stakeholders

stakeholders whose interests stem from direct ownership, investments or employment

internal economies of scale

reduction in unit average costs of production that result from an increase in the scale of operations

technical economies

large businesses more likely to be able to justify cost of mass production lines, latest and most advanced technical equipment

financial economies

banks offer prefer lending to a big business with a proven track record and diversified range of products (lower interest rates)

marketing economies

marketing costs increase with size of business but not at the same rate business grows, employ advertising agency for promotion, costs can spread over more sales for a big business

managerial economies

able to afford and attract specialise functional managers who operate more efficiently than general managers

acquisition

larger, financially stronger organisation takes over a smaller one