Business mocks

Economic problem

There exit unlimited wants but limited resources to produce the goods and services to satisfy those wants. This creates scarcity.

Factors of production

Resources needed to produce goods or services. There are four factors of production and they are limited in supply.

Scarcity

The lack of sufficient products to fulfil the total wants of the population.

Type of factors of production

Land, Labour, Capital and enterprise.

Division of labour

This is when the production process is spit into different tasks and each worker preforms one of these tasks. It is a form of specialisation.

Businesses

Combined factors of production to make products, goods and services which satisfy peoples wants.

Advantages of division of labour

Quicker and cheaper to train workers as fewer skills need to be taught. Workers are trained in one task and specialize in this.

Disadvantages of dol

Workers can become bored. If the worker is absent no one else can do the job, meaning production might be stopped.

Added value

The difference between the selling price of a product and the cost bought in materials and components.

primary sector

Firms whose business activity involves the extraction of natural resources. Mining and agriculture

Secondary sector

Firms that process and manufacture goods from natural resources like food caning, clothing production and car manufacturing.

Tertiary sector

Firms that provide services to consumers and other sectors of the industry.

De- industrialisation

Occurs when there is a decline in the importance of the secondary, manufacturing sector of industry in a country.

Mixed economy

A mixed economy has both a private sector and a public state sector.

Why do governments support business start ups

To reduce unemployment, to increase competition.

capital employed

The total value of capital used in the business.

Methods of measuring business size

Number of people employed, Value of output, value of sales and value of capital employed.

Sole trader

A business that is owned by one person.

Partnership agreement

The written and legal agreement between business partners. It is not essential for partners to have such an agreement but it is always recommended.

Annual general meeting

A legal requirement for all companies. Shareholders may attend and vote on who they want to be on the Board of Directors for the coming year.

Business objectives

Aims or targets that a business works towards.

Calculation fpr market share

Company sales divided by total market sales times a hundred.

wage

A payment for work, usually paid weekly.

Time rate

The amount paid to an employee for one hour of work.

Piece rate

The amount paid per unit of output.

Salary

Is payment for work, usually paid monthly

Bonus

An additional amount of payment above basic pay as reward for good work.

Comission

Payment relating to the number of sales made.

Profit sharing

A system whereby a proportion of the companys profits is paid out of employees.

Organisation structure

Refers to the levels of management and division of responsibilities within an organisation.

Organisational chart

Refers to a diagram that outlines the internal management structure.

Hierarchy

Refers to the levels of management in any organisation, from the highest to the lowest.

Level of hierarchy

Refers to managers,supervisors other employees who are given similar levels of responsibility in an organisation.

Closed shop

This is when all employees must be a member of the same trade union.

Workforce planning

Establishing the workforce needed by the business for the foreseeable future in terms of number and skills of employees required.

Dismissal

Capital intensive

This means relying more on machinery and equipment than human labor in production.