Business Studies IGSCE Flashcards

A Need

A good or service essential for living.

A want

A good or service that people would like to have, but which is not essential for living.

Economic problem

Unlimited wants but limited resources - this creates scarcity.

Scarcity

Lack of sufficient products to satisfy total wants of population.

Opportunity Costs

The next best item given up by choosing another.

Factors of production

Resources needed to produce goods and services - land, labour, capital and enterprise

Business

An organisation that combines factors of production to make goods and services to satisfy people's wants and needs.

Specialisation

People and business concentrate on what they are best at.

Division of labour

Production is split into seperate tasks each worker specialises in one task

Added Value

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

Primary sector

Businesses that extract and use natural resources to produce raw materials.

Secondary sector

Businesses that manufactures goods using raw materials provided by primary sector.

Tertiary sector

Businesses that provide services to consumers and other firms.

Deindustrialisation

Decline in the importance of secondary, manufacturing industry.

Mixed economy

This has both private sector businesses and public sector businesses.

Private sector

Businesses owned by people, not the goverment/state.

Public sector

Businesses owned by goverment/state.

Privatisation

The sale of public sector business to private sector.

Entrepreneur

Someone who organises, operates and takes the risk for a new business venture.

Business plan

The objectives and details of the operations, finance and owners of a new business.

Capital employed

The total value of capital used in a business.

Internal Growth

The business expands its existing operations.

External Growth

The business expands by merging with or taking over another business.

Takeover

A business buys out the owners of another business.

Merger

The owners of businesses agree to join their firms together to form one business.

Horizontal integration

The business integrates with another in the same industry at the same stage of production.

Vertical integration

The business integrates with another in the same industry but at a different stage of production - towards suppliers is backward vertical integration and towards the market/customer is forward vertical integration.

Conglomerate integration

The business integrates with another but in a different industry.

Soletrader

The business is owned by one person.

Partnership

The business is jointly owned by two or more people.

Limited liability

The liability of owners/shareholders is limited to the amount invested. Personal posessions are not at risk.

Incorporated business

A business with seperate legal identity from its owners.

Unincorporated business

A business without seperate legal identity from its owners.

Private limited company

A business owned by shareholders but it cannot sell shares to the public.

Public limited company

A business owned by shareholders but it can sell shares to the public and its shares are tradable on Stock Exchange.

Shareholders

The owners of a limited company.

Dividends

Payments made to shareholders from profits (after tax) of a company.

Franchise

A business that uses, under license, the brand name, logo and trading methods of an existing business. The franchisor sells the license; the franchisee buys the licence.

Joint venture

Two or more businesses start a new project together sharing capital, risks and profits.

Public corporation

The business, in the public sector that is owned and controlled by the state/goverment.

Business Objectives

The aims or targets that a business work towards.

Profit

Total income/ revenue of a business less total costs.

Market share

The proportion (%) of total market sales held by one brand or business = (sales of business / total market sales) * 100

Social enterprise

An organisation with profit, environmental and social objectives.

Stakeholder

Any person or group with a direct interest in the performance and activities of a business.

Motivation

Workers want to work hard and effectively for their employer.

Wage

Payment for work, usually paid weekly.

Time rate

Wage based on number of hours worked.

Piece rate

Wage based on number of unit of output produced.

Salary

Payment for work, usually paid monthly.

Commission

Payment based of number of units sold.

Profit Sharing

Payment to employees based on a share of the profits of the business.

Bonus

Additional payment to workers, above the basic wage/ salary, as a reward for good work.

Performance-related play

Pay is related to the performance of an employee.

Share ownership scheme

Giving employees share in a company to encourage sense of belonging and ownership.

Appraisal

Assesing the effectiveness of employees (important for performance-related pay).

Fringe benefits

Non-financial rewards

Job satisfaction

Enjoyment employees can derive from work if they feel they have done good/rewarding job.

Job rotation

Workers are asked to switch different tasks with other workers (but at the same level of responsibility).

Job enlargement

Tasks of a similar level of difficulty/responsibility are added to a worker's jov description.

Job enrichment

Adding tasks that are more challenging, more skillful and more responsible.

Organisational Structure

The levels of management and divisions of responsibility in an organisation.

Chain of command

The route taken by instructions passed down from upper to lower management.

Level of hierarchy

A level of management where people have the same level of responsibility.

Span of Control

The number of employees working directly under a manager.

Line Managers

Have direct responsibility over people below them in the hierarchy of an organisation.

Staff managers

Specialists who provide support, information and assistance to line managers.

Delegation

Giving subordinates the ability to perform particular tasks.

Autocratic Leadership

Where the manager is in charge of the business, takes all decisions and expects orders to be followed.

Democratic Leadership

All employees are involved in the decision making process.

Laissez-faire Leadership

Makes broad objectives known to employees who are then left to make own decisions and organize their own work.

Trade Union

A group of workers who join together to protect their interests.

Recruitment

Identifying need for new employees and encouraging people to apply for a vacancy.

Job Description

Responsibilities and duties to be carried out by the job holder.

Job Specification

The requirements,qualifications, experience and characteristics of people needed to fill a job vacancy.

Internal Recruitment

The vacancy is filled by someone who is an existing employee of the organisation.

External Recruitment

The vacancy is filled by someone who is not an existing employee of the organisation.

Part-time employment

Jobs with less hours than a full working week.

Full-time employment

Jobs with a full working week. Full time employees will usually work 35 hours or more a week.

On-the-job training

Training at the place of work - watching and being instructed by experienced workers.

Off-the-job training

Training away from place of work.

Induction training

Training for new employees explaining the business structure, activities and procedures.

Redundancy

Employees are no longer required - the job no longer exists.

Workforce Planning

Establishing the size and skills of the workforce needed by a business for the future.

Dismissal

An employee's employment contract is terminated and they must leave the business.

Communication

Sending a message from sender to receiver who understands it.

Message

Information or instructions sent from sender to receiver.

Internal Communication

Between members of the same organisation.

External Communication

Between the organisation and another organisation.

Sender/transmitter

The person sending the message.

Receiver

The person who receives the message.

Feedback

Reply from receiver to sender to confirm message received/understood.

Method of communication

How the message is communicated

One-way communication

Message send without the receiver required or expected to give feedback.

Two-way communication

Gives feedback to received message - there may be discussion about it.

Formal Communication

Messages sent through established channels.

Informal Communication

Messages sent casually, not through established channels.

Communication Barriers

Factors that stop effective communication.

Marketing

Identifying and meeting the needs of customers.

Market Share

The proportion (%) of total market sales held by one brand or business