ALL BUSINESS DEFINITIONS FINAL (to update)

Need

A good or service essential for living.

Want

A good or service people would like to have but is not essential for living. People's wants are unlimited.

Economic Problem

The situation where unlimited wants exist but limited resources to satisfy those wants create scarcity.

Factors of Production

Resources needed to produce goods and services; there are four factors and they are limited in supply.

Scarcity

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

Opportunity Cost

The next best alternative given up when making a choice.

Specialization

When people and businesses focus on what they are best at.

Division of Labour

When production is split into different tasks, and each worker performs one task; a type of specialization.

Businesses

Combine factors of production to make goods and services that satisfy people's wants.

Added Value

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

Primary Sector

The part of industry that extracts and uses natural resources to produce raw materials.

Secondary Sector

The part of industry that manufactures goods using raw materials from the primary sector.

Tertiary Sector

The part of industry that provides services to consumers and other sectors.

De-industrialisation

The decline in importance of the secondary, manufacturing sector of a country.

Mixed Economy

An economy with both private sector and public (state) sector involvement.

Capital

Money invested into a business by its owners.

Entrepreneur

A person who organizes, operates, and takes risks to start a new business venture.

Capital Employed

The total value of capital used in a business.

Internal Growth

When a business expands its existing operations.

External Growth

When a business merges with or takes over another business; also called integration.

Merger

When owners of two businesses agree to join their businesses into one.

Horizontal Integration

When a business merges with or takes over another in the same industry and production stage.

Vertical Integration

When a business merges with or takes over another in the same industry but at a different production stage; can be forward or backward.

Sole Trader

A business owned by one person, with unlimited liability.

Limited Liability

When shareholders' responsibility for company debts is limited to their investment amount.

Unlimited Liability

When business owners are personally responsible for all debts, beyond their investment.

Partnership

A business owned jointly by two or more people.

Shareholders

Owners of a limited company who buy shares representing part-ownership.

Private Limited Company

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

Public Limited Company

A business owned by shareholders that can sell shares to the public on the stock exchange.

Franchise

A business that operates using the brand and methods of an existing successful business by buying a license.

Joint Venture

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

Public Corporation

A business in the public sector owned and controlled by the state government.

Business Objectives

The aims or targets a business works towards.

Market Share

The percentage of total market sales held by one brand or business.

Social Enterprise

A business with social objectives and aims to make a profit to reinvest back into the business.

Stakeholder

Any person or group with a direct interest in a business's performance and activities.

Motivation

The reason employees work hard and effectively for a business.

Wage

Payment for work, usually paid weekly.

Time Rate

Amount paid to an employee for one hour of work.

Piece Rate

Payment for each unit of output produced.

Salary

Payment for work, usually paid monthly.

Bonus

Additional payment above basic pay as a reward for good work.

Commission

Payment based on the number of sales made.

Profit Sharing

A system where employees receive a portion of the company's profits.

Job Satisfaction

The enjoyment from feeling you have done a good job.

Job Rotation

Workers swap tasks regularly to do different jobs for limited times.

Job Enrichment

Adding more tasks that require responsibility to a job.

Training

The process of improving a worker's skills.

Promotion

Advancement of an employee to a higher job or managerial level.

Organisational Structure

The levels of management and division of responsibilities in an organisation.

Organisational Chart

A diagram outlining the internal management structure.

Hierarchy

The levels of management from highest to lowest.

Level of Hierarchy

Groups of employees with similar responsibility levels in an organisation.

Chain of Command

The structure that allows instructions to pass down from senior to lower management.

Span of Control

The number of subordinates directly managed by a manager.

Delegation

Giving authority to a subordinate to perform specific tasks.

Leadership Styles

Different ways of managing people and making decisions: autocratic, democratic, laissez-faire.

Autocratic Leadership

Manager expects to be in charge and have orders followed without question.

Democratic Leadership

Manager involves employees in decision-making.

Laissez-faire Leadership

Manager sets broad objectives but lets employees organise their own work.

Recruitment

The process from identifying a job vacancy to receiving applications.

Job Analysis

Identifying and recording tasks and responsibilities related to a job.

Job Description

A document outlining the duties of a specific job.

Job Specification

A document listing the qualifications, skills, and qualities needed for a job.

Internal Recruitment

Filling a job vacancy with an existing employee.

External Recruitment

Filling a job vacancy with someone new to the business.

Induction Training

Introduction for new employees to the business’s activities, customs, and procedures.

On-the-Job Training

Learning skills by watching an experienced worker do the job.

Off-the-Job Training

Training away from the workplace, usually by specialists.

Workforce Planning

Planning the number and skills of employees needed in the future.

Dismissal

Ending employment against the employee’s will, often for poor performance.

Redundancy

Losing a job because the role is no longer needed, not due to poor performance.

Contract of Employment

A legal agreement between employer and employee listing rights and responsibilities.

Marketing

Identifying and satisfying customer wants profitably.

Customer Loyalty

When customers keep buying from the same business regularly.

Customer Relationships

Communicating with customers to encourage loyalty.

Market Share

Percentage of total sales held by a business or brand.

Consumer

A person who buys goods or services for personal use, not for resale.

Mass Market

A large number of sales of a product to a wide audience.

Niche Market

A small, specialized segment of a larger market.

Market Segment

A subgroup of a market where consumers have similar characteristics or preferences.

Market Research

Gathering, analyzing, and interpreting information about a market.

Product-Oriented Business

Focuses mainly on the product itself rather than customer wants.

Market-Oriented Business

Conducts market research to understand customer wants before producing products.

Marketing Budget

A financial plan specifying how much money is available for marketing a product.

Primary Research

Collecting original data directly from customers or potential customers.

Secondary Research

Using information already collected by others.

Focus Group

A representative group of the target market used for market research.

Sample

A group selected to respond to a market research exercise, like a survey.

Marketing Mix

The four activities used to market a product: Product, Price, Place, Promotion.

Unique Selling Point (USP)

The special feature that differentiates a product from competitors.

Brand Name

A unique name that distinguishes a product from others.

Brand Loyalty

When customers repeatedly buy the same brand instead of competitors’.

Brand Image

The personality or identity given to a product that sets it apart from competitors.

Packaging

The physical container or wrapping of a product, used for protection and promotion.

Product Life Cycle

The stages a product passes through: Introduction, Growth, Maturity, Decline.

Competitive Pricing

Pricing a product at or just below competitors’ prices to attract customers.

Penetration Pricing

Setting a low price to enter a new market.

Price Skimming

Setting a high price for a new product when it first enters the market.