Business UNIT 1: Intro to Business Management

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What is a business?

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Business

11th

46 Terms

1

What is a business?

A decision-making organization established to produce goods and/or provide services.

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2

Primary Sector

Business activity involved with the extraction of natural resources, e.g. fishing, mining and agriculture.

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3

Secondary Sector

Business activity involved with the manufacturing or construction of finished products.

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4

Tertiary Sector

Business activity that involves providing services to customers, i.e. consumers and business clients.

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5

Quaternary Sector

Business activity involving the creation or sharing of knowledge and information.

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6

Entrepreneurs

A person who organises human, physical and financial resources to start a business.

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7

Intrapreneurship

is the activity of entrepreneurship when it takes place within an established organization.

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8

Limited liability

A legal status that enables its owners not to be liable for more than the original amount of money invested in the business

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9

Unlimited liability

This means the owner of a business is personally liable for any business debts, even if this requires the debts to be settled by selling off personal assets.

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10

Private Sector

includes all those organizations that are owned by private individuals or groups of individuals

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11

Public Sector

includes all those organizations that are owned and operated by either the government or their agencies

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12

Partnerships

business by two or more individuals, has unlimited liability.

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13

Sole Traders

individuals who run their own businesses. They keep all the profits, but is responsible for any losses and had unlimited liability.

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14

Non-profit organizations (NPO)

is one that reuses any financial surplus to achieve its organizational goals. Rather than for profits

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15

Charities

non-profit organizations that exist to benefit the public.

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16

Corporate social responsibility (CSR)

Businesses that actively seek ways to improve society and the environment through core business activities and business designs.

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17

Strategic objectives

The long-term goals of a business, which could include profit maximization, growth, and increased market share.

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18

Tactical objectives

The relatively short-term and specific goals of a business which are used to guide the daily functioning of the organization. Ex. departmental reorganization

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19

Mission statement

a written expression of an organization's purpose and reason for being.

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20

Vision Statement

a written expression of an organization's long-term ambitions that it hopes to realize in the future

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21

Business Plan

is an official document with details of an organization and the proposals for reaching its goals.

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22

Ansoff Matrix

a strategic decision-making tool, used to plan product and market growth strategies

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23

Ansoff Matrix: Market Penetration

existing product, existing market

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24

Ansoff Matrix: Product Development

new products in existing markets

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25

Ansoff Matrix: Diversification

new product, new market. Most risky.

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26

Ansoff Matrix: Market Development

existing product, new market

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27

SWOT analysis

a diagnostic tool to analyse its internal strengths and weaknesses, and external opportunities and threats

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28

STEEPLE Analysis

a diagnostic tool, used to study the factors in the external business environment that impact on its operations.

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29

Stakeholders

is any individual or group that affects an organization or is affected by it.

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30

Internal Stakeholders

are individuals or groups who are part of the organization. (employees, owners, shareholders, managers). LEARN CONFLICTS BETWEEN AND INTERESTS.

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31

External Stakeholders

are people or organizations not part of the business but have a direct interest in its decisions, actions and performance. (Pressure groups/unions, suppliers, government, bank, media, competition, customers). LEARN CONFLICTS BETWEEN AND INTERESTS.

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32

Economies of scale

enable a business to benefit from lower average costs (the cost per unit) by increasing the size of its operations.

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33

Diseconomies of scale

will occur if the firm grows beyond its ability to operate efficiently. This causes the firm's average costs of production to rise.

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34

Internal economies of scale

occur for a particular organization (rather than the industry in which it operates) as it grows. SAME AS EXTERNAL DISECONOMIES OF SCALE BUT COST OF PRODUCTION INCREASES.

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35

External economies of scale

occur when a firm's average cost of production falls as the industry as a whole (rather than the firm itself) grows. SAME AS EXTERNAL DISECONOMIES OF SCALE BUT COST OF PRODUCTION INCREASES.

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36

Internal Growth

when an organization expands without the help of an external partners. LEARN REASONS WHY

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37

External Growth

when an organization needs the support of a partner organizations for growth. LEARN REASONS WHY

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38

Acquisition

one firm purchases another firm. Company A acquires 50% or more of the shares of Company B.

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39

Merger

when two or more companies join to form a single firm

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40

Takeovers

involves a company purchasing a controlling interest in another company. Are almost always hostile in nature as they occur against the wishes of the owners of the target company.

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41

Joint ventures

involve the creation of a new company by two or more parent companies in order to carry out an aim of objective. Can be dissolved without to much impact. (Samsung + Spotify).

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42

Strategic Alliances

involve two or more organizations working together to realize a set of common objectives. Loosest form of external growth no entity created. (Star alliance)

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43

Franchising

A contractual agreement between a franchisor and a franchisee that allows the franchisee to operate a business using the name and format by the franchisor. LEARN PROS AND CONS.

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44

MNCs (multinational companies)

any business organization that has operations overseas, irrespective of whether it produces/sells goods and/or provides services, i.e., MNCs operate in two or more countries.

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45

Cash Flow

Payments received by a business (inflows) and payments made by a business (outflows).

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46

Shareholders

is a person, company, or institution that owns at least one share of a company's stock or in a mutual fund.

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