What is a business?
A decision-making organization established to produce goods and/or provide services.
Primary Sector
Business activity involved with the extraction of natural resources, e.g. fishing, mining and agriculture.
Secondary Sector
Business activity involved with the manufacturing or construction of finished products.
Tertiary Sector
Business activity that involves providing services to customers, i.e. consumers and business clients.
Quaternary Sector
Business activity involving the creation or sharing of knowledge and information.
Entrepreneurs
A person who organises human, physical and financial resources to start a business.
Intrapreneurship
is the activity of entrepreneurship when it takes place within an established organization.
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
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.
Private Sector
includes all those organizations that are owned by private individuals or groups of individuals
Public Sector
includes all those organizations that are owned and operated by either the government or their agencies
Partnerships
business by two or more individuals, has unlimited liability.
Sole Traders
individuals who run their own businesses. They keep all the profits, but is responsible for any losses and had unlimited liability.
Non-profit organizations (NPO)
is one that reuses any financial surplus to achieve its organizational goals. Rather than for profits
Charities
non-profit organizations that exist to benefit the public.
Corporate social responsibility (CSR)
Businesses that actively seek ways to improve society and the environment through core business activities and business designs.
Strategic objectives
The long-term goals of a business, which could include profit maximization, growth, and increased market share.
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
Mission statement
a written expression of an organization's purpose and reason for being.
Vision Statement
a written expression of an organization's long-term ambitions that it hopes to realize in the future
Business Plan
is an official document with details of an organization and the proposals for reaching its goals.
Ansoff Matrix
a strategic decision-making tool, used to plan product and market growth strategies
Ansoff Matrix: Market Penetration
existing product, existing market
Ansoff Matrix: Product Development
new products in existing markets
Ansoff Matrix: Diversification
new product, new market. Most risky.
Ansoff Matrix: Market Development
existing product, new market
SWOT analysis
a diagnostic tool to analyse its internal strengths and weaknesses, and external opportunities and threats
STEEPLE Analysis
a diagnostic tool, used to study the factors in the external business environment that impact on its operations.
Stakeholders
is any individual or group that affects an organization or is affected by it.
Internal Stakeholders
are individuals or groups who are part of the organization. (employees, owners, shareholders, managers). LEARN CONFLICTS BETWEEN AND INTERESTS.
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.
Economies of scale
enable a business to benefit from lower average costs (the cost per unit) by increasing the size of its operations.
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.
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.
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.
Internal Growth
when an organization expands without the help of an external partners. LEARN REASONS WHY
External Growth
when an organization needs the support of a partner organizations for growth. LEARN REASONS WHY
Acquisition
one firm purchases another firm. Company A acquires 50% or more of the shares of Company B.
Merger
when two or more companies join to form a single firm
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.
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).
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)
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.
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.
Cash Flow
Payments received by a business (inflows) and payments made by a business (outflows).
Shareholders
is a person, company, or institution that owns at least one share of a company's stock or in a mutual fund.