ch1 business organization

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primary sector

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28 Terms

1

primary sector

businesses which are involved with the extraction and harvesting of natural resources

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2

secondary sector

businesses which are involved with the manufacturing and construction of products

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3

tertiary sector

businesses which provide services to general public

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4

quaternary sector

businesses involved with intellectual based activities

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5

reasons for starting up a business

  • Growth

  • Earning

  • Transference

  • Challenge

  • Autonomy

  • Security

  • Hobbies

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6

steps of starting up a business

  1. write business plan

  2. obtain start-up capital

  3. obtain business registration

  4. obtain bank account

  5. marketing

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7

elements of business plan

  • business

  • products

  • market

  • finance

  • personnel

  • marketing

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8

private sector

businesses which are owned and controlled by private individual

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9

public sector

businesses which are owned and controlled by the government

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10

cooperatives

for-profit social enterprise owned by their members

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11

pros of cooperatives

  • decision making power

  • public support

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12

cons of cooperatives

  • slower decision making

  • cannot raise funds on stock exchange

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13

NGO

non-profit social enterprise in the private sector

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14

charities

non-profit social enterprise providing voluntary support for good causes

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15

vision statement

outlines organization’s aspirations in the distant future

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16

mission statement

outlines organization’s purpose and core values

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17

CSR

idea that firms should play positive role in their community by considering social and environmental issues

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18

what is STEEPLE

  • Social

  • Technological

  • Economics

  • Environmental

  • Politics

  • Legal

  • Ethics

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19

economies of scale

lower average cost of production as firm operates on larger scale

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20

diseconomies of scale

higher cost of production as business continues to grow

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21

types of economies of scale

  • technical economies

    • machinery is spread over huge scale of output

  • purchasing economies

    • buying resources in bulk

  • financial economies

    • borrow massive sum of money at lower interest rates

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22

internal growth

business grows organically using own resources

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23

internal growth methods

  • improved products

  • changing price

  • effective promotion

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24

external growth methods

  • takeover

  • mergers

  • joint ventures

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25

horizontal integration

M&A between firms coperating in same industry

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26

vertical integration

M&A between firms between businesses at different stages of production

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27

lateral integration

M&A between firms that have similar operations

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28

conglomerate M&A

between businesses in completely different markets

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