The quantity of a good or service that consumers want to buy when the good or service is at a specific price
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Law of demand
Law in economics that states that consumers buy more of a good or service when its price goes down, and less of a good or service when its price goes up
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Demand on a price graph
- movement along the curve : downward sloping - when graph shifts : it moves to the right
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Supply
How much of a good or service is available for consumers to buy
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Law of supply
Law that states that if demand stays the same, when the price of a good or service increases, the quantity supplied increases and when the price of a good or service decreases so does the quantity supplied
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Supply on a price graph
- movement along the curve : upward sloping - when graft shifts : it moves to the left
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Equilibrium price
The price of a product when demand equals supply
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Factors that affect demand
New technology changes in consumer's preferences Changes in a country's population Price Income levels
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Factors that affect supply
Natural disasters New production technology Government regulations The cost of production inputs Producers' expectations about products and services
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Primary sector
Economic sector in which businesses use land and natural resources as raw materials - farming, fishing, forestry, mining
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Secondary sector
Economic sector in which people use raw materials from the primary sector to process or manufacture things people can use - food and drink factories, textile factories, clothing manufacturers, bottling plants
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Tertiary sector
Economic sector in which businesses offer services to the public - schools, hospitals,, banks, restaurants
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Organized worker
A worker who belongs to a trade union
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Blue-collar workers
People who usually work outside or in a factory and use mostly their hands and physical labor in their jobs
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White-collar workers
People who work in an office and who use their minds more than physical labor
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Trade union
An organized association of workers in a trade, group of trades, or a profession, that is formed to protect and further the worker's rights and interests - controlled, run and paid for by its workers - negotiate with employers to get the best deal for their members(wages, hiring/firing, working conditions)
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There are trade unions for....
- General workers - skilled and unskilled employees in a range of industries - Tradesmen - employees with particular skills - Blue-collar workers - skilled and unskilled workers in a particular industry - White-collar workers - professionals such as teachers
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Role of trade unions
When workers feel that employers are not listening to them, their trade unions can organize industrial action
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Trade unions can organize the following
Workers can: - stop working and strike - stop working overtime or work less overtime - advertise their problems with posters and protests
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Industrial action
- Strike = don't go to work - Go-slow = work slower to reduce productivity - Picketing = stand outside premises with posters - Lock-out = close business doors to keep employees out
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Trade unions also...
- Work to get the government to pass laws that will improve member's lives - Provide professional training and legal advice - Represent workers' interests during disputes with employers
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Collective bargaining
When trade unions negotiate workers' rights with employers
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Responsibilities of trade unions
Trade unions must : - negotiate with employers to improve their workers' conditions - try to attract new trade union members - help to settle disputes between employers and employees - help to bring about peaceful workplace
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Business function
An operation or process that people in the business perform often to help the business to achieve its objectives
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The administrative function
Runs the administrative side of the business
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Characteristics of the administrative function
- performing daily tasks such as answering phone calls - filing information - planning - scheduling - record-keeping
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The purchasing function
Responsible for procuring or buying all of the raw materials and finished goods that a business needs to functions
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Responsibilities of the purchasing function
- acquiring raw materials at the best possible price - making sure that purchases stay within budget - keeping accurate records of purchases
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The marketing function
Makes potential customers aware of the business's goods/services
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Responsibilities of the marketing function
- determine how the business and its goods should be branded to have the biggest impact on potential customers - to advertise and promote goods - provide publicity for the business and its goods - find a target market for the goods
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The finance functions
Manages all of the aspects of the business's finances
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Responsibilities of the finance function
- managing the cash flow of the business - managing the budgets of the business - keeping records of income and expenses - paying the business's tax
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The public relations function
Is about giving businesses positive publicity, it communicates with the public about what the business does
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Role of the public relations function
- finds out about how the public sees the business - gives advice to senior management about how the business can improve public opinion about it - communicates with the public to create a positive image of the business - runs promotional events
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The human resources function
Manages the people in a business, it looks after the welfare of employees
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Responsibilities of the human resources function
- recruiting or hiring staff - defining job descriptions - dismissing an retrenching staff - administering staff leave - training staff
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The production function
Manages all aspects of the production function
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Responsibilities of the production function
- getting resources or inputs required for the production process - managing efficiency and quality - choosing the best production method - controlling production costs
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The general management
Oversees and manages all of the other business functions
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Responsibilities of the general management function
- plans and strategizes at a high level - keeps the business on track - oversees all of the other functions - ensures that the functions work together and communicate with one another
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Business plan
Formal or written plan that gives a detailed description of how a business is going to achieve its goals
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Concept of a business plan
- written when people want to start a new business, they use it to apply for finance or start-up capital - also used by existing businesses when they plan to change the nature of their business/when they want to apply for finance for expanding the business
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Format of the business plan
- front cover - table of contents - description of goods/services offered - goals - who owns the business - production, marketing and management plan - SWOT analysis and conclusion - financial plan
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Description of goods/services offered by the business
- nature of business - goods and services offered - description of location - what makes the business's goods unique - whether the pricing is luxury or budget
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Front cover of the business plan
- logo of your business - name of your business - name & title/position in the business - slogan of your business - date on which the plan was prepared
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Goals of the business
- vision statement = statement of what the business aims to achieve in the medium or long term - the business's short and long term goals
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Owner of the business
- business name, the name you have registered - form of ownership - where the business is based - names of all owners - brief description of the business experience that the owners have
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Production plan of the business
Needs to show that production operations are efficient, cost effective, organized and reliable. Needs to specify the following: - where the business gets its raw materials form - what equipment and machinery is used - what equipment and machinery they already have and what it still needs to get for manufacturing
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Batch production
System that makes a batch of goods of one kind and then moves on to another kind
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Mass production
System that used 1 continuous system to make a high number of goods of the same kind
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Job production
System that businesses use when they produce once-off goods that are all different
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Marketing plan of the business
Explains how the business is going to market its goods and services, needs to convey what is unique about the goods and services.
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Contents of the marketing plan of the business
- marketing aims - how your goods/services will benefit customers - target market - information about competitors - your plan to advertise & brand your business
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Management plan of the business
Investors can see whether the managers of the business have enough skills and experience to make the business succeed.
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Contents of the management plan of the business
- names of all the business's management staff - details about their work experience in managerial positions - other businesses they have managed\ - who will run the business - CVs of all management staff
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Financial plan of the business
No business will work if it is not financially feasible - the part that potential investors will remember the most
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Credit
An arrangement with a business to pay later for something you buy
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Creditworthy
Able to be trusted to pay back money that is owed; safe to lend money to
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Credit limit
The maximum amount that the business is willing to allow the person to buy for on credit
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Credit agreement
An agreement between a business and a person/business applying for credit, a legally binding document signed by both parties
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Terms of credit
How long the person has to pay the credit amount back
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Debtor
Person or business owing money to the business
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Database
An organized set of data that is stored in a computer and can be looked at and used in various ways- for debtors, a list of all their names, addresses and telephone numbers needed to send out statements and follow up on payments owing
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Advantages of credit to a business
- Gains more clients - Can charge more for goods bought on credit - Can use the database of debtors (marketing purposes)
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Disadvantages of credit to a business
- Administrative costs - Risk of bad debts or non-payments - Transactions are more time consuming
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Advantages of credit to a consumer
- Can buy more expensive goods immediately - Can take advantage of sales or special deals - Can create a credit-worthy reputation