Business Organization and Environment Flashcards

Comprehensive vocabulary flashcards generated from the Business Organization and Environment lecture notes, covering core concepts, ownership entities, strategic analysis, circular production, stakeholders, and growth strategies.

System

A set of interconnected parts that work together to make a more complex whole to achieve a specific purpose, characterized by inputs, processes, outputs, and feedback.

Inputs

All the physical (raw materials, capital goods), financial (money for setup/running), and human (employees, managers, enterprise) resources needed to create a product.

Outputs

The final results of a business's production process, which are divided into tangible goods and intangible services.

Goods

Tangible business outputs that have physical characteristics and can be measured (e.g., cupcakes, computers, furniture).

Services

Intangible business outputs that cannot be touched or described by physical characteristics (e.g., education, healthcare, hair styling).

Negative Feedback Loop

A system response where the output feeds back into the inputs to move the system in the opposite direction, promoting stability and balance (e.g., adjusting a product based on customer complaints).

Positive Feedback Loop

A reinforcing system response where the output moves the system and its processes in the same direction, amplifying changes (e.g., poor financial results leading to budget cuts, which further degrades quality and decreases sales).

Primary Sector

The segment of the economy involved in the extraction or production of raw materials directly from the Earth, such as agriculture, mining, fishing, and drilling.

Secondary Sector

The segment of the economy involved in manufacturing and processing, where raw materials are transformed into finished or semi-finished products for sale (e.g., car manufacturing, food processing).

Tertiary Sector

The segment of the economy focused on selling services, including retail, education, healthcare, travel, and transportation.

Quaternary Sector

A knowledge-based sub-category of the tertiary sector focused on collecting, processing, and selling information, data, and web-based services.

Supply Chain / Chain of Production

The sequential steps and processes involved in moving a product through the primary, secondary, tertiary, and quaternary sectors to the final consumer.

Integrated Business

A business that actively participates in two or more sectors of the economy (e.g., oil companies that drill, refine, and retail petrol).

Entrepreneur

An individual who demonstrates creativity and passion to start a new business from scratch, taking on financial and personal risks to plan and execute a solution.

Intrapreneur

An individual who uses an entrepreneurial mindset and skill set to develop new products, services, or processes within an existing enterprise they work for.

Push Factors

Negative conditions that make individuals want to leave their current situation and start a business (e.g., redundancy, threat of unemployment, or low pay).

Pull Factors

Positive conditions that attract individuals to start a business (e.g., a lucrative business idea, passion for change, or the desire for independence and work-life balance).

SWOT Analysis

A simple strategic planning tool used to evaluate a business's internal Strengths and Weaknesses, alongside its external Opportunities and Threats.

Internal Factors

Factors originating inside the organization (such as human resources, finance, marketing, and operations) that the business can directly control, classified as Strengths or Weaknesses.

External Factors

Environmental conditions or trends originating outside the organization that the business cannot control, classified as Opportunities (favourable conditions) or Threats (unfavourable conditions).

STEEPLE Analysis

A framework used to systematically analyze the external environment of a business across seven categories: Sociocultural, Technological, Economic, Environmental, Political, Legal, and Ethical influences.

Doughnut Economics Model

A visual economic framework designed to help human systems meet the needs of all people while respecting the limits of the living planet.

Social Foundation

The inner ring of the Doughnut Economics Model representing the essential human needs required for well-being (e.g., food, water, housing, energy, health, gender equality, and political voice).

Ecological Ceiling

The outer ring of the Doughnut Economics Model representing the critical planetary boundaries that must not be overshot to protect the Earth's systems (e.g., climate change, biodiversity loss, and ocean acidification).

Private Sector

The part of the economy owned, funded, and controlled by private individuals or groups rather than the government, usually driven by the objective to earn a profit.

Public Sector

The part of the economy owned, funded (through taxes), and controlled by the government to provide essential services that might otherwise be underprovided by the private sector (e.g., police, public healthcare, state education).

Sole Trader

An individual who owns and runs a business alone, keeping all profits but having no separate legal distinction from the business itself.

Partnership

A business owned and run by two or more individuals (partners) governed by a partnership agreement outlining capital contributions, responsibilities, and profit/loss sharing.

Privately Held Company

A limited liability corporation owned by a relatively small group of private shareholders (such as family and friends) whose shares cannot be traded on public stock exchanges.

Publicly Held Company

A limited liability corporation that has issued shares to the general public via an Initial Public Offering (IPO) and whose shares are traded freely on a stock exchange.

Unlimited Liability

A legal status where the business owners are personally responsible for all business debts; if the business fails, personal assets can be seized to pay off creditors.

Limited Liability

A legal status where shareholders' personal assets are fully protected if the business fails; shareholders can only lose the money they invested in purchasing their shares.

Memorandum of Association

A legally required document for incorporating a company that outlines the external, basic details of the business (such as its name and location).

Articles of Association

A legally required document for incorporating a company that outlines the internal governance roles, responsibilities, and rights of the directors and shareholders.

Commercial Enterprise

A private sector entity whose primary objective is to maximize financial profits for its owners or shareholders.

Social Enterprise

A hybrid organisation in the "third sector" that places a social or environmental purpose at its core while combining the commercial efficiencies of the private sector with public-good objectives.

For-Profit Social Enterprise

A commercial, revenue-generating business that embeds a social or environmental mission directly into its business model, usually reinvesting the majority of profits back into the mission.

Non-Profit Social Enterprise

An organization legally recognized as a non-profit that works to improve social or environmental outcomes, requiring by law that all generated financial surpluses are reinvested directly into its mission.

Non-Governmental Organisation [NGO]

A sub-category of non-profit social enterprises that operate on a national or international scale to benefit society or the environment, independent of government control.

Cooperative

A business owned, funded, and run democratically by its members in their common interest (e.g., worker, agricultural, or consumer cooperatives).

Business Objective

A stated outcome or target that a business aims to achieve over a specified period.

SMART Criteria

A framework used to set concrete, effective objectives by ensuring they are Specific, Measurable, Attainable, Relevant, and Time-focused.

Vision Statement

A highly inspiring, long-term dream or goal expressing what the business wants the future to look like.

Mission Statement

A concrete, present-focused statement explaining what the organization actually does, right now, to work towards achieving its long-term vision.

Strategy

A significant, long-term plan of action formulated by senior management to achieve the business's overall, big-picture objectives (the "how").

Tactic

A smaller-scale, short-term, day-to-day decision or action taken to achieve immediate objectives or respond to quick changes in the market.

Value Creation

The process of generating utility, benefits, and positive outcomes for multiple stakeholder groups connected to the business.

Value Extraction

The process of capturing and pulling financial value out of a system, which can become excessive when shareholders secure profits at the expense of other stakeholders (e.g., environmental damage or paying below-living wages).

Corporate Social Responsibility [CSR]

A business's commitment to self-regulate and act responsibly towards society and the environment through core and non-core actions.

Creating Shared Value [CSV]

A strategic approach proposing that a business's financial success and the well-being of its surrounding community are interdependent; solving social/environmental problems is integrated into core operations to improve profitability.

Linear Production System ["Take-Make-Waste"]

A manufacturing system where resources are taken from the Earth, transformed into products, and then disposed of as waste after use.

Circular Production System

A sustainable manufacturing system where products are designed from the start to prevent waste, ensuring that system outputs feed back in as inputs.

Circular Supply Model

A circular business strategy focused on replacing virgin raw materials with bio-based, recyclable, or fully recovered materials in the production phase.

Resource Recovery Model

A circular business strategy focused on collecting, sorting, and secondary processing of waste materials to transform them into raw materials for other companies.

Sharing Model

A circular business strategy that maximizes product utilization by allowing consumers to share access to products with others (often supported by online platforms).

Co-ownership

A sub-type of sharing model involving the collaborative lending/renting of physical goods that are used occasionally (e.g., tool sharing).

Co-access

A sub-type of sharing model that allows individuals to participate in an activity or service that would have occurred anyway (e.g., carpooling).

Product Service System Model

A circular business strategy where a company sells the service/utility of using a product rather than selling ownership of the physical product itself.

Product-Oriented Service System

A service system focusing on selling a product alongside a legally binding after-sale maintenance, repair, or take-back contract.

User-Oriented Product Service System

A service system where the business retains 100% ownership of the product, and consumers pay for temporary access (e.g., leasing or streaming services).

Sociocultural Sustainability

The "People" dimension of the triple bottom line, focusing on meeting human needs, supporting employee and community well-being, and respecting human rights.

Environmental Sustainability

The "Planet" dimension of the triple bottom line, focusing on regenerating ecosystems, minimizing carbon emissions, and operating within planetary boundaries.

Economic Sustainability

The "Profit" dimension of the triple bottom line, focusing on maintaining long-term financial viability so the business can continue to operate and distribute value.

Stakeholder

Any individual, group, or organization that can affect, or is affected by, the decisions and operations of a business.

Shareholder

A specific type of stakeholder who owns shares (part-ownership) in a limited liability company and is primarily concerned with profitability and financial returns.

Internal Stakeholder

Individuals or groups who are directly involved in the internal operations and decision-making of the business (specifically employees, managers, and owners/shareholders).

External Stakeholder

Individuals or groups who do not work inside the business but are affected by its actions and have varying degrees of influence (such as customers, suppliers, banks, governments, pressure groups, and society).

Stakeholder Alignment

A state where the interests of various stakeholder groups are actively in harmony, often realized in the long term through sustainable business design or regulatory structures.

Stakeholder Conflict

A state of tension where the priorities of one stakeholder group directly oppose the priorities of another (e.g., shareholders demanding cost-cutting measures, causing conflict with employees seeking higher wages and better working conditions).

Internal Growth [Organic Growth]

Expanding a business using its own internal resources, such as developing new products, reinvesting profits, or entering new geographic markets.

External Growth [Inorganic Growth]

Expanding a business quickly through partnering, merging, or taking over another existing organization.

Merger

An external growth method where two independent businesses agree to fuse together to form a brand-new, single legal entity.

Acquisition

An external growth method where one company purchases a controlling interest (50% or more) in another company with the permission of its board of directors, resulting in a parent-subsidiary relationship.

Takeover

A highly risky external growth method where one company purchases a majority of shares in another company without the consent of the target firm's board of directors (often leading to a hostile proxy fight).

Joint Venture

An external growth method where two or more businesses set up a brand-new, separate business entity for a specific project while maintaining their own distinct parent identities.

Strategic Alliance

A loose, flexible agreement where two or more businesses work together to achieve a shared objective without establishing a separate legal entity in the process.

Franchising

A legal contract and growth arrangement where a business model is expanded through independent owner-operators.

Franchisor

The parent company with a proven, successful business model that sells the rights to its brand name, logos, and operating systems in exchange for setup fees and ongoing royalty payments.

Franchisee

The independent entrepreneur who purchases the rights to open, own, and run an individual outlet of a franchise, paying fees and royalties to the franchisor.

Satisficing

A business objective common among small businesses where owners choose to optimize profits and balance other goals (like customer service or lifestyle) rather than strictly maximizing profits.

Monopoly

A market structure where a single company holds a dominant position, giving it immense pricing power and high sales revenues.

Economies of Scale

A business situation where the average cost of production per unit decreases as the total level of output increases.

Diseconomies of Scale

A business situation where a company grows too large and complex, causing its operations to become inefficient and resulting in an increase in average unit costs as output expands.

Internal Economies of Scale

Unit cost reductions achieved through efficiency improvements within the company itself as it grows (e.g., bulk-purchasing discounts, specialized management, or marketing cost-spreading).

External Economies of Scale

Unit cost savings that occur due to factors outside the control of the business, arising from the growth of the surrounding industry or region (e.g., specialized local training, industry-specific infrastructure, or localized innovation hubs).

Internal Diseconomies of Scale

Unit cost increases caused by internal operational challenges as a firm expands (e.g., communication breakdowns across multiple layers of management, overcrowding, or employee alienation).

External Diseconomies of Scale

Unit cost increases resulting from factors in the external environment as an industry expands (e.g., traffic congestion, raw material shortages pushing up supply costs, or increased government regulatory costs).

Ansoff Matrix

A strategic 2x2 planning tool designed to classify a business's revenue growth strategies based on combinations of existing or new products and existing or new markets.

Market Penetration

The lowest-risk Ansoff growth strategy, involving selling more of the business's existing products to its existing markets and customer groups.

Product Development

An Ansoff growth strategy that involves researching, creating, and selling new products to the business's existing markets and customers.

Market Development

An Ansoff growth strategy that involves selling the business's existing products to brand-new markets or customer segments (e.g., exporting abroad).

Diversification

The highest-risk Ansoff growth strategy, involving selling entirely new products to entirely new, unfamiliar markets.

Related Diversification

A growth strategy where a business enters a new market with a new product, but the new business activity retains some operational or brand similarities to the existing business (e.g., a bakery opening a chocolate shop).

Unrelated Diversification

A growth strategy where a business enters a new market with a new product that has absolutely no connection or similarity to the existing business (e.g., a bakery selling furniture online).