business

Business

An organisation which produces goods and services.

Need

A good or service essential for living.

Want

A good or service which people would like to have, but which is not essential for living. People's wants are unlimited.

Economic problem

There exist unlimited wants but limited resources to produce the goods and services to satisfy those wants, this creates scarcity.

Scarcity

lack of sufficient products to fulfill the total wants of the population.

Factors of production

resources needed to produce goods or services. There are four factors of production and they are in limited supply.

(factor of production) Land

natural resources provided by nature and includes fields, forests, oil, gas, metals and other resources.

(factor of production) Labour

number of people available to make products.

(factor of production) Capital

finance, machinery and equipment needed for the manufacture of goods.

(factor of production) Enterprise

skill, and risk-taking ability of the person who brings the factors of production together to produce a good or a service. For example, the owner of a business. These people are called entrepreneurs.

Opportunity cost

Next best alternative given up by choosing another item.

Specialisation

When people and businesses concentrate on what they are best at.

Division of labour

When the production process is split up into different tasks and each worker performs one of these tasks. It is a form of specialisation.

Added value

Difference between the selling price of a product and the cost of bought in materials and components.

Primary sector

extracts and uses the natural resources of the earth to produce raw materials used by other businesses

Secondary sector

The secondary sector of industry manufactures goods using raw materials provided by the primary sector.

Tertiary sector

The tertiary sector of industry provides services to consumers and the other sectors of industry.

De-industrialisation

De-industrialisation occurs when there is a decline in the importance of the secondary, manufacturing sector of industry in a country.

Mixed economy

A mixed economy has both a private sector and a public sector.

Private sector

Businesses not owned by the government.

Public sector

Government owned and controlled businesses and organisations.

CHAPTER 3 - ENTERPRISE, BUSINESS GROWTH AND SIZE

Entrepreneur

An entrepreneur is a person who organises, operates and takes the risk for a new business venture.

Business plan

A business plan is a document containing the business objectives and important details about the operations, finance and owners of the new business.

Value

How much something is worth.

Business size

Measured by: number of employees; value of output; value of sales; value of capital employed.

Capital employed

Capital employed is the total value of capital used in the business.

Internal growth

Internal growth occurs when a business expands its existing operations.

External growth

External growth is when a business takes over or merges with another business.

Integration

Integration is when one firm is integrated into another one.

Merger

A merger is when the owners of two businesses agree to join their firms together to make one businesses.

Takeover

A takeover is when one business buys out the owners of another business.

Horizontal integration

Horizontal integration is when one firm merges with or takes over another one in the same industry at the same stage of production.

Vertical integration

Vertical integration is when one firm merges with or takes over another one in the same industry but at a different stage of production, it can be forward (higher stage of production) or backward (lower stage of production).

Conglomerate integration

Conglomerate integration is when one firm merges with or takes over a firm in a completely different industry, this is also known as diversification.

CHAPTER 4 - TYPES OF BUSINESS ORGANISATIONS

Sole trader

Sole trader is a business owned by one person.

Liability

The state of being responsible for something, especially by law.

Limited liability

Limited liability means that the liability of shareholders in a company is only limited to the amount they invested.

Unlimited liability

Unlimited liability means that the owners of a business can be held responsible for the debts of the business they own. Their liability is not limited to the investment they made in the business.

Partnership

Partnership is a form of business in which two or more people agree to jointly own a business.

Partnership agreement

A partnership agreement is the written and legal agreement between business partners. Not essential to have it but always recommended.

Unincorporated business

An unincorporated business is one that does not have a separate legal identity. Sole traders and partnerships are unincorporated businesses.

Incorporated business

Incorporated businesses are companies that have separate legal status from their owners.

Shareholders

Shareholders are the owners of a limited company. They buy shares which represent part ownership of a company.

Annual general meeting (agm)

An 'agm' is a legal requirement for all companies. Shareholders may attend and vote on who they want to be on the Board of Directors for the coming year.

Dividends

Dividends are payments made to shareholders from the profits (after tax) of a company. They are the return to shareholders for investing in the company.

Joint venture

A joint venture is when two or more businesses agree to start a new project together, sharing the capital, the risks and the profits.

Franchise

A franchise is a business based upon the use of the brand names, promotional logos and trading methods of an existing successful business. The franchisee buys the license to operate this business from the franchisor.

CHAPTER 5 - BUSINESS OBJECTIVES AND STAKEHOLDER OBJECTIVES.

Business objectives

Business objectives are the aims or targets that a business works towards.

Market share

Market share is the proportion of total market sales achieved by one business.

Social enterprise

A social enterprise has social objectives as well as an aim to make a profit to reinvest back into the business.

Stakeholder

A stakeholder is any person or group with a direct interest in the performance and activities of a business.

CHAPTER 6 - MOTIVATING WORKERS.

Motivation

Motivation is the reason why employees want to work hard and work effectively for the business.

Wage

A wage is payment for work, usually paid weekly.

Salary

A salary is payment for work, usually paid monthly.

Commission

Commission is payment relating to the number of sales made .

Profit sharing

Profit sharing is a system whereby a proportion of the company's profits is paid out to employees.

Bonus

A bonus is an additional amount of payment above basic pay as a reward for good work.

Performance-related pay

Performance-related pay is pay which is related to the effectiveness of the employee where their output can easily be measured.

Share ownership

Share ownership is where shares in the company are given to employees so that they become part owners in the company.

Appraisal

An appraisal is a method of assessing the effectiveness of an employee.

Fringe benefits

Fringe benefits are non-financial rewards given to employees.

Job satisfaction

Job satisfaction is the enjoyment derived from a feeling that you have done a good job.

Job rotation

Job rotation involves workers swapping round and doing each specific task for only a limited time and then changing round again.

Job enlargement

Job enlargement is where extra tasks of a similar level of work are added to a worker's job description.

Job enrichment

Job enrichment involves looking at jobs and adding tasks that require more skill and/or responsibility.

CHAPTER 7 - ORGANISATION AND MANAGEMENT.

Organisational structure

Organisational structure refers to the levels of management and division of responsibilities within an organisation.

Chain of command

Chain of command is the structure in an organisation which allows instructions to be passed down from senior management to lower levels of management.

Span of control

The span of control is the number of subordinates working directly under a management.

Line managers

Line managers have direct responsibility over people below them in the hierarchy of an organisation.

Staff managers

Staff managers are specialists who provide support, information and assistance to line managers.

Delegation

Delegation means giving a subordinate the authority to perform particular tasks.

Leadership styles

Leadership styles are the different approaches to dealing with people when in a position of authority - autocratic, laissez-faire or democratic.

Autocratic leadership

Autocratic leadership is where the manager expects to be in charge of the business and to have their orders followed.

Democratic leadership

Democratic leadership gets other employees involved in the decision-making process.

Laissez-faire

Laissez-faire leadership makes the broad objectives of the business known to employees, but then they are left to make their own decisions and organise their own work.

Trade union

A trade union is a group of workers who have joined together to ensure their interests are protected.

Closed shop

Closed shop is when all employees must be a member of the same trade union.

CHAPTER 8 - RECRUITMENT, SELECTION AND TRAINING OF WORKERS.

Recruitment

Recruitment is the process from identifying that the business needs to employ someone up to the point at which applications have arrived at the business.

Job analysis

A job analysis identifies and records the responsibilities and tasks relating to a job.

Job description

A job description outlines the responsibilities and duties to be carried out by someone employed to do a specific job.

Job specification

A job specification is a document which outlines the requirements, qualifications, expertise, physical characteristics, etc. for a specified job.

Internal recruitment

Internal recruitment is when a vacancy is filled by someone who is an existing employee of the business.

External recruitment

External recruitment is when a vacancy is filled by someone who is not an existing employee and will be new to the business.

Part-time

Part-time employment is often considered to be between 1 and 30-35 hours a week.

Full-time

Full time employees will usually work 35 hours or more a week.

Induction training

Induction training is an introduction given to a new employee, explaining the firm's activities, customs and procedures and introducing them to their fellow workers.

On-the-job training

On-the-job training occurs by watching a more experienced worker doing the job.

Off-the-job training

Off-the-job training involves being trained away from the workplace, usually by specialist trainers.

Workforce planning

Workforce planning is establishing the workforce needed by the business for the foreseeable future in terms of the number and skills of employees required.

Redundancy

Redundancy is when an employee is no longer needed and so loses their job. It is not due to any aspect of their work being unsatisfactory.

Ethical decision

Ethical decision is a decision taken by a manager or a company because of the moral code observed by the firm.

Industrial tribunal

An industrial tribunal is a legal meeting which considers workers complaints of unfair dismissal or discrimination at work.

Contract of employment

A contract of employment is a legal agreement between employer and employee listing the rights and responsibilities of the workers.

CHAPTER 9 - INTERNAL AND EXTERNAL COMMUNICATION.