Comprehensive Study Notes: Economic Concepts, Sectors, Entrepreneurship, Business Organization, Management, and Marketing (Chapters 1–5)

Want

A service or good people would like to have, but is not essential for living.

Need

A service or good essential for living.

Factors of Production

Land, Labour, Enterprise (Entrepreneurship), and Capital.

Specialisation / Division of Labour

Production process split into different tasks, with each worker specialising in their field to increase efficiency.

Added Value

Increasing selling price while keeping raw material costs the same, or reducing raw material costs while keeping the price the same.

Primary Sector

Economic sector involved in extracting natural resources (e.g., farming, fishing, mining).

Secondary Sector

Economic sector involved in manufacturing and processing (e.g., car manufacturing, hairdressing services).

Tertiary Sector

Economic sector involved in providing services (e.g., hotels, tourism, retail).

De-industrialisation

Movement away from heavy industry toward services; growth of the tertiary sector.

Mixed Economy

An economic system combining private sector decision-making for profit with public sector government ownership and service provision.

Private Sector

The part of the economy owned and controlled by private individuals, where decisions are made for profit.

Public Sector

The part of the economy owned and controlled by the government/state, where decisions are made for public welfare and service provision.

Entrepreneur

An individual who takes risks, works hard, is independent, and creative, often providing new business ideas with the potential for high income.

Government Support for Start-ups

Provided to reduce unemployment, foster growth, increase competition, and boost economic activity, often through low-cost land (premises), low-interest loans (finance), and grants for training (labour).

Measuring Business Size

Can be measured by the number of people employed, value of output, value of capital employed, or value of sales.

Business Plan

A document outlining a business's description, strategy, financial information, and products/services offered.

Reasons for Business Expansion

Higher profit, larger market share, and increased status/prestige for the owner.

External Growth

Business growth achieved through mergers and acquisitions.

Internal Growth

Business growth achieved by expanding operations, such as opening new shops or branches.

Horizontal Merger

A merger between businesses in the same industry at the same stage of production.

Vertical Merger

A merger between businesses in the same industry but at different stages of production (can be forward or backward).

Conglomerate Merger

A merger involving diversification into a completely different industry.

Delayering

Removing levels of management to flatten an organizational structure.

Sole Trader

A business owned and run by one person, with advantages like ease of setup and full control, but disadvantages including unlimited liability and limited finance.

Partnership

A business owned by two or more people, offering shared responsibilities and increased finance, but with unlimited liability for partners and potential conflicts.

Franchising

A system where a franchisee buys rights to operate under an established brand's system, logos, and trading methods, receiving training and support from the franchisor.

Joint Venture

A medium- to long-term agreement between two or more businesses to achieve a defined outcome, offering shared expertise, lower risk, and access to local knowledge.

Public Corporation

A business in the public sector owned and controlled by the state, with objectives set by the government.

Nationalisation

The process by which the government buys private businesses to bring them under public ownership, often to control essential services or protect jobs.

Business Objectives

Clear targets (e.g., profit, market share, growth, community service) that provide direction for workers and management, and facilitate performance comparisons.

Market Share

The percentage of total market sales that a company achieves, calculated as \frac{\text{Company sales}}{\text{Total market sales}} \times 100.

Social Enterprise

Businesses that combine social, environmental, and financial returns in their objectives.

Stakeholder

Any person or group with a direct interest in a business's performance, including internal (owners, workers, managers) and external (customers, government, community, banks) groups.

Maslow's Hierarchy of Needs

A motivational theory proposing a five-tier model of human needs: Physiological, Safety, Social, Esteem, and Self-actualisation.

Taylor's Scientific Management

A motivation theory suggesting motivation is primarily by money and efficiency is achieved through pay incentives, often criticized for not considering non-monetary factors.

Herzberg's Two-Factor Theory

A motivation theory differentiating between hygiene factors (prevent dissatisfaction but don't motivate) and motivators (drive psychological growth and motivation).

Financial Rewards

Methods of payment and incentives like commission, wages (time rate or piece rate), salaries, bonuses, and profit sharing.

Fringe Benefits

Non-wage benefits provided to employees, such as a company car, health care, education support, or pension.

Job Enrichment

A non-financial motivator involving adding skill and ownership responsibilities to jobs.

Job Rotation

A non-financial motivator involving rotating tasks to reduce monotony and broaden skills.

Organisational Structure

The framework outlining levels of management, division of responsibilities, chain of command, and span of control.

Chain of Command

The flow of instructions from the top to the bottom of an organizational hierarchy.

Span of Control

The number of subordinates that a manager directly supervises.

Delegation

Assigning authority to perform tasks to subordinates, while ultimate responsibility remains with the manager.

Autocratic Leadership

A leadership style where the manager makes all decisions, leading to quick decisions but potentially demotivating staff.

Democratic Leadership

A leadership style where decision-making involves employees, leading to better motivation but potentially slower decisions.

Laissez-faire Leadership

A leadership style where employees are largely left to make their own decisions, fostering creativity but risking a lack of direction.

Job Description

A document listing the duties and responsibilities of a specific job.

Job Specification

A document outlining the qualifications, experience, and skills required for a specific job.

Internal Recruitment

Filling vacancies from within the existing workforce, offering familiarity with the business but potential resentment.

External Recruitment

Filling vacancies from outside the existing workforce, bringing new ideas but incurring higher costs.

Induction Training

Training provided to new employees to help them settle in and understand the business.

On-the-job Training

Training received while performing work tasks, typically cheaper but may risk bad habits.

Off-the-job Training

Training conducted away from the workplace, often by external trainers, offering multi-skilling but at a higher cost.

Dismissal

The termination of employment due to an employee's performance or behavior, generally following warnings and legal procedures.

Redundancy

The termination of employment not due to employee fault, but due to changes in business needs, with compensation possibly applying.

One-way Communication

Communication where no immediate feedback is received, carrying a risk of misunderstanding.

Two-way Communication

Communication that includes feedback, confirming understanding and enabling discussion.

Niche Market

A small, specialized segment of a larger market, often with higher profit margins but higher average unit costs.

Mass Market

A large market with high sales volumes and a broad customer base, typically having lower per-unit