OCR GCSE Business Paper 1: Business Activity

Entrepreneur

Is a person who takes the risk of starting and running a business enterprise.

Spotting an opportunity

Is the ability to see the need for a particular product or service that customers need.

Enterprising characteristics

Are the features of an entrepreneur, which include being determined, creative and having ability to take risks.

Business plan

Is a simple plan which sets out details on the product or service being sold, where the finance is to come from to start the business, how the product is to be marketed and the market research carried out.

Finance

Finance is needed to start a business - maybe a loan or grant.

Success

For a business can take many forms, including making a profit, surviving and providing a good service.

Resources

Are the things a business needs to make it work, including land, labour, capital and enterprise.

Limited liability

Is where the responsibility for the debts of a business is limited to the amount invested by a shareholder. They will not be made to sell personal belongings to pay off business debt. A feature of private and public limited companies.

Unlimited liability

Is where the responsibility for all the debts of a business rests with the owners of the business. A feature of sole traders and partnerships who may need to sell their own personal belongings to pay off business debt.

Sole trader

Is a business owned by one person. They have sole responsibility but benefit if the business is a success.

Partnership

Is a business owned by between two and 20 partners.

Private limited company

Is often (but not always) a smaller business. Owned by at least two shareholders. Shares cannot be sold to the general public. Has Ltd after its name.

Public limited company

Is a large business, where shares can be sold to the general public enabling vast sums of money to be raised to develop the company. Has plc after its name.

Deed of partnership

Is a document setting out the operations of the partnership, including amount of capital to be invested and how profits will be shared.

Capital

Is money raised to start or develop a business.

Sleeping partner

Is a partner who invests in a partnership but has no part in the running of the business.

Limited liability partnership

Are part partnership part limited company. Owners are members, not partners. They have limited liability and have to make their finances available to the public.

Shareholders

Are the owners of a private or public limited company.

Dividend

Is the money paid to shareholders from the profits of a limited company.This is the reward for the shareholder taking a risk by investing money in the company.

Market share

Is the share of the total market for a product or service and is shown as a percentage.

Business aims and objectives

Are what the business aims to achieve and include survival, profit, growth and providing a services.

Profit

Is the difference between revenue and costs.

Survival

Is when a business just manages to keep going.

Growth

Is where a business becomes larger, for example by making more products or opening more places where goods and services are sold.

Providing a service

Is where a business makes sure that the needs of the customer are being met.

Stakeholder

Are groups or individuals who have an interest in a business.

Internal stakeholders

Are the business owners and employees who are in the business.

External stakeholders

Are the local community, suppliers, customers and government.

Organic Growth

Is growth of a business internally by increasing sales. eg sales can be increased by expanding the product mix, developing new markets.

Merger

Is where two or more businesses agree to join together.

External Growth

Is growth of a business by takeover or merger.

Takeover

Is where a business takes a controlling interest in another business.

Horizontal Growth

Is a merger or takeover where two businesses are involved in a similar operation eg two fashion retailers.

Backwards vertical growth

Is when a business merges with, or takes over a business that supplies it with goods or services.

Forwards vertical growth

Is when a business merges with or takes over a business that it supplies goods or services to.

Diversification

Is when a business merges with or takes over another business with which there is no connection.

Risk

The bad things that can happen if you go ahead and open your own business e.g. you lose all your savings that have been invested.

Reward

The good things that can happen if you go ahead and open your own business e.g. you gain lots of profit so can have a good home life.