Unit 1 Retest Study Guide - Vocabulary

Vocabulary flashcards covering core business management concepts, business organizations, sectors, ownership structures, and strategic planning terms from the Unit 1 Retest Study Guide.

Business

A decision-making organization established to produce goods and/or provide services.

Consumers

The individuals or organizations that actually use a product.

Customers

The individuals or organizations that purchase a product.

Entrepreneurs

The individuals who take risks in overseeing a business organization or business venture, usually in pursuit of profit.

Entrepreneurship

The knowledge, skills and experiences of individuals who have the capability to manage the overall production process.

Goods

These are physical (tangible) products, such as cars, clothes, flowers, food, furniture, smartphones, and toys.

Primary sector

Business activity involved with the extraction of natural resources, e.g. fishing, mining and agriculture.

Production

The process of creating goods and/or services using the factors of production available to the business.

Quaternary sector

Business activity involving the creation or sharing of knowledge and information.

Secondary sector

Business activity involved with the manufacturing or construction of finished products.

Services

Intangible products, such as haircuts, tourism, public transport, banking, insurance education, and healthcare.

Tertiary sector

Business activity that involves providing services to customers, i.e. consumers and business clients.

Companies (corporations)

This refers to any business organisation that is owned by its shareholders, who have limited liability. They are comprised of privately held companies and publicly held companies.

Deed of Partnership

A legally binding contract that all joint owners of a partnership sign, stating the purpose of the business, the formal rights of the partners, and how any profits should be split.

Initial public offering (IPO)

An IPO occurs when an organization sells all or part of its business to shareholders on a public stock exchange for the first time. This changes the legal status of the business to a publicly held company.

Limited liability

This legal status of a business enables its shareholders (business owners) not to be liable for more than the original amount of money invested in the business.

Limited partnership

This is a special type of partnership where one or more partners contribute capital and enjoy a share of the profits but do not participate in the running of the business. However, at least one partner must still have unlimited liability.

Non-profit organizations (NPO)

This refers to businesses that operate for collective or social benefits rather than primarily aiming to generate profits for their owners or shareholders.

Non-profit social enterprises

These organizations operate in a commercial-like way but do not distribute any profits or financial surplus to their owners or shareholders.

Non-governmental organizations (NGOs)

A type of non-profit organization (NPO) operating in the private sector of the economy for the benefit of others in society (rather than for shareholders).

Partnership

A business alliance that typically consists of between 2 and 20 individual owners who are jointly responsible for the business (although this number can vary between countries).

Private sector

This section of the economy is made up of businesses that are owned by individuals or groups of individuals, rather than by the government.

Privately held company

This is a business owned by shareholders with limited liability, but the shares cannot be traded on a public Stock Exchange.

Publicly held company

A joint-stock company owned by shareholders. The shares in a publicly held company can be bought and sold by the general public, without prior approval of existing owners.

Public sector

Businesses in this section of the economy are run and owned by the government in order to provide essential services for society as a whole, e.g., education and healthcare services.

Shareholders

These are the owners of a limited liability company. Their interests are financial, i.e., regular dividends and a higher share price.

Sleeping partner

Also known as a silent partner, this is an investor in a partnership but who does not get involved in the daily running and management of the organization.

Social enterprises

These organizations are revenue-generating businesses with community (social) objectives at the core of their operations in order to benefit the general public, rather than private shareholders.

Sole Trader

An organization which is owned by a single entrepreneur who has exclusive responsibility for the running of the business.

Stock exchange

This is any marketplace where the general public and other companies can buy and/or sell shares.

Unlimited liability

This means the owner(s) of a business (such as a sole trader or partner) is personally liable for any business debts, even if this requires the debts to be settled by selling off personal assets.

Ethics

These are moral guidelines or codes of practice which govern good organizational behaviour.

Growth

Refers to an increase in the size of a business and its operations, using measures such as market share, sales revenue, or the number of customers.

Mission statement

A succinct and motivating declaration of an organization’s purpose of existence, who they are, and what they do.

Business Objectives

These are the clearly defined targets of a business in order to achieve its aims. They are often based on the SMART acronym – specific, measurable, agreed, realistic and time specific.

Profit

This is the positive difference between a firm's sales revenue and its total costs of production, per time period.

SMART objectives

Framework for setting organization objectives, which should be specific, measurable, agreed (or achievable), realistic (or relevant), and time bound.

Stakeholders

Individuals or groups with an interest in a company's operations, including employees, customers, and investors.

Strategic objectives

The long-term goals that the whole organization continually strives to achieve. They help to achieve the overall aims, vision, or mission of the business and typically require significant human and financial resources.

Strategies

The actions and plans used to achieve the long-term objectives of an organization. They are usually decided by senior management and can include decisions such as diversification, overseas expansion, mergers, or takeovers.

Tactical objectives

The relatively short-term and specific goals of a business. These targets are used to guide the daily functioning of the organization.

Triple bottom line

A framework that considers the ecological, social, and economic performance of a business rather than focusing only on financial results. It encourages organizations to consider their impact on the planet and society alongside their long-term economic sustainability.

Vision statement

An inspiring declaration of what an organization ultimately strives to be, or to achieve, in the distant future.