IB Business and Management Unit 1.1 - 1.3 Vocab

Businesses

Organizations that are involved in the production of goods and/or the provision of services.

Capital

All non-natural resources used in the production process.

Division of Labour

the breaking up of a production process into a series of specialized tasks, each by a different worker.

Entrepreneurs

People who manage, organize and plan the other three factors of production.

Factors of Production

Land, labor, and capital; the three groups of resources that are used to make all goods and services

Functional Areas

The term used to refer to the different sections of a business. These are usually named as the marketing, production, finance and human resources departments.

Industrialization

The process experienced by a country that moves away from primary production towards manufaturing as its principal sector for national output and employment.

Labour

Physical and mental human effort used int he production process.

Land

Any natural resource provided by nature and used in the production process

Opportunity Cost

Cost of the next best alternative use of money, time, or resources when one choice is made rather than another

Primary Sector

Businesses involved in extracting natural resources

Private Sector

Comprises businesses owned and controlled by individuals or groups of individuals

Public Sector

The part of the economy that involves the transactions of the government

Secondary Sector

Portion of the economy concerned with manufacturing the process, transformation, and assembly of raw materials into useful products

Structural Change

A shift in the relative share of national output and employment that is attributed to each business sector.

Tertiary Sector

Portion of the economy concerned with the transportation, communications, and utilities, sometimes extended to the provision of all goods and services to people in exchange for payment

Value Added

The gross value of the product minus the costs of raw materials and energy.

Articles of Association

Name given to the document that sets out the internal organization and rules of a limited company. Details may include the powers of each director and voting rules. It is one of the compulsory documents needed to set up a company.

Certificate of Incorporation

Name of the document issued to a limited company to show that it has been legally formed and is therefore a separate legal entity from its owner (who have limited liability). Possession of this certificate then allows the company to start trading.

Charities

Not-for-profit organizations that are established to support good causes, from society's point of view.

Company

A business, owned by multiple shareholders, which is a separate legal entity established through being incorporated

Deed of Partnership

The legal contract signed by the owners of a partnership.

Incorporation

A legal difference between the owners of a company and the business itself. This ensures owners are protected from any loss made by the company.

Limited Liability

A restriction on the amount of money that can be lost from the owners of a business if it goes into bankruptcy.

Memorandum of Association

The name of one of the legal documents required to create an incorporated company. It will include basic information of the organization such as: the name, address, company, its objectives and the details of its share capital.

Mixed Economy

An economy in which private enterprise exists in combination with a considerable amount of government regulation and promotion.

Free-Market Economy

Economic resources are owned largely by the private sector with very little state intervention

Command Economy

An economic system in which the government controls a country's economy.

Privatization

To change from government or public ownership or control to private ownership or control.

Nationalization

Changing something from private to state ownership or control

Sole Trader

The most basic form of business ownership where the business is private, has unlimited liability and the owner bears the financial risks of the business on their own.

Partnership

A business in which two or more persons combine their assets and skills

Joint and Several Liability

A legal concept that makes each partner in a partnership legally liable for all the debts of the partnership.

Private Limited Company

A business organization owned by shareholders with limited liability but whose shares cannot be bought or sold to the general public.

Shareholder

A person who invests in a corporation by buying stock and is a partial owner

Share

A certificate confirming part ownership of a company and entitling the shareholder to dividends and certain shareholder rights

IPO

An IPO is how a company goes from private → public by selling stock to raise money for growth.

Public Limited Company ( PLC)

An incorporated business organization that allows the general public to buy and sell shares in the company via a stock exchange.

Public Corporation

The stock of a public company is owned and traded by individual and institutional investors. In contrast, the stock is held by company founders, employees, and sometimes venture capitalists.

Non-Profit Organization

A business whose goal is to provide a service rather than to make a profit, such as the American Red Cross.

Non-governmental organization

A private sector organization that does not primarily aim to make a profit. Instead, they operate for the benefit of others in society.

Public-Private Partnership

A combined effort of government and a for-profit entity, generally intended to use the efficiency of the private sector to help achieve a public policy goal.

Stock Exchange

A place where shares in a company or business enterprise are bought and sold.

Silent Partner

One who may be known to the public as a partner but takes no active part in management.

Unlimited Liability

A business owner is responsible for all losses experienced by the business.

Social Enterprise

A business with mainly social objectives that reinvests most of its profits into benefiting society rather than maximising returns to owners

Mission Statement

A brief summary of what a business owner wants a business to be doing.

Vision Statement

A summary of what a business owner wants a business to become.

Corporate Objectives (Strategic Objectives)

Goals of the company stated in terms of profit or return on investment.

Corporate Social Responsibility

A business's concern for the welfare of society.

Tactical (Operational) Objectives

Short-term or medium-term goals or targets which must be achieved for an organisation to attain its corporate objectives

Ethics

A set of moral principles that may be held by a society, a group or an individual.

Ethical Code (Code of Conduct)

Developed by a company or profession for employees and clients. It outlines ways of behaving which are appropriate for the profession.

Environmental Audit

A method used to assess the company's corporate responsibility by evaluating the environmental impact of the policies and processes they use to produce and distribute their goods and services.

Social Audit

A systematic evaluation of how well a firm is meeting its ethics and social responsibility goals.

Aims

Are the long-term goals of business. They are a general statement of a firm's purpose or intentions and tend to be qualitative in nature

Objectives

Are an organization's performance targets -- the result and outcome managment wants to achieve. they function as yardsticks for measuring how well the organization is doing

Strategy

A pattern of actions and resource allocations designed to achieve the organization's goals.

Tactics

Methods of employing equipment and personnel on an incident to accomplish specific tactical objectives in order to achieve established strategic goals.

Targets

The level of performance or rate of improvement needed in the performance measure (e.g. each salesperson has been set a target of three new customers a month, each department is required to find savings equal to ten per cent of its annual budget)