Business studies AS defintions Unit 1

up to the end of fbo

Business enterprise

Business enterprise

Any endeavor where the primary motive is profit and not mere employment for oneself and others.

Factors of production

Inputs needed for the creation of a good or service

Land -factors of production

Including Land used to build premises roads farmland also natural resources and raw materials

Labour-factors of production

All human resources that work in a business including physical and mental

Capital-factors of production

Including money invested by owner and items bought with this money

Enterprise-Factors of production

the person with the idea and skills to bring the other factors together and organise them effectively

use of resources of business

each business must decide how to allocate its resources in order to maximise productivity and output

entrepreneurs

someone who runs their own business in the hope of making profit and is willing to take financial risks to achieve business success

added value

difference between cost of raw material inputs for and the selling price of a product or service, can also refer to extra features of an item of interest which will go beyond the standard expectations and provide something more whilst adding little or no cost.

competitive advantage

a favourable situation than a business has over its rivals arising from a marketing opportunity such as price, cost, innovation etc.

cost advantage

business can produce then sell its goods or services at a lower price than its competitors

differentiation advantage

when a business creates the percentage that its products or services are better than those of competitors

usp

something that sets one firms product or service apart from its competitors in the eyes and minds of potential consumers.

stakeholder

an individual group or organisation that has an interest or concern or is affected by the activities and performance of an organisation.

stakeholder objectives

each stakeholder group will have their own set of objectives which is likely to influence the business in different ways.

outsourcing

is an arrangement in which one company provides services for another company that could also or usually be provided in house.

private sector

includes all businesses set up by individuals or groups of individuals

public sector

made up of organistaions that are accountable to central or local government. they are funded by the government and tend to supply public services rather than produce products

sole trader/proprietor (unincorporated)

an organisation which has a single owner and in which there is no legal distinction between the owner and the business

Partnership

a group of individuals working together in business with a view of making profit. Simple to establish, it consists of 2-20 people. Legally the partners are the business.

Sleeping partners

Contribute capital and share in profits and losses but do not participate in decision making.

Limited partnership

One partner has unlimited liability. Limited partners contributes capital , shares in profits and losses but do not participate in decision making. This type of firm has no legal identity so the departure of a member dissolves the partnership.

deed of partnership

a binding legal document which states the formal rights, powers and duties of partners in the business.

Limited company

A business organisation which has a separate legal identity from its owners. The liability of the members of the company is dependent on their investment in the company or promise.

Private limited companies

They are a separate legal entity from the owners, shareholders own the company and their liability is limited to the amount of investment, shares can only be sold privately with consent of other shareholders. Limited in name.

Public limited companies

Separate legal entity from owners, ownership by shareholders, liability limited to investment, plc, members of the public can buy shares and can be subject to a hostile takeover.

Franchising

An agreement between two parties which allows one party to market a product or service under the trademark of another business.

Social enterprise

A business with primarily social objectives which surpluses are principally reinvested in the business or in the community for that purpose rather than being driven to maximise profits for shareholders and owners.

Voluntary sector/3rd sector/civil society/not-for profit sector

The part of the economy which consists of non profit making organisations. They focus on making social change rather than profit they are independent from the government

Charity

An organisation with specific purposes that are defined in law to be charitable and exclusively for public benefit.

Market

Exists where people and businesses can buy and sell goods and services.

Consumer goods and services market

Households buy goods and services they desire, firms try to meet demand by selling them in store or online.

Capital goods market

An industrial market selling tangible goods required by businesses who supply the consumer goods market.

Labour market

Those seeking work can interact with employers that are competing to hire them.

Mass market

Broad non-targeted, non-segmented market.

Niche market

A business aims their product at a narrow or focused subset of a larger market sector.

Market size

Calculated by adding together all sales reported of all firms within the market place.

Market share

Proportion of sales a business or produce line has achieved expressed as a percentage of the total during a particular time period.

Location

Geographical territory where the enterprise trades/markets its services

Investment

Purchase of capital goods used to produce further wealth and expenditure by a business that is likely to yield return in the future.

Productivity

Measure of how efficient a firm is in providing its product or service.

Job production

Producing an order to meet individual customer needs. Each item may have a specific specification.

Batch production

Groups of items are produced together and move from one stage to the next together. Thisallows the product to be modified.

Flow production

Very large production of a standardised product where one unit of production is performed continually usually on a production line. Mass market products mostly.

Pip

Ensures that the organisation has the correct staff with the correct skills to enable it to perform effectively now and in the future. It takes into account expected demand and staff requirements but not behavior of staff. Is about the number of staff which will be required.

Succession planning

Process from identifying and developing internal people who have the capability of filling key management positions which will increase the availability of experienced and proficient employees which can take up vacant roles.

Organisational design

Process of shaping an organisations structure so that it meets its purpose And helps it deliver its objectives in the short and long term.

Business structure

The way a business is organised

Organisation chart

A diagram illustrating the structure of an organisation.

Chain Of command

The system of reporting relationshups within the organisation.

Span of control

The number of subordinates under a superior.

Hierarchy

Refers to the levels of management within an enterprise from the lowest to the highest.

Authoritarian management

Dictatorial style of management where workers are told how to do a task without participating in decision making.

Consultative style involves the 2 way communication where manager listens to and implements ideas gathered from feedback.

Democratic management

Paternalistic management

Form of authoritarian leadership consultation with staff but manager makes final decision

Laissez faire management

Employees carry out work without interference as they are trained and reliable.