Economics IGCSE Term 1

Business

an organisation set up by a person or people to satisfy the needs and wants of consumers or customers

Need

Any good or service that people must have to be able to live

factors of production

the resources needed by a business to produce goods and services-land,labour,capital and enterprise

added value

the differences between the selling prices and the cost of bought-in materials

Primary sector

a business activity that involves the extraction or harvesting of natural resources

Secondary sector

businesses that turn raw materials into manufactured goods

Tertiary sector

involves providing service to customers or other businesses

private sector

the part of economy that is owned and controlled by individuals and organizations for profit

public sector

the part of economy that is owned and controlled by the state or central government

business plan

a detailed written document outlining the aims and objectives of a business and what it intends to do to achieves them

entrepreneur

an individual who has an idea for a new business and takes the financial risk of starting it

merger

when two businesses agrees to become a single, larger business

Takeover

When one business buys a controlling interest in another

Horizontal integration

When two businesses at the same stage of production join to become a single, larger business

Vertical integration

When two businesses at different stages of production within the same industry join to become a single, larger business

Sole trader

A business that is owned and controlled by just one person

Partnership

A business owned by two or more people

Shareholder 

A person or organization who buys shares in a limited company, which means they own part of the business

Limited liability

Owners of a company only responsible for the debts of the business up to the amount they have invested in the company

Private limited company

Business that is owned by shareholders that can only sell its share to family and friends

Public limited company

Business that is owned by shareholders that can sell its share to the general public

Franchise

A business agreement where one person or business buys the right to use the name, logo and product of an existing business

Joint venture

Two or more businesses agree to work together on a project and set up a separate business for this purpose 

Social enterprise 

A business with social objectives that reinvests most of its profit back into the business or into benefiting society at large