The Purpose and Nature of Business Activity

Vocabulary flashcards based on the introductory concepts of business activity, production factors, objectives, sectors, and stakeholders as outlined in the lecture notes.

Business

An organisation that produces goods or services to satisfy customer needs and wants, usually to make profit.

Goods

Physical products that people can touch, such as clothes, food, and phones.

Services

Non-physical activities provided to customers, such as transport, banking, and education.

Needs

Things necessary for survival, including water, food, and shelter.

Wants

Things people would like to have but do not need to survive, such as expensive trainers, gaming consoles, and jewellery.

Scarcity

The result of limited resources combined with unlimited human wants.

Opportunity Cost

The next best alternative given up when a choice is made.

Factors of Production

The resources used to produce goods and services, classified into Land, Labour, Capital, and Enterprise.

Land

All natural resources used in production, such as forests, oil, farmland, and water; its reward is rent.

Labour

Human effort used in production, such as factory workers, teachers, and managers; its reward is wages or salary.

Capital

Man-made resources used to produce goods and services, such as machinery, computers, buildings, and tools; its reward is interest.

Enterprise

Organising the other factors of production and taking risks.

Entrepreneur

A person who starts and runs a business, usually characterized as risk-takers who are creative, hard-working, and confident.

Business Objectives

The goals a business wants to achieve, such as survival, profit, growth, market share, and customer satisfaction.

Survival

The main objective of new businesses, often achieved by keeping prices low, reducing costs, and improving cash flow.

Profit

The difference between revenue and costs, calculated as: $\text{Profit} = \text{Revenue} - \text{Costs}$

Market Share

The percentage of total sales in a market, calculated as: $\text{Market Share} = \frac{\text{Business Sales}}{\text{Total Market Sales}} \times 100$

Added Value

The difference between the selling price of a product and the cost of bought-in materials/components, calculated as: $\text{Added Value} = \text{Selling Price} - \text{Cost of Inputs}$

Specialisation

Occurs when workers perform one specific task to increase efficiency and skill.

Division of Labour

Breaking production into smaller tasks to make production faster and training easier.

Primary Sector

The sector involving the extraction of natural resources, such as farming, fishing, and mining.

Secondary Sector

The sector involving manufacturing and construction, such as car factories and clothing manufacturers.

Tertiary Sector

The sector providing services, such as banks, schools, shops, and transport companies.

Private Sector

Businesses owned by individuals or companies with the main aim of making profit.

Public Sector

Businesses and organisations owned by the government with the aim of providing services for citizens.

Stakeholders

People or groups affected by business activities, such as customers, employees, owners, suppliers, government, and the local community.