Business 1.1

Business

An organization that combines resources to produce goods and/or services to satisfy the needs and wants of customers.

Needs

Essential goods or services necessary for survival and basic well-being.

Wants

Goods or services that people desire but are not essential for survival.

Goods

Physical products that satisfy consumer needs and wants.

Services

Non-physical products provided to satisfy consumer needs and wants.

Added value

The difference between the selling price of a product and the cost of the inputs used to produce it.

Opportunity cost

The value of the next best alternative forgone when a choice is made.

Specialization

When an individual, business or economy concentrates on producing a particular good, service or task.

Division of labour

The division of production into separate tasks, with workers specializing in particular tasks.

Primary sector

The sector of the economy involved in extracting raw materials from natural resources.

Secondary sector

The sector of the economy involved in manufacturing and processing raw materials into goods.

Tertiary sector

The sector of the economy that provides services.

Quaternary sector

The sector of the economy involved in knowledge-based activities such as research and information technology.

Entrepreneurship

The process of identifying a business opportunity, organizing resources and taking risks to establish and operate a business.

Entrepreneur

A person who identifies a business opportunity, organizes resources, takes risks and makes decisions to establish and operate a business.

Start-up

A newly established business.

Business opportunity

A situation in which an entrepreneur identifies a potential market need that could be satisfied by a business.

Risk

The possibility that an actual outcome will differ from the expected outcome.

Uncertainty

A situation in which future outcomes cannot be predicted with certainty because of insufficient information.

Innovation

The introduction of new or significantly improved products, processes or methods.

Start-up capital

The finance required to establish and begin operating a business.

Factors of Production

Land, Labour, Capital and Entrepreneurship