Business Concepts Review

These flashcards cover key concepts in business, including definitions and examples, tailored for exam review.

What is a business?

An organization that exists to provide goods and services to consumers that need or want them.

What are goods?

Tangible items that are made, bought, and sold.

What are services?

Activities that other businesses or people do for you.

What is the difference between goods and services?

Goods are tangible, whereas services are not.

What are the factors of production?

Land, labor, enterprise, and capital.

Define added value.

The difference between the selling price and the cost of all the materials and resources needed to make the product.

What is opportunity cost?

The next best alternative foregone when making a choice.

What is specialization?

When people or businesses concentrate on what they are best at.

Define division of labor.

Each person in the business process performs just one action.

What are the three sectors of production?

Primary sector, secondary sector, and tertiary sector.

What is de-industrialization?

A decrease in the secondary industry so that it is no longer the main economic sector in the country.

What is a mixed economy?

An economy that has both public and private sectors.

What is privatization?

Selling a public sector business to a private company.

What is an entrepreneur?

Someone who has an idea for a business, starts it up, and accepts the risks.

Define a business plan.

A document outlining the objectives, strategies, and financial projections of a business.

What are the advantages of private sector businesses?

Aim to make a profit, operate efficiently to reduce costs, and create competition.

What are the disadvantages of private businesses?

Price fixing, monopolies, and limited access to essential goods and services.

What are the advantages and disadvantages of public businesses?

Advantages include preventing monopolies and providing universal access; disadvantages include high costs and inefficiency.

Define cash flow.

The movement of cash into and out of a business.

What is profit?

Surplus after total costs are deducted from total revenue.

What is the purpose of a cash flow forecast?

To estimate future cash inflows and outflows to ensure the business can meet its liabilities.

Define short-term finance.

Working capital needed by a business for day-to-day operations, repaid within one year.

How does a bank overdraft work?

It allows the business to withdraw more money than is available in its bank account.

What are variable costs?

Costs that change in relation to the production output of a business.

What is the role of the finance department in a business?

To record financial transactions, produce financial reports, and forecast cash flows.

Describe the different leadership styles: autocratic, democratic, and laissez-faire.

Autocratic: top-down decision-making; Democratic: shared decision-making; Laissez-faire: minimal leader intervention.