Studied by 24 people
Business activity
the process of producing goods and services to satisfy consumer demand
Need
a good or service which is essential to living
Want
a good or service which people would like, but is not essential for living
Economic problem
unlimited wants cannot be met because there are limited factors of production and creates scarcity
Factors of production
the resources needed to produce goods and services - land, labour, capital, enterprise
Scarcity
there are not enough goods and services to meet the wants of the population
Opportunity cost
the benefit that could have been gained from an alternative use of the same resource.
Specialisation
people and businesses concentrate on what they’re best at
Division of labour
production is divided into separate tasks and each employee does just one of those tasks
Consumer goods
products which are sold to the final consumer and can be seen and touched (e.g. computers and food)
Consumer services
non-tangible products such as insurance services, transport
Capital goods
physical goods, such as machinery and delivery vehicles, used by other businesses to help produce other goods and services
Primary sector
firms whose business activity involves the extraction of natural resources
Secondary sector
firms that process and manufacture goods from natural resources
Tertiary sector
firms that supply a service to consumers and other businesses
Chain of production
the production and supply of goods to the final consumer involves activities from primary, secondary and tertiary sector businesses
Mixed economy
an economy where the resources are owned and controlled by both the private and public sectors
Private sector
the part of the economy that is owned and controlled by individuals and companies for profit
Public sector
the part of the economy that is controlled by the state or government
Entrepreneur
an individual who has an idea for a new business and takes the financial risk of starting up and managing it
Business plan
a detailed written document outlining the purpose and aims of a business, which is often used to persuade lenders or investors to finance a business proposal.
Revenue
the amount a business earns from the sale of its products
Business start-up
a newly formed business that usually starts small, but some might grow to be much bigger
Sole trader
a business that is owned and controlled by just one person who takes all of the risks and recieves all of the profits
Start-up capital
the finance needed when first setting up a business
Partnership
a business formed by two or more people who will usually share responsibility for the day-to-day running of the business. Partners usually invest capital in the business and will share profits
Unincorporated business
a business that does not have legal identity separate for its owners. The owners have unlimited liability for business debts.
Unlimited liability
if an unincorporated business fails, then the owners might have to use their personal wealth to finance any business debts
Shareholder
a person or organisation who owns shares in a limited company
Private limited company
often a small to medium-sized company; owned by shareholders who have limited liability. The company can sell its shares to the general public.
Public limited company
often a large company; owned by shareholders who have limited liability. The company can sell its shares to the general public.
Ordinary shareholders
the owners of a limited company
Limited liability
the shareholders in a limited liability company which fails only risk losing the amount they have invested in the company, and not any of their personal wealth
Dividend
a payment, out of profits, to shareholders as a reward for their investment
Collateral
non-current assets offered as a security against borrowing
Franchise
a business system where entrepreneurs buy 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
Public corporation
a business organisation that is owned and controlled by the state
Objective
a statement of a specific target to be achieved, and should be SMART (specific, measurable, achievable + agreed, realistic + relevant, and time-specific)
Market share
the proportion of sales one business has in comparison to the sales of the entire market
Corporate social responsibility (CSR)
businesses taking responsibility for the impact their activities might have on society and the environment
Pressure group
a group of like-minded people that puts pressure on businesses and government to change their policies to reach a predetermined objective.
Social enterprise
a business with social objectives that reinvests most of its profits back into the business or into benefiting society at large
Stakeholder
an individual or group which has an interest in a business because they are affected by its activities and decisions
Note 
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