Business flash cards

Frage	Antworten
Need	A good or service essential for living
Want	A good or service which people would like to have, but which is not essential for living. Wants are unlimited.
Economic problem	There exists unlimited wants but limited resources to produce the goods and services to satisfy those wants. The creates scarcity.
Factors of production	Resources needed to produce goods and services. There are four factors of production and they are in limited supply.
Scarcity	The lack of sufficient products to fulfil the total wants of the population.
Opportunity cost	The next best alternative given up by choosing another item.
Division of labour	When the production process is split up into different tasks and each worker performs one of these tasks. It is a form of specialisation.
Businesses	Combine factors of production to make goods and services which satisfy peoples wants.
Added value	The difference between the selling price of a product and the cost of bought in materials and components.
Primary sector	Extracts and uses the natural resources of the earth to produce raw materials used by other businesses
Secondary sector	Manufactures goods using the raw materials provided by the primary sector.
Tertiary sector	Provides services to consumers and the other sectors of industry.
De-industrialisation	Occurs when there is a decline in the importance of the secondary, manufacturing sector of industry in a country.
Mixed economy	Has both private and a public sector.
Capital	The money invested into a business by the owners.
Entrepreneur	A person who organises, operates, and takes the rick for a new business venture.
Business plan	Is a document containing the business objectives and important details about the operations, finance and owners of the new business.
Capital employed	The total value of capital used in the business.
Internal growth	Occurs when a business expands its existing owners operations.
External growth	when a business takes over or merges with another business.
Integration	As one firm is integrated into another one.
Merger	Is when the owners of two businesses agree to join their firms together to make one business.
Takeover/acquisition	Is when one businesses buys out the owners of another business when then becomes part of the 'predator' business.
Horizontal integration	Is when one firm merges with or takes over another one in the same industry at the same stage of production.
Vertical integration	Is when one firm merges with or takes over one in the same industry but at a different stage of production. It can be backwards or forwards.
Conglomerate Integration / Diversification	Is when one firm merges with or takes over a firm in a completely different industry.
Sole trader	Is a business owned by one person
Limited liability	Means that the liability of shareholders in a company is only limited to the amount
Unlimited liability	The owner of a business can be responsible for the debts of the business they own. Their liability is not limited to the investment they made in the business.
Partnership	A form of business in which two or more people agree to jointly own a business.
Partnership agreement	The written and legal agreement between business partners. It is not essential for partners to have such an agreement but it is always recommended.
Unincorporated business	Is one that does not have a separate legal identity. Sole traders and partnerships are unincorporated businesses.
Incorporated Businesses	Companies that have separate legal status from their owners.
Shareholders	are the owners of a limited company. They buy shares which represent part ownership of a company.
Annual general meeting	A legal requirement for all companies. Shareholders may attend and vote on who they want to be on the board of directors for the coming year.
Dividends	Are payments made to shareholders from the profits (after tax) of a company. They are the return to shareholders for investing in the company.
Joint venture	When two or more businesses start together sharing capital, risks and profits.
Franchise	A business based upon the use of the brand names, promotional logos and trading methods of an existing successful business. The franchisee buys the licence to operate this business from the franchisor.
Business objectives	The aims or targets that a business works towards.
Profit	Total income of a business - total costs
Market share	The proportion of total market sales achieved by one business.
Social enterprise	Has social objectives as well as an aim to make a profit to reinvest back into the business.
Stakeholder	Any person or group with a direct interest in the performance and activities of a business.

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