Unit 1: Key Words

Unit 1: Key Words

Need- a good or services essential for living Want- good or services which people would like to have, but is not essential for living Economic problem- unlimited wants but limited resources to produce services. This creates scarcity Factors of production- ed to produce goods and services Scarcity- lack of products to fulfill the total wants of population Opportunity cost- is the next best alternative given up by choosing another item Specialisation- people concentrate on what they are best Division of labour- production process which splits into different tasks and each worker does one task. Form of specialisation Businesses- combine factors of production to satisfy peoples wants, making products Added value- difference between the selling price and the cost of bought in materials and components Primary sector- uses natural resources form the art 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 Stakeholders- person or group with direct interest in the performance and activities of a business De-industalisation- decline in the importance of the secondary sector or industry in a country  Mixed economy- a country which has a private and a public sector Free market economy- an economy where all business activities are run by the private sector without government interference Planned/controlled economy- an economy where all business activities are run by the government without a private sector  Capital- money invested in a business by the owners Entrepreneur- person who organizes, operates and takes the risk for a new business venture Business plan- document containing the business objectives and important details about the finance, owners... Capital employed- total value of capital invested in a  business Internal growth- business expands in its existing operations External growth- take over or merge with another business Integration- when one firm is integrated into another one Merger- owners of 2 businesses agrees to join their firms together to create on business Takeover acquisition- a business buys the owners of another business which then becomes part of  Horizontal integration- when one firm merges with another or takes over a business of the same industry at the same stage of production Vertical integration- when one firm merges with another in the same industry but at different stage of production Conglomerate integration- when it merges or takes over another firm from a different industry. This is also known as diversification Sole trader- a business with unlimited liability and is owned by only one person Partnership- two or more people agree to jointly own a business and it has unlimited liability Partnership agreement- the written legal document agreement between business partners Limited liability- liability of shareholders in a company is only limited to the amount they invested Unlimited liability- if the business fails the owners have to pay debts with their savings. Their liability isn't limited to the amount they have invested Unincorporated business- doesn't have a separate legal identity. Sole traders and partnerships are unincorporated businesses Incorporated business- have separate legal status from their owners  Shareholders- owners of a limited company, they buy shares which represents part of the ownership of a company Annual General meeting- legal requirements for all companies Dividends- payments made to shareholders form profits of a company Franchise- a business based on an existing business. They use their logos, branding names and methods of an successful business Business objectives- aims or targets that the business work towards Profit- total income of a business (sales revenue) less total costs Market share- the proportion of total market sales achieved by one business Social enterprise- social objectives as well as an aim to make profit to reinvest back in the business Stakeholders- person or group of people with a direct interest in the performance and activities of a business