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

	Created by Carmen Diaz over 6 years ago

3º de ESO Business (Topic 1: Understanding business activity) Note on Unit 1: Key Words, created by Carmen Diaz on 02/05/2018.