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| Question | Answer |
| //BUSINESS ACTIVITY // | //BUSINESS ACTIVITY // |
| Need | good/ service essential for living |
| want | good/service that people would like to have, but which is not essential for living |
| economic problem | unlimited wants but limited resources- creates scarcity |
| scarcity | lack of sufficient products to satisfy total wants of population |
| opportunity cost | next best item given up by choosing another |
| factor of production | resources needed to produce goods & services - land, labour, capital & enterprise |
| business | an organization that combines factors of production to make goods & services to satisfy peoples was & needs |
| specialization | people and business focus on what they are best at |
| division of labour | production is split into separate tasks and each worker specializes in one task |
| added value | the difference between a products selling price and the cost of bought in materials |
| //CLASSIFICATION OF BUSINESS// | //CLASSIFICATION OF BUSINESS// |
| primary sector | businesses that extract and use natural resources to produce raw materials |
| secondary sector | businesses that manufacture goods using the raw materials given by the primary sector |
| tertiary sector | businesses that provide services to consumers and other firms |
| private sector | businesses owned by people, not the government/ state |
| public sector | businesses owned by the government/ state |
| privatisation | the sale of public sector businesses to the private sector |
| //ENTERPRISE, BUSINESS GROWTH & SIZE// | //ENTERPRISE, BUSINESS GROWTH & SIZE// |
| entrepreneur | someone who organizes, operates & takes the risk for a new business venture |
| business plan | objectives & details of of the operations, finance, & owners of a new business |
| capital employed | total value of capital used in a business |
| internal growth | the business expands its existing operations. e.g retailer opening more shops |
| external growth | business expands by merging with or taking over another business |
| takeover | a business buys out the owners of another business |
| merger | owners of businesses agree to join their firms together to form 1 business |
| horizontal integration | business integrates with another in the same industry at the same stage of production- such as 2 fashion shops |
| vertical integration | business integrates with another in the same industry but a different stage of production- towards suppliers is backward vertical integration and towards the market / customer is vertical integration |
| conglomerate integration ( diversification) | business integrates with another but in a different industry- such as insurance company merging with a food processing business |
| //Types of business organization// | //Types of business organization// |
| sole trader | a business owned by 1 person |
| partnership | business is jointly owned by 2 or more people |
| limited liability | Liability of owners/ shareholders is limited to the amount invested. Personal possessions are not at risk |
| incorporated business | business with separate legal identity from its owners, e.g. limited company |
| Unincorporated business | business without separate legal identity from its owners, eg. a sole trader/ partnership |
| private limited company | a business owned by shareholders but cannot sell shares to the public |
| public limited company | business owned by shareholders but it can sell shares to the public and its shares are tradable on the stock exchange |
| shareholders | owners of a limited company |
| dividends | payments made to shareholders from the profits ( after tax) of a company |
| franchise | a business that uses, under license, brand name, logo, and trading methods of an existing business. The franchisor sell the franchise to the franchisee |
| joint venture | 2 or more businesses start a new project together sharing capital, risks, and profit |
| Public corporation | A business, in the public sector, that is owned and controlled by the state |
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