Needs
Goods or services we need to survive
Opportunity Cost
the potential benefits a business misses out on when choosing one alternative over another
Purpose of Business Activity
Business satisfies peoples (consumers) wants
Scarcity
Not enough resources, goods or services to provide for peoples’ (consumers) unlimited wants
Specialisation
People in business focus on what they do best
Value Added
Selling price - cost of bought-in materials
Wants
Good or service people want but aren’t essential for survival
Primary Sector
Using natural resources to make raw materials for business Private Sector, Part of the economy owned and controlled by private individuals Secondary Sector, Manufacturing goods from raw materials
Private Sector
Part of the economy owned and controlled by private individuals
Secondary Sector
Manufacturing goods from raw materials
Tertiary Sector
A business that provides services to consumers and other businesses
Business Plan
A document setting out a businesses objectives and how it will achieve them
Entrepreneur
Someone who invests capital, takes a risk and starts up and operates a new business venture
External Growth
Business expansion, taking over or merging with another business
Grant
Capital given by a government to a business to assist with start-up costs, innovation or business growth
Internal Growth
Business expansion without taking over or merging with another business (organic growth)
Franchise
Buying the license to use another companies logo and sell their products
Incorporated Business
Business is a separate legal entity - separation between owners and the company
Joint Venture
Two companies share capital and expertise on a project they share risks and profits
Limited Liability
Owners responsibility for company debts restricted to what they have invested in the business
Partnership
Two or more people join to set up a business. Shared decision making, capital invested and risk
Private Limited Company
Incorporated business with shares sold to friends and family
Public Corporation
Government-owned organisation set up to provide service to the public Public Limited Company, Incorporated business with shares sold to the general public, limited liability
Public Limited Company
Incorporated business with shares sold to the general public, limited liability
Public Sector
Part of the economy owned and controlled by the government
Sole Trader
A business owned by one person who is responsible for all decisions, capital invested and risk
Unincorporated Business
No separation between the company and the owners in law
Business Objectives
Aims or targets a business sets out to achieve
External Stakeholders
Individual or group outside the business impacted by the business activity (customers, suppliers, government, local community)
Internal Stakeholders
Individual or group inside the business impacted by the business activity (owners/shareholders, managers, employees)
Social Enterprise
A private enterprise which uses profits to pursue environmental or social objectives
Unlimited Liability
Owners personal assets may be taken to pay for debts of the company