Business Activity
Land, labor, capital, enterprise
What are the factors of production?
Business secstor that extracts and uses the natural resources from the earth. e.g. Fishing, farming
What is the primary sector?
Term for when owners are held responsible for the business. If the business goes in debt, the owner needs to pay back with their own money
What is unlimited liability?
A person who organizes a business and takes risk for profit
What is an entrepreneur?
A person or group with a direct interest in the performance and activities of a business.
What is a stakeholder?
The next best alternative that has been given up in order to achieve something else
What is opportunty cost?
Business sector that provides service to consumers and other sectors of the industry e.g. Restaurants, car showroom, travel agent
What is the tertiary sector?
Term for when a business fails, the owners only lose what they invested
What is limited liability?
A document with important information about a business e.g. Business objectives, operations, finance, owners
What is a business plan?
These are internal stakeholers (name 3)
Owners, managers, workers etc.
When people and businesses concentrate on what they are best at, eg workers at a factory working at different stages of the production process
What is specialisation?
Businesses sector not owned by the government but by private individuals. (Goal = Profit)
What is the private sector?
An unincorporated, unlimited liability business with two or more owners
What is a partnership?
When firms in the same industry at the same stage of production merges. e.g. 2 Bakeries merging to form a larger business
What is horizontal integration?
These are examples of external stakeholders (name 3)
What are customers, government, competitors
When the production process has been divided into different tasks for a specialised worker to work on. e.g. painting cars at a car factory.
What is division of labor?
Sector where manufacture goods using raw materials from primary sector. e.g. Car manufacturers and other factories
What is the secondary sector?
An organization with limited liability and shares can be sold to the public. Great for large companies
What is a public limited company?
When business expands by merging with another business in another stage of production. There are 2 types. Backwards and forwards.
What is vertical integration?
The term for when different stakeholders have different business objectives
What is stakeholder conflict?
The difference between the selling price of a product and the cost to produce it
What is the added value?
Sector where government own a control in the business. Quite often the main goal is not non-profit but rather, provide a service for all citizens (e.g. Electricity, police, public transit)
What is the public sector?
When 2 or more businesses start a new project together. Both costs and profits can be shared together.
What is a joint venture?
When two businesses in a completely different industry combine to form a new business. e.g. Insurance company buys an advertising agency
What is a conglomerate merger?
Organizations operated by private individuals – they are in the private sector – but they do not just have profit as an objective. The people operating the organization often set three objectives for their business: social, enviornmental and financial
What is a social enterprise?