Business Activity
What are the factors of production?
Land, labor, capital, enterprise
What is the primary sector?
Business secstor that extracts and uses the natural resources from the earth. e.g. Fishing, farming
What is unlimited liability?
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 an entrepreneur?
A person who organizes a business and takes risk for profit
What is a stakeholder?
A person or group with a direct interest in the performance and activities of a business.
What is opportunty cost?
The next best alternative that has been given up in order to achieve something else
What is the tertiary sector?
Business sector that provides service to consumers and other sectors of the industry e.g. Restaurants, car showroom, travel agent
What is limited liability?
Term for when a business fails, the owners only lose what they invested
What is a business plan?
A document with important information about a business e.g. Business objectives, operations, finance, owners
Name 3 internal stakeholders
Owners, managers, workers etc.
What is specialisation?
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 the private sector?
Businesses sector not owned by the government but by private individuals. (Goal = Profit)
What is a partnership?
An unincorporated, unlimited liability business with two or more owners
What is horizontal integration?
When firms in the same industry at the same stage of production merges. e.g. 2 Bakeries merging to form a larger business
Name 3 examples of external stakeholders
customers, government, competitors
What is division of labor?
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 the secondary sector?
Sector where manufacture goods using raw materials from primary sector. e.g. Car manufacturers and other factories
What is a public limited company?
An organization with limited liability and shares can be sold to the public. Great for large companies
What is vertical integration?
When business expands by merging with another business in another stage of production. There are 2 types. Backwards and forwards.
What is stakeholder conflict?
The term for when different stakeholders have different business objectives
What is the added value?
The difference between the selling price of a product and the cost to produce it
What is the public sector?
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 a joint venture?
When 2 or more businesses start a new project together. Both costs and profits can be shared together.
What is a conglomerate merger?
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 social enterprise?
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