Business Terminology PDF

Definition Need A good or service essential for living Want A good or service which people would like to have but which is not essential for living. These are unlimited Economic Problem Results from their being unlimited wants b...

Definition Need A good or service essential for living Want A good or service which people would like to have but which is not essential for living. These are unlimited Economic Problem Results from their being unlimited wants but limited resources to provide the goods and services to satisfy these wants. This creates scarcity Factors of Production The resources need to produce goods or services. There are four and are in limited supply Scarcity The lack of sufficient products to satisfy the total wants of the population Opportunity Cost The next best alternative given up by choosing another item Division of Labor When the production process is split up into different tasks and each worker performs one of these tasks (Specialization) Businesses Combine factors of production to make products which satisfy the people’s wants Business Objectives The aims or targets that a business works towards Value Added The difference between the selling price of a product or service and the cost of bought in materials and components Stakeholder Any person or group with direct interest in the performance and activities of a business Primary Sector Extracts and uses the natural resources of the Earth Secondary Sector Manufactures goods using the raw materials provided by the primary sector Tertiary Sector Provides services to consumers and the other sectors of industry De-industrialization When there is a decline in the importance of the secondary sector industry in a country Liquidity Liquidity is the ability of a business to pay its short term debts Mixed Economy Has both a public and a private sector Capital The money invested into a business by the owners Profit The surplus after total costs have been subtracted from the sales revenue Internal Growth When a business expands its existing operations External Growth When a business takes over or merges with another business Merger When owners of two companies agree to join together their firms to make one business Takeover When one business buys out the owners of another business which then becomes part of the predator business Horizontal Integration When one firm merges with or takes over another one in the same industry at the same stage of production Vertical Integration When one firm merges with or takes over another one in the same industry but at different stages of production Conglomerate When one firm merges with or takes a firm in a completely Integration different industry