Business Terminology.docx

+-----------------------------------+-----------------------------------+ | | Definition | +===================================+===================================+ | Need | A good or service essential for | |...

+-----------------------------------+-----------------------------------+ | | 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 | | (Specialization) | each worker performs one of these | | | tasks | +-----------------------------------+-----------------------------------+ | 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 | +-----------------------------------+-----------------------------------+ | | | +-----------------------------------+-----------------------------------+ | | | +-----------------------------------+-----------------------------------+ | | | +-----------------------------------+-----------------------------------+ | 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 Integration | When one firm merges with or | | | takes a firm in a completely | | | different industry | +-----------------------------------+-----------------------------------+