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business unit 1
| Question | Answer |
|---|---|
| Define ‘business activity’ | The process of producing goods and services to satisfy consumer demand. |
| Define a ‘want’ | A good or service which people would like, but is not essential for living. |
| Define a ‘need’ | A good or service which is essential to living. |
| What is the difference between the public and the private sector? | The private sector is controlled by individuals for profit whereas the public sector is controlled by government |
| Name the four factors of production | Land, labour, capital, enterprise |
| What is an opportunity cost? | The benefit that could have been gained from an alternative use of the same resource. |
| What is specialisation? | People and businesses do what they are best at |
| What is division of labour? | Production that is divided into separate tasks |
| What is a consumer good? | Products that are tangible and sold to the final consumer. |
| Define a consumer service | Non-tangible goods such as insurance and transport |
| What is ‘capital goods’? | Goods used by other businesses such as machinery and delivery vehicles |
| 3 classifications of businesses? | Primary, secondary, tertiary |
| Horizontal integration | Joining a business from the same market |
| Backward vertical integration | Integrate with a supplier |
| Internal growth | Growing your existing business using your own resources |
| Forward vertical integration | Integrate with a retailer |
| Conglomerate integration | Two random businesses integrate |
| Profits | Revenue left over after business cost has been made |
| Market share | Percent of total sales in an industry by a specific company |
| Economies of scale | As a business grows its output, its unit cost of production reduces. |
| Market power | The company’s first to innovate which enables them to set prices. |
| Risk of takeover | When a company acquires control over a target company |
| Brand recognition | Percentage of people who can recognize the brand |
| Market size | The number of sales the entire market has |
| Capital | Money/anything owned that is bought by money |
| Market domination | One company is so large in a market, they have the most customers and the power over other businesses. |
| Stakeholders | An individual or group which has an interest in a business because they are affected by its activities and decisions. |
| Entrepreneur | An individual who takes the financial risk of starting and managing a new business |
| What are ways to measure business size? | Value of output, number of employees, and market share |
| Public limited company | Often a large company owned by shareholders who have limited liability |
| Private limited company | Often a medium-sized company owned by shareholders who have limited liability |
| Joint venture | Two or more businesses agree to work together on a project and set up a separate business for this process |
| Sole trader | A business that is owned and controlled by one person who takes all of the risks and receives all of the profit |
| What factors can cause a business to fail? | Competition, economic influences, poor planning, poor cash-flow management, poor management skills, lack of objectives, failure to invest in new technologies, lack of finance, poor choice of location, poor marketing |
| Chain of production |
Created by:
jsemy
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