Needs

Goods or services we need to survive

Opportunity Cost

the potential benefits a business misses out on when choosing one alternative over another

Purpose of Business Activity

Business satisfies peoples (consumers) wants

Scarcity

Not enough resources, goods or services to provide for peoples’ (consumers) unlimited wants

Specialisation

People in business focus on what they do best

Value Added

Selling price - cost of bought-in materials

Wants

Good or service people want but aren’t essential for survival

Primary Sector

Using natural resources to make raw materials for business Private Sector, Part of the economy owned and controlled by private individuals Secondary Sector, Manufacturing goods from raw materials

Private Sector

Part of the economy owned and controlled by private individuals

Secondary Sector

Manufacturing goods from raw materials

Tertiary Sector

A business that provides services to consumers and other businesses

Business Plan

A document setting out a businesses objectives and how it will achieve them

Entrepreneur

Someone who invests capital, takes a risk and starts up and operates a new business venture

External Growth

Business expansion, taking over or merging with another business

Grant

Capital given by a government to a business to assist with start-up costs, innovation or business growth

Internal Growth

Business expansion without taking over or merging with another business (organic growth)

Franchise

Buying the license to use another companies logo and sell their products

Incorporated Business

Business is a separate legal entity - separation between owners and the company

Joint Venture

Two companies share capital and expertise on a project they share risks and profits

Limited Liability

Owners responsibility for company debts restricted to what they have invested in the business

Partnership

Two or more people join to set up a business. Shared decision making, capital invested and risk

Private Limited Company

Incorporated business with shares sold to friends and family

Public Corporation

Government-owned organisation set up to provide service to the public Public Limited Company, Incorporated business with shares sold to the general public, limited liability

Public Limited Company

Incorporated business with shares sold to the general public, limited liability

Public Sector

Part of the economy owned and controlled by the government

Sole Trader

A business owned by one person who is responsible for all decisions, capital invested and risk

Unincorporated Business

No separation between the company and the owners in law

Business Objectives

Aims or targets a business sets out to achieve

External Stakeholders

Individual or group outside the business impacted by the business activity (customers, suppliers, government, local community)

Internal Stakeholders

Individual or group inside the business impacted by the business activity (owners/shareholders, managers, employees)

Social Enterprise

A private enterprise which uses profits to pursue environmental or social objectives

Unlimited Liability

Owners personal assets may be taken to pay for debts of the company