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A good or service that is essential for living.
A good or service that people would like to have but is not necessary for living. People have unlimited wants.
There are unlimited wants but limited resources to produce the goods and services to satisfy wants. This creates scarcity.
Factors of production
Resources needed to produce goods and services. There are 4 factors of production (land, labour, capital, enterprise) and they are limited in supply.
The lack of sufficient products to fulfil the total wants of the population.
The next best alternative given up by choosing another item.
When people and businesses concentrate on what they are best at.
Division of labour
When the production process is split up into different tasks and each worker performs one of these tasks. It is a form of specialisation.
Combines factors of production to make products (goods and services) which satisfy people's wants.
It is the difference between the selling price of a product and the cost of bought in materials and components.
Extracts and uses natural resources to produce raw materials used by other businesses.
Manufactures goods using raw materials provided by Primary Sector.
Provides services to customers and other sectors of industry.
There is a decline in the importance of the secondary, manufacturing sector of industry in a country.
Has both a private sector and a public sector.
Businesses not owned by government. Make their own decision about selling price. Aim to run profitably. Some government control.
Government-owned, controlled businesses and organisations. Decide which price to charge consumers. Different aim from Private Sector.
Money invested into business by owners.
A person who organises, operates and takes the risk for a new business venture.
Document containing the business objectives and important details about the operations, finance and owners of the new businesses.
Total value of capital used in the business.
When a business expands its existing operations.
When a business takes over or merges with another business.
When two businesses agree to join their firms together to make one business.
One business buys out the owners of another business which then becomes part of the 'predator' business
When one company merges with or takes over another in the same industry in the same stage of production.
When one company merges with or takes over another in the same industry but at a different stage of production.
When one company merges with or takes over another in a completely different industry.
Business owned by one person
The liability of shareholders in a company is only limited to the amount they invested.
The owners of a business can be held responsible for the debts of the business they own. Their liability is not limited to the investment they make.
A form of business in which two or more people agree to jointly own a business.
The written legal agreement between partners.
One that does not have a separate legal entity. Sole traders and partnerships are unincorporated businesses.
Companies that have a separate legal status from their owners.
Owners of a limited company. They buy shares which represent part ownership of a company.
Annual General Meeting
A legal requirement for all companies. Shareholders may attend and vote on who they want to be on the Board of Directors for the coming year.
Payments made to shareholders from the profit (after tax) of a company. They are the return to shareholders for their investment in the company.
Business based upon the use of brand names and trading methods of an existing successful business. Franchisees use franchisor's ideas, names.
Aims and targets that a business works towards.
Total income (sales revenue) - total costs
Proportion of total market sales achieved by one business.
Has social objectives as well as an aim to make profit to reinvest back into the business.
A person or group with a direct interest in the performance and activities of a business.