Business Terms 0.0 / 5 ? Business StudiesUnderstanding Business ActivityIGCSECIE Created by: HandelSpartanCreated on: 30-10-15 04:33 Need A good or service that is essential for living. 1 of 25 Want A good or service which people would like to have, but is not essential for living. (Wants can be limited) 2 of 25 Economic Problem Where there are unlimited wants but limited resources to produce the goods and services to satisfy those wants. This creates scarcity. 3 of 25 Factors of Production Resources need to produce goods and services. There are four factors of production (which are in limited supply): Land, Labour Capital and Enterprice. 4 of 25 Scarcity Lack of sufficient products to fulfil the total wants of the population. 5 of 25 Opportunity Cost The next best alternative given up by coosing something else. 6 of 25 Specialisation Occurs when people and businesses concentrate on what they are best at. 7 of 25 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. 8 of 25 Businesses Combination of the factors of production to make products (goods and services) which satisfy people's needs and wants. 9 of 25 Added Value The difference between the selling price of a product and the cost of bought in materials and components. 10 of 25 Primary Sector Primary Sector of industry extracts and uses the natural resources of the earth to produce raw materials used by other businesses. 11 of 25 Secondary Sector Secondary Sector of industry manufactures goods using the raw materials provided by the primary sector. 12 of 25 Tertiary Sector Tertiary Sector of industry provides services to consumers and the other sectors of industry. 13 of 25 De-industrialisation The decline in the importance of the secondary, manufacturing sector of industry in a country. 14 of 25 Mixed Economy Economy that has both a private sector and a public sector. 15 of 25 Capital The money invested into a business by owners. 16 of 25 Entrepreneur A person who organises, operates and takes a risk to combine the four factors of production for a new business venture. 17 of 25 Business Plan A document containing the business objectives and important details about the operations, finance and owners of the new business. 18 of 25 Capital Employed The total value of capital usined in the business. 19 of 25 Internal Growth Occurs when a business expands its existing operations. 20 of 25 External Growth When a business takes over or merges with another business. It is also often called integration. 21 of 25 Integration When one firm is integrated into another one. 22 of 25 Merger When the owners of two businesses agree to join their firms together to make one business. 23 of 25 Takeover or Acquisition When one business buys out the owners of another business which then becomes part of the 'predator' business (the firm which has taken it over). 24 of 25 Horizontal Integration When one firm merges withor takes over another one in the same industry at the same stage of production. 25 of 25
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