1. Understanding business activity Flashcards
Specialisation
Occurs when people and businesses concentrate on what they are best at
Division of labour
When the production process is split into different tasks and each worker performs one of these tasks
Primary Sector
Uses natural resources of Earth to produce raw materials used by other businesses
Secondary sector
Provides services to consumers and the other sectors of industry
Entrepreneur
A person who organises, operates and takes the risk for a new business venture
SME
Small medium sized enterprises
External growth
When a business takes over or merges with another business (often called integration)
Horizontal integration
When one business merges with or takes over another one in the same industry at the same stage of production
Forward and Backward vertical integration
When one business merges with or takes over another one in the same industry but at a different stage. Forward is a brewery buys a pub and backwards is pub buys a brewery
Conglomerate integration
Two businesses that appear to have nothing in common join, there is often a link somewhere.
Internal growth
Occurs when a business expands its existing operations
Partnership
A form of business when two or more people agree to jointly own a business
Partnership Agreement
The written and legal agreement between business partners. It means all partners are equal
Sole trader
Someone who owns a business alone, but can hire employees
Unlimited liability
The owners of a business can be held responsible for the debts of their business
