Key Words Flashcards
(31 cards)
Factors of production
Resources or materials businesses use to manufacture or produce it’s goods or services.
Land-labour-capital-enterprise
Land
Refers to all natural resources involved in production- physical land, minerals ,oils
Labour
Include inputs into productions done by humans- physical or mental
Capital
Man made resourced in production- machines, buildings
Enterprise
Skills of the people managing or establishing the business resources to meet demands of customers.
Opportunity cost
What is given up as a consequence of making a different decision
Objectives of entrepreneurs
Have an interest or an idea
Find a gap in the market
Being there own boss
Characteristics of entrepreneurs
Willingness to take risks
Hardworking and committed
Innovative
Organised
Business sectors
Primary
Secondary
Tertiary
Primary
First stage of production. Extracting raw materials. Farming , agriculture or forestry
Second sector
Converts primary sectors raw material Into products adding value. Car manufacturing, construction
Tertiary sector
Businesses that supply service. Education, healthcare
Buisness environment
Refers to external factors of the business that have an effect on it.
Technological, economic,legal change and environmental expectations.
Technological change
Technology has led to many new products and new methods of productions
Economic change
Interest rates - affect cost of borrowing money
Exchange rates - influence price of goods brought from overseas
Inflation - price increasing
GDP- value of incomes earned in the economy
Legal change
Legal changes could affect the way the product must be produced or sold
Environmental expectations
Businesses are under pressure to use environmentally friendly ways to produce there products and might use sustainable supplies instead.
Sole trader
Owns and manages a business on there own.
Adv and dis-adv of sole trade
Simple quick and easy to set up Unlimited liability
Keeps all profit Can be hard work and stressful
Control over decisions Difficult to raise money to start the business
Partnership
Formed when tow to 20 people set up a business together.
Adv and dis-adv of partnership
Wider range of skills available Profits must be shared
Potentially more access to finance Disagreements are common
Can cover for each other on holidays Most have unlimited liability
Private limited company
Existing shareholders in a LTD can control who is able to control and buy shares in there company. They are re usually small and owned by families.
Public limited companies
Anyone can buy shares in a PLC. Tend to be larger. Most advertise and share stock on stock exchange
Qualities of a private limited company
Limited liability
Separate legal identity
Able to hire experts to mange it
Higher status
