Unit 1: Introduction to Business Management Flashcards
Primary Sector
The part of the economy engaged in extraction or production of raw materials
eg. fishing, mining
Secondary Sector
The part of the economy engaged in refining raw materials or the manufacture of finished goods
eg. automobiles, oil refining
Tertiary Sector
The part of the economy engaged in the delivery of services
eg. banking, accommodation
Quaternary Sector
The part of the economy engaged in the delivery of knowledge-based services
Involved in production, processing and transmission of information
eg. consulting, education
Private Sector
The part of the economy owned by individuals or groups
Primary focus is typically the maximisation of profit
Public Sector
The part of the economy owned by regional, local or national governments
Primary focus is aiding the local community
Providing essential services
Providing job positions
Ensuring safety and order
eg. public schools, government services
Sole Trader
Business owned by an individual
No legal distinction exists between the owner and the business
The owner has unlimited liability for the losses incurred by the business
The business ceases to exist when the owner dies
Partnership
Business owned by a group of individuals
No legal distinction exists between the owners and the business
The owners are collectively liable for 100% of the losses incurred by the business
Deed of partnership / Partnership agreement outlines the responsibilities and division of profits between partners
Privately Held Company
Business owned by a group of individuals
Articles of association make the business a separate legal entity from its owners
Owners have limited liability for losses incurred by the business and can only lose as much finance as they themselves invested
Number of shareholders is limited, as shares need to be offered by existing owners and cannot be purchased on the public stock exchange
Publicly Held Company
Business owned by a group of individuals
Articles of association make the business a separate legal entity
Owners have limited liability for losses incurred by the business and can only lose as much finance as they themselves invested
Stock market flotation and initial public offering needed to make a private limited company “go public”, after which shares of the business become available for purchase on the public stock exchange
Must disclose sensitive information, such as accounting, to the public
Social Enterprise
Business advancing a social purpose in a financially sustainable way
Share of the profits often reinvested into the business
Typically not reliant on philanthropy
For-Profit Social Enterprise
Social enterprise that earns a profit, which is sometimes distributed among the business’ owners
Primary aim is still to provide a social service
Cooperative
Business owned and operated by its members, sharing any profits
eg. financial, housing, workers, producer, consumer (often agriculture)
Non-Proft Social Enterprise
Social enterprise that generates little to no surpluses (instead of profit)
Primary aim is to provide a social service
Non-Governmental Organisation (NGO)
Non-profit organisations, often with a humanitarian purpose
Independent of the government, but may receive government grants or funding, working in cooperation with the government
Charity
Specific form of non-governmental organisation
Relies heavily on donations, but does not need to pay any tax
Vision Statement
A philosophy, vision or set of principles which steers the direction and behaviour of a business
Typically does not change
Provides internal stakeholders with motivation and gives external shareholders a sense of shared beliefs
Business Objectives
Articulated, measurable targets that must be met to achieve the business’ long-term aims. (Ideally: Specific, Measurable, Achievable, Relevant, Time-specific)
Mission Statement
States a company’s purpose and explains why the business exists
Outlines a business’ aims and values
Often changes when there is significant change in the internal- or external business environment
Provides internal stakeholders with a direct goal and gives external stakeholders insight into what the business is about
Strategic Objectives
Long-term goals of a business that indicate how the business intends to fulfil its mission
Often performance goals, eg. market share, profitability
Usually set by board of directors/executive management
Tactical Objectives
Medium- to short-term targets that, if consistently met, help the business achieve its strategic objectives
Usually set by executive/middle management
Operational Objectives
Short-term goals governing the day-to-day improvements of a business
If consistently met, help the business achieve its tactical objectives
Usually set by middle/floor management
Corporate Social Responsibility
View that businesses, rather than focusing purely on shareholder value, should contribute to the social, economic and environmental well-being of society
Stakeholder
A person or organisation that affects or is affected by a business
Often classified as internal or external
