Business topic 1

• what are the three sectors

  primary, secondary, and territory
• primary sector

  produces raw materials, extracted from ground, can be grown, can be collected e.g. fishing
• secondary sector

  manufactures goods, turns raw materials into finished good
• tertiary sector

  provides services
• 4 factors of production

  land:

  earths natural resources

  Labour:

  work done by people who contribute to production process

  capital:

  equipment, factories, and schools

  Enterprise:

  people who create things from other 3 factors
• sole traders

  business with one owner
• partnerships

  business with 2-20 owners
• limited companies

  business that means money belongs to company, not owner

  means owners hame limited liability, if something goes wrong, company pays

  owned by share holders
• private limited company

  shares can only be sold if all share holders agree
• public limited company

  shares can be bought or sold by anyone
• stakeholder

  someone affected by the business
• profit and revenue

  profit=revenue-costs

  revenue= sales x price
• costs

  fixed costs don't vary e.g. rent

  variable costs are costs that increase e.g. material

  average unit costs is how much a product costs to make

  average unit cost= total costs/output
• location

  businesses need good location

  1. location of raw mats
  2. competition
  3. cost
  4. location of market
  5. labour supply
• internal expansion

  when a business grows by expanding its activites

  3 methods:

  1. e commerce
  2. new stores
  3. outsourcing ( paying another firm to carry out tasks but could do its self)
• franchising

  when a company expands by letting other firms sell the product
• external expansion

  when a business expands by working with other businesses

  2 methods

  1. merging with another business
  2. take-over, buying over 50% of shares in another business