business

• Economies of scale


  When the cost per unit of a product falls as a business expands
• Market share

  The portion of a business's sales within its market
• Internal diversification

  Where a business grows by selling more of its own products
• External growth

  Where a business grows by joining with another business
• Turnover

  Measured by the price, multiplied by the number of units sold
• Market Capitalisation

  Measures the business by the value of its shares
• Franchising

  Paying a franchise owner to open an established business
• Franchisor

  Sells the franchise to the franchisee
• Franchisee

  Buys the franchise from the franchisor
• E-commerce

  Involves trading online
• Outsourcing

  When a business uses another business to produce some or all of its products or to provide a service
• Merger

  When two or more businesses join together to form a new business
• Takeover/acquisition


  When one business gains control of another
• Business environment

  All of the outside factors that effect a business such as economic changes, changes in law etc.
• Competitive environment

  How businesses compete with others to attract and keep customers
• Business Sectors

  • Primary Sector
  • Secondary Sector
  • Tertiary Sector
• Primary Sector

  The first stage of production such as fishing, farming or all exploration
• Secondary Sector


  Second stage using the primary resources and turning them into products - manufacturing
• Tertiary Sector

  Organisations that provide the service such as estate agent
• Private Sector

  Businesses that are owned by private individuals to make a profit
• Public Sector

  Organisations Owned by the government such as the NHS
• Horizontal Integration

  This is where a business joins with another at the same stage of the production process.
• Vertical Integration


  This is where a business joins with another at a different stage of the same production process.
• Backward Vertical Integration

  This is where the business joins with its suppliers.
• Forward Vertical Integration


  This is where a business joins with its distributors.
• Conglomerate Integration

  This is where a business joins with another in a different type of production process.
• PLC


  A public limited company
• LTD


  A private limited company
• Shareholders


  People who have bought shares in a limited company
• Dividend


  Payment made to shareholders
• Limited Liability


  A shareholder's responsibility for the debts of a business is limited to the amount he/she has invested in the purchase of shares
• Itds


  Tend to sell shares to friends and family
• plcs


  Sell shares to the general public on the stock exchange
• why make a business plan?

  -It will be needed by banks before lending money

  -It shows how the business will be run

  -It shows the business has been researched and thought through

  -It shows opportunities and problems
• Sole Trader


  Businesses owned by one person who has unlimited liability. Other people can be employed but there is only one owner.
• Advantages of being a Sole Trader

  • Profit can keep all profit/ no need to share
  • Making decisions→without consulting others/will be speedy
  • Own boss free to choose / any example
  • Independence → can work at own pace
  • Easy to set up→ few formalities
  • cheaper to set up
  • Have a job
• Disadvantages of being a Sole Trader

  • Unlimited liability responsible for debts of the business
  • More responsibility → relies heavily on their own ability to make decisions → may work long hours and have limited holidays, as there is no one to cover them
  • Limited sources of resources
• Unlimited Liability


  Means that the owners of a business are responsible for all of the debts of a business. Personal belongings may need to be given up to pay the debts of the business.
• Public Sector


  Organisations owned and controlled by the government
• Aims & Objectives of Public Sector

  • Provide a service
  • Improve accessibility to others
  • Avoid wasteful duplication of resources