Definitions

• Consumer services


  services sold to the end user
• Capital goods


  The physical goods used by the industry to aid in production of other goods and services, such as, machines and commercial vehicles
• Adding value

  Increasing the difference between the cost of purchasing bought-in materials and the price the finished goods are sold for
• Added value


  The difference between the costs of purchasing bought-in materials and the price the finished goods are sold for
• Opportunity cost


  The next best alternative forgone when a choice is made
• Entrepreneur


  Someone who takes the financial risk of starting and managing a new venture
• Social enterprise


  A business with mainly social objectives that reinvests most of its profits into benefiting society rather than maximising returns to owners
• Triple bottom line


  The three objectives of social enterprises: economic, social and environmental
• Business activity sectors


  • Primary sector (firms engaged in farming, fishing, oil extraction and all other industries that extract natural resources so that they can be used and processed by other firms)
  • Secondary sector (firms that manufacture and process products from natural resources including computers, brewing, baking, and clothes-making and construction)
  • Tertiary sector (firms that provide services to consumers and other businesses such as retailing, transport, insurance, banking, hotels, tourism and telecommunications)
• Economic sectors


  • Public sector (comprises organisations accountable to and controlled by the central or local government)
  • Private sector (comprises of businesses owned and controlled by individuals or groups of individuals)
  • Mixed economy (economic resources are owned and controlled by both private and public sector)
  • Free-market economy (economic resources are owned largely by the private sector with little state intervention)
  • Command economy (economic resources are owned, planned and controlled by the state)
• Sole trader


  A business in which one person provides the permanent finance and, in return, has full control of the business and is able to keep all of the profits
• Partnership


  A business formed by two or more people to carry on a business together, with shared capital investment and, usually, shared responsibilities
• Limited liability


  The only liability-or potential loss-a shareholder has if the company fails is the amount invested in the company, not the total wealth of the shareholder
• Private limited company


  A small to medium-sized business that is owned by shareholders who are often members of the same family; this company cannot sell shares to the general public
• Share


  A certificate confirming part ownership of a company and entitling the shareholder owner to dividends and certain shareholder rights
• Shareholder


  A person or institution owning shares in a limited company
• Public limited company


  A limited company, often a large business, with the legal right to sell shares to the general public-share prices are quoted on the national stock exchange
• Memorandum of association


  This states the name of the company, the address of the head office through which it can be contacted, the maximum share capital for which the company seeks authorisation and the declared aims of the business
• Articles of association


  This document cover the internal working and control of the business-for example, the names of the directors and the procedures to be followed at meetings will be detailed
• Franchise


  A business that uses the name, logo and trading systems of an existing successful business
• Joint venture


  Two or more businesses agree to work closely together on a particular project and create a separate business division to do so
• Holding company


  A business organisation that owns and controls a number of separate businesses, but does not unite them into one unified company
• Public corporation


  A business enterprise owned and controlled by the state-also known as nationalised industry
• Revenue


  Total value of sales made by a business in a given time period
• Capital employed


  The total value of all the long term finance invested in the business
• Market capitalisation


  The total value of a company's issued shares
• Market share


  Sales of the business as a proportion of total market sales
• Internal growth


  Business expansion using internal resources, opening new branches, hops or factories (also known as organic growth)
• Mission statement


  A statement of the business's core aims, phrased to motivate employees and stimulate interest by outside groups
• Corporate social responsibility


  This objective of businesses that consider the interests of society by taking responsibility for the impact of their decisions of customers, employees, communities and the environment
• Ethical code (code of conduct)


  A document detailing a company's rules and guidelines on staff behaviour that all employees must follow
• Stakeholders


  People or groups of people who can be affected by – and therefore have an interest in – any action by an organisation
• Stakeholder concept


  The view that businesses and their managers have responsibilities to a wide range of groups, not just shareholders
• Manager


  Responsible for setting objectives, organising resources and motivating staff to meet the organisation's aims
• Leadership


  The art of motivating a group towards achieving common objectives
• Autocratic leadership


  A style of leadership that keeps all decision-making at the centre of the organisation
• Democratic leadership


  A leadership style that allows workers' to be involved in the decision making process
• Paternalistic leadership


  A leadership style based on the approach that the manager is in a better position than the workers to know what is best for an organisation
• Laissez-faire leadership


  A leadership style that leaves much of the business decision-making to the workforce – a 'hands off' style approach and the reverse of the autocratic style
• Informal leader


  A person who has no formal authority but has the respect of colleagues and some power over them