The physical and tangible goods sold to the general public – they include durable consumer goods like cars and washing machines, and non durable consumer goods like food, drinks and sweets that can be used only once
Consumer services
The non tangible products sold to the general public – they include hotel accommodation, insurance services and train journeys
Capital goods
The physical goods used by the industry to aid in production of other goods and services, such as, machines and commercial vehicles
Creating 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 benefit of the next most desired option which is given up
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 (farming, fishing, oil extraction)
Secondary sector (manufacturing and processing)
Tertiary sector (services)
Public sector
Organisations accountable to and controlled by the central or local government
Private sector
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 limitedcompany
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
Expansion of a business by means of opening new branches, shops or factories (also known as organic growth)
Mission statement
A statement of the business's core aims, phrased in a way to motivate employees and to stimulate interest by outside groups
Corporate social responsibility
This concept applies to those businesses that consider the interests of the society by taking responsibility for their impact of their decisions of customers, employees, communities and the environment
Management by objectives
A method of coordinating and motivating all staff in an organisation by dividing its overall aim into specific targets for each department, manager and employee
Ethical code (code of conduct)
A document detailing a company's rules and guidelines on staff behaviour that must be followed by all employees
Stakeholders
People or groups of people who can be affected by – and therefore have an interest in – any action by an organisation
Shareholder concept
The view that businesses and their managers have responsibilities to a wide range of groups, not just shareholders
Corporate social responsibility
The concept that accesses that business should consider the interests of society in their activities and decisions, beyond the legal obligations that they have