Business 3.1

• Sole trader


  business owned and operated by one person
• Partnership


  A business in which two or more persons combine their assets and skills. They are both responsible for debt
• Deed of partnership


  A binding legal document which states the formal rights of partners
• limited liability


  A form of business ownership in which the owners are liable only up to the amount of their individual investments.
• unlimited liability


  The owner is personally and fully responsible for all losses and debts of the business
• interest rate


  The cost of borrowing money for the reward for saving money expressed as a percentage
• Inflation


  The rate at which prices are generally going up
• Gross Domestic Product (GDP)


  A measurement of the total goods and services produced within a country.
• Factors of External Environment


  Political

  Economic

  Social

  Technological

  Legal

  Environment

  Competitors
• Functions of Business


  Marketing

  Operations

  Human Resources

  Finance
• Characteristics of an entrepreneur


  Motivated

  Risk taking

  Forward thinking
• Sectors of Industry


  primary, secondary, tertiary
• Resource


  Inputs that a business use to provide their goods/ services.
• enterprise


  A business
• Social enterprise

  A business that is set up to help society rather than to make a profit.
• interest


  The money paid by a bank as a reward or the cost of borrowing money.
• Four factors of production

  Land, Labour, Capital and Enterprise
• want


  an item that we desire but that is not essential to survival
• need


  Basic requirement for survival
• goods


  Physical objects such as clothes or shoes
• service


  Nonphysical items that are used or bought
• customer


  someone who pays for goods or services
• Consumer


  Someone who uses goods and services produces by a business
• business


  An organisation where goods or services are exchanges for money
• Entrepreneur


  someone who starts a business
• Private limited company (ltd)


  A company which sells shares, but only if agreed between shareholders.
• public limited company (plc)


  A company able to sell shares to the general public by being listed on the stock exchange
• Aims


  A broad statement of what a business would like to achieve over a longer period of time
• objective


  A specific target for a business to meet, which helps them to achieve their overall aims.
• Shareholders


  Someone who buys a share in a business and therefore becomes a partial owner
• Dividends


  The payments made to shareholders from the profits of a business as a reward for their investment
• market share


  The percentage of total sales in a market that one business has
• Market share= scales of individual business or product / total market sales X100


  Market share equation
• Revenue-costs


  profit
• price x quantity sold


  revenue equation
• Stakeholders


  An individual or group with an interest in a business
• When dealing with stakeholders what may a business think about?


  How they communicate with stakeholders

  What stakeholders are involved in discussions
• Examples of stakeholders


  owners, employees, customers, local community, suppliers, HMRC.
• 2 objectives a new business may have

  Survive, increase awareness
• Primary Sector


  Made up of organisations that are at the first stage of production and use of raw materials