Business

• Microeconomics


  Focuses on the behavior and decisions of individual households and businesses and how they interact
• Macroeconomics


  Looks at the bigger picture and deals with questions concerning the overall economy (of one country for example) and aggregate quantities
• Functions of money


  • Medium of exchange
  • Unit of account
  • Store of value
• Supply


  The quantity of a certain good or service that is available for purchase
• Law of supply


  The higher the price that can be charged for the good or the service, the higher the supply will be
• Marginal cost


  The cost of producing an additional unit of a good or by providing an additional unit of a service
• Demand


  The quantity of a good or service that customers are willing and able to buy. Usually the higher the price is, the lower demand will be
• Market price/Equilibrium price


  Supply equals demand

  
• Market structures


  • Monopoly (1 supplier)
  • Oligopoly (several suppliers)
• Factors of production


  • Labour (all human resources)
  • Land (all natural resources)
  • Capital (resources like machinery, plant, vehicles, financial resources)
  • Entrepreneurship (which brings land, labour and capital together)
  • Knowledge and technology
• GDP


  The total monetary value of final goods and services that are produced within a country's borders in a certain time period (usually a year)
• Sole proprietorship


  A business that is owned by one person who also manages and runs the business
• Partnership


  A business that is jointly founded by two or more persons
• Corporation


  A business that is a legal entity of its own
• Market capitalisation


  The total market value of a company's (outstanding) shares (= shares currently held by all the shareholders multiplied by the current market price)
• Dividend yield


  Expresses the dividend in relation to the share price
• Price-earnings ratio (P/E ratio)

  A company's current share price relative to its earnings per share. A low P/E ratio usually indicates either that the shares are currently undervalued or that the company is thriving and earnings are high
• Bonds


  Can be regarded as a loan between investors as creditors and a corporation
• If the financial funds are used for capital expenditures

  Long-term finance is required
• If the financial funds are used for revenue expenditures


  Short-term sources can safely be used
• Marketing


  Creating value for the customer by identifying the (potential) customers' needs and wants, developing the product(s) and the product features accordingly, communicating the products and their benefits to the (potential) customers
• Marketing goals


  • Customer satisfaction
  • Creating a unique selling proposition (USP)
  • Gaining and maintaining market share
  • Maintaining or increasing sales
  • Profitability
• Customer relationship management (CRM)


  Aims at creating a long-term relationship with customers
• Market research sources


  • Primary sources (business conducts a research, tailored)
  • Secondary sources (existing research, general)
• Customer analysis


  • Who
  • What they do with it
  • Where
  • When
  • Why buy it
• Market size (or market volume)

  The total sales of a product of all the businesses in the market
• Relative market share


  Shows how a business (or one of its brands) is doing in terms of its largest competitor
• Marketing strategies


  • Mass marketing (same product to all segments)
  • Segment marketing (offering different products to one or more segments)
  • Niche marketing (focuses on particular segments of a market)

  
• Targeting


  The first step towards an effective marketing strategy
• Relaunch


  Minor changes (like different packaging, colours, etc.)
• Growth strategies


  • Market penetration (the safest, improving product or new ways of promoting)
  • Product development (little riskier)
  • Market development (businesses find new target groups, new use for product)
  • Diversification (highest risk, two unknown variables but reduce risk in long run)
• Break-even point


  The output that needs to be sold in order to "break even"
• Contribution


  The difference between selling price and variable cost per item, the number of items that it takes to cover the fixed costs

  
• Elastic demand


  The change in demand (in per cent) exceeds the price adjustment (in per cent)
• Inelastic demand


  A product cannot be easily substituted by other products
• Promotion methods


  • Advertising
  • Direct mailing
  • Personal selling
  • Sales promotions
  • Sponsorship
  • Public relations activities
• Accounting


  The aim of recording all transactions is to generate information on the financial status of the business. Statements that provide this information are called accounts
• Assets


  Things that the business owns and that are used for the business
• Liabilities


  Money that is owed to someone else
• Owner's equity


  The proportion of the assets that was NOT financed by debt, indicator of the wealth of the company