UNIT 1

Goods - A physical product e.g. a car, or a pair of trousers.

Services - An intangible item such as insurance or decorating.

Product - A general term to describe both goods and services.

Gross domestic product (GDP) - Measures the total value of the production of an economy (that is all a country's businesses) over a period of time, usually a year.

Mission Statement - Highlight's the business's main purpose. Used as a method of directing and stimulating the entire organisation.

Aims - Long-term plans the business has. It's corporate objectives are derived from this.

Objectives - Medium or long-term goals the business has in order to coordinate the business.

Profit - The extent of which revenue exceeds total costs incurred in producing a product over a period of time.

Cash Flow - Amount of money moving into and out of a business.

Stakeholders - Individuals or groups who are interested in the business.

Revenues - Earnings generated from the business selling products.

Fixed Costs - Costs that do not alter when the business changes its level of output.

Variable Costs - Costs that vary directly when the business changes it level of output.

Total Costs - Fixed and variable costs added together.

Average Costs - Total costs of production divided by the output, which gives the cost of a single unit.

Sole Trader - A business that is owned and managed by one persona, but may employ other people.

Unlimited Liability - When an indiviual(s) are personally responsible for the actions of their business. In case the business falls to debt, they may lose their personal assets to pay off the debt.

Company - A business organisation that has its own legal identity and has limited liabilty.

Incorporation - The process of establishing a business as a seperate legal entity.

Shareholder - An investor in and one of the owners of the company.

Limited Liability - If the company falls into debt, the personal assets of shareholders are safe.

Dividends - A percentage of the company's profits that are distributed among shareholders.

Market Capitalisation - Total value of the issued shares of a public limited company.

Takeover - When one company gains control of another by buying more than 50% of its share capital.

Privatisation - Selling businesses to private individuals and businesses.

Market Conditions - Features of a market. E.g. level of sales and the rate at which they are changing.

Demand - The amount of services or goods that consumers/organisations want, and can afford, to buy at a given price.

Real Incomes - Incomes which are adjusted for the rate of inflation to show changes in purchasing power.

Interest Rates - Price of borrowed money.

Fair Trade - Social movement that promotes fairer prices for producers of products in less-developed countries.

Sustainable Production - When the supply of a product doesn't have negative effects on the environment in the future. E.g. using renewable energy.