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1、Unit 1 The purpose of business activityA NEED is a good or service essential for living.A WANT is a good or service which people would like to have, but which is not essential for living, Peoples wants are unlimited.The ECONOMIC PROBLEM results from there being unlimited wants but limited resources
2、to produce the goods and services to satisfy those wants. This creates scarcity.FACTORS OF PRODUCTION are those resources needed to produce goods or services. There are four factors of production: land labour enterprise capital. They are in limited supply.SCARCITY is the lack of sufficient products
3、to fulfil the total wants of the population.OPPORTUNITY COST is the next best alternative given up by choosing another item.DIVISION OF LABOUR is when the production process is slipt up into different tasks and each worker performs one of these tasks. It is also known as SPECIALISATION.BUSINESS comb
4、ines factors of production to make products which satisfy peoples wants.BUSINESS OBJECIVES are the aims or targets that a business works towards.1. To make a profit. 2. To increase added value 3. To expand the business. 4. To achieve business survival 5.To provide a service to the community.VALUE AD
5、DED is the difference between selling price of a product or service and the cost of bought in materials and components.A STAKEHOLDER is any person or group with a direct interest in the performance of a business.Society Manager Suppliers Government Creditor Owner Workers CustomersUnit 2 Type of busi
6、ness activityThe PRIMARY SECTOR of industry extracts and uses the natural resources of the earth.The SECONDARY SECTOR of industry manufactures goods using the raw materials provided by the primary sector.The TERTIARY SECTOR of industry provides services to consumers and the other sectors of industry
7、.DE-INDUSRIALISATION occurs when there is a decline in the importance of the secondary, manufacturing sector of industry in a country.A FREE MARKET ECONOMY has no government control over factors of production. Its also known as a MARKET ECONOMY.A MONOPOLY is a business which controls all of the mark
8、et for a product.A COMMAND ECONOMY does not have a private sector as all resources are owned by the state.A MIXED ECONOMY has both a private sector and a public sector.CAPITAL is the money invested into a business by the owners.PROFIT is the surplus after total costs have been subtracted from sales
9、revenue.INTERNAL GROWTH occurs when a business expands its existing operations.EXTERNAL GROWTH is when a business takes over or merges with another business. It is often called INTEGRATION as one firm together to make one business.A MERGER is when the owners of two businesses agree to join their fir
10、ms together to make one business.A TAKEOVER or ACQUISITION is when one business buys out the owners of another business which then becomes part of the predator business.HORIZONTAL INTERGRETION is when one firm merges with or takes over another one in the same industry at the same stage of production
11、.VERTICAL INTERGRETRTION is when one firm merges with or takes over another one in the same industry but different stages of production. Vertical integration can be FORWARD or BACKWARD.CONGLOMERATE INTEGRATION is when one firm merges with or takes over a firm in a completely different industry. This
12、 is also known as DIVERSIFICATION.Unit 3 Forms of business organizationLIMITED LIABILITY means that the owners of company- shareholders cannot be held responsible for the debts of the company they own. Their liability is limited to the investment they made in buying the shares.UNLIMITED LIABILITY me
13、ans if business fails to reply business debts. The creditor will force the owner to sell all his own procession to pay the debts. A PARTNERSHIP AGREEMENT is the written and legal agreement between business partners. It is not essential for partners to have such an agreement but it is always recommen
14、ded.An UNINCORPORATED BUSINESS is one that does not have separate legal identity. Sole traders and partnerships are unincorporated business.SHAREHOLDERS are the owners of a limited company. They buy shares which represent part ownership of a company.A PROSPECTUS is a detailed document issued by the
15、directors of a company when they are converting it to public limited company status. It is an invitation to the general public to buy shares in the newly formed plc.ANNUAL GENERAL MEETING(AGM) is a legal requirement for all companies. All shareholders may attend. They vote on who they want to be on
16、the board of Directors for the coming year.DIVIDENDS are payments made to shareholders from the profits of a company after it has paid corporation tax. They are the return to shareholder for investing in the company.A FRANCHISE is a business based upon the use of the brand names, promotional logos a
17、nd trading methods of an existing successful business. The franchisee buys the license to operate this business from the franchisor.Unit 4 Government and economic influences on businessINFLATION is the increase in the average price level of goods and services over time.UNEMPLOYMENT exists when peopl
18、e who are willing and able to work cannot find a job.ECONOMIC GROWTH is when a countrys Gross Domestic Product increases more goods and services are produced than in the previous year.The BALANCE OF PAYMENTS records the difference between a countrys exports and imports.REAL INCOME is the value of in
19、come and falls when prices rise faster than money income.GROSS DOMESTIC PRODUCT (GDP) is the total value of output of goods and services in a country in one year.TRADE CYCLE: Growth Boom Recession Slump Growth BoomEXPORTS are goods and services sold from one country to other countries.IMPORTS are go
20、ods and services bought from one country to other countries.The EXCHANGE RATE is the price of one currency in terms of another, for example 1:$1.5EXCHANGE RATE DEPRECIATION is the fall in the value of a currency compared with other currencies. Balance of payment=Revenue from exports spending on impo
21、rtsDIRECT TAXES are paid directly from incomes-for example, income tax or profit tax.INDIRECT TAXES are added to the prices of goods and taxpayers pay the tax as they purchase the goods- for example, VATDISPOSABLE INCOME is the level of income a taxpayer has after paying income tax.An IMPORT TARIFF
22、is a tax on an imported product.An IMPORT QUOTA is a physical limit to the quantity of a product that can be imported.MONETARY POLICY 货币政策 is a change in interest rates by the government or central bank, e.g. the European Central Bank.EXCHANGE RATE APPRECIATION is the rise in the value of a currency
23、 compared to other currencies.SUPPLY SIDE POLICIES 供给政策 are used by government to improve the efficient supply of goods and services in their countries.CONSUMER PRETECTION:1951 Weight and Measures Act1968 Trade Description Act1974 Consumer Credit Act1979 Sales of Goods Act1987 Consumer Protection Ar
24、tMONOPOLIES- 特征: 1 Have eliminated their competitors by mergers or takeovers 2 Invent a product and prevent other firms from making it 3 Be too expensive for other firms to set up in competitionCONTROL OF MONOPLIES 1 Decision taken by monopolists which are thought to be against consumer interests-su
25、ch as trying to eliminate competitors or refusing to supply retailers which charge low prices or sell competing products. 2 Proposed mergers or takeovers that will create a monopoly.PROTECTION AGAINST UNFAIR DISCRIMINATION 1975 Sex Discrimination Act 1976 Race Relations Act 1994 Disability Discrimin
26、ation ActPROTECTION OF HEALTH AND SAFETY 1 Protect workers from dangerous machinery 2 Provide safety equipment and clothing 3 Maintain reasonable workplace temperature 4 Provide hygienic conditions and washing facilities 5 Do not insist on excessively long shifts and provide breaks in the work timet
27、able.PROTECTION AGAINST UNFAIRE DISMISSAL 1 Joining a trade union 2 Being pregnant 3 When no warnings are given before dismissalWAGE PROTECTION 1 The wage rate to be paid 2 How frequently wages will be paid 3 What deductions will be made from wages, for example, income taxAn ETHICAL DECISION is a de
28、cision taken by a manager because of the moral code observed inthat firm. This can include improving working conditions for staff beyond legal requirements, or not producing dangerous or polluting goods-even if these activities are not illegal.An INDUSTRIAL TRIBUNAL is a legal meeting which consider
29、s workers complaints of unfair dismissal or discrimination at work.An CONTACT OF EMPLOYMENT is a legal agreement between employee listing the rights and responsibilities of workers.PLANNING PERMISSION is given by a government body to allow a business to build a factory or office in a particular loca
30、tion. This permission can be refused if the site is not suitable.A DEVELOPMENT AREA is a region of a country where businesses will receive financial support to establish there. High unemployment is often a problem in these areas.Unit 5 Other external influences on businessA CONSTRAINT on a business
31、is something that limits or controls his actions or decisions.EXTERNAL CONSTRAINTS are those over which a business has no direct control.SOCIAL RESPONSIBILITY is when a business takes decisions that many benefit shareholders other than shareholders, e.g. a decision to reduce pollution of the local e
32、nvironment by using the latest and least dirty production equipment.PRESSURE GROUPS are formed by people who share a common interest and who will take action try to change government policy or business decision.COST-BENEFIT ANALYSIS is the valuation by a government agency of all external and private
33、 costs and benefits resulting from a business decision.EXTERNAL COSTS are the costs paid by the rest of society, other than the business, as a result of a business decision.EXTERNAL BENEFITS are the gains to the rest of society, other than the business, resulting from a business decision.PRIVATE COS
34、TS are the costs of a business decision actually paid for by the business.PRIVATE BENEFITS are the financial gains made by a business as a result of a business plan.SOCIAL COST is the addition of the private and external benefits of a business decision.SOCIAL BENEFIT is the addition of the private a
35、nd external benefits of a business decision.Unit 6 Business costs and revenueFIXED COSTS are costs which do not vary with the number of items sold or produced in the short term. They have to be paid whether the business is making any sales or not. They are also known as OVERHEAD COSTS.VARIABLE COSTS
36、 are costs which vary with the number of items sold or produced. They are often called DIRECT COSTS as they can be directly related to or identified with a particular product.TOTAL COSTS are fixed and variable costs combined.BREAK-EVEN CHARTS are graphs which show how costs and revenues of a busines
37、s change with sales. They show the level of sales the business must make in order to break even.The REVENUE of a business is the income during a period of time from the sale of goods or services.Total revenue= Quantity sold PriceThe BREAK-EVEN POINT is the level of sales at which Total costs = Total
38、 revenue.The CONTRIBUTION of a product is selling price less variable cost.DIRECT COSTS are those that can be directly related to or identified with a particular product or department.MARGINAL COSTS are the extra costs a business will incur by producing one more unit of output.INDIRECT COSTS are tho
39、se costs which cannot be direct related to a particular product. They are often termed OVERHEADS or OVERHEAD COSTS.AVERAGE COST PER UNIT is the total cost of production divided by total output.ECONOMIES OF SCALE are the factors that lead to a reduction of average costs as a business increases in siz
40、e. Purchasing economies 2. Marketing economies 3.Financial economies 4. Managerial economies 5. Technical economiesDISECONOMIES OF SCALE are the factors the lead to an increase in average costs as a business grows beyond a certain size. Poor communication 2. Low moraleFORECASTS are predictions of th
41、e future, for example, likely future changes in the size of the market.A TREND is an underlying movement or direction of data over time, for example, the trend of sales data may be increasing.A LINE OF BEST FIT is a line drawn through a series of points, for example, sales data, which best shows the
42、 trend of that data. It can be used to forecast results in the future.BUDGETS are plans for the future containing numerical or financial targets.Unit 6 Business costs and revenueFIXED COSTS are costs which do not vary with the number of items sold or produced in the short term. They have to be paid
43、whether the business is making any sales or not. They are also known as OVERHEAD COSTS.VARIABLE COSTS are costs which vary with the number of items sold or produced. They are often called DIRECT COSTS as they can be directly related to or identified with a particular product.TOTAL COSTS are fixed an
44、d variable costs combined.BREAK-EVEN CHARTS are graphs which show how costs and revenues of a business change with sales. They show the level of sales the business must make in order to break even.The REVENUE of a business is the income during a period of time from the sale of goods or services.Tota
45、l revenue= Quantity sold PriceThe BREAK-EVEN POINT is the level of sales at which Total costs = Total revenue.The CONTRIBUTION of a product is selling price less variable cost.DIRECT COSTS are those that can be directly related to or identified with a particular product or department.MARGINAL COSTS
46、are the extra costs a business will incur by producing one more unit of output.INDIRECT COSTS are those costs which cannot be direct related to a particular product. They are often termed OVERHEADS or OVERHEAD COSTS.AVERAGE COST PER UNIT is the total cost of production divided by total output.ECONOMIES OF SCALE are the factors that lead to a reduction of average costs as a business increases in size. Phasing economies 2. Marketing economies 3.Financial economies 4. Managerial economies 5. Technical economiesDISECONOMIES OF SCALE are the factors the lead to an increase in a