Business Environment Key Terms

The Basics • Consumer: A person who uses goods and services.

• Customer: A person who buys products and services.

• Market: Where buyers and sellers come together to exchange goods or services for money.

• Entrepreneur: A person who is willing to take a risk by investing money into a business, organising the re-

sources and hoping to make a profit. E.g Richard Branson.

• Factors of Production: These are the resources needed to produce goods or services. Land, Labour, Capi-

tal & Enterprise

• Needs: Goods or services essential for living.

• Wants: Goods or services which people would like to have but which are not essential for living.

• Private Sector: Businesses not owned by the state (government) but by individuals or groups of individuals.

• Public Sector: Organisations where the activities are carried out either by national or local government.

• Chain of Production: The stages through which a product will pass during production.

• Primary Sector: Industries which extract natural resources. E.g farming, oil drilling & mining.

• Secondary Sector: Industries which manufacture, assemble, process and construct goods.

• Tertiary Sector: Industries which provide services both to individuals and other sectors of industry.

Business Environment Key Terms

The Basics • Consumer: A person who uses goods and services.

• Customer: A person who buys products and services.

• Market: Where buyers and sellers come together to exchange goods or services for money.

• Entrepreneur: A person who is willing to take a risk by investing money into a business, organising the re-

sources and hoping to make a profit. E.g Richard Branson.

• Factors of Production: These are the resources needed to produce goods or services. Land, Labour, Capi-

tal & Enterprise

• Needs: Goods or services essential for living.

• Wants: Goods or services which people would like to have but which are not essential for living.

• Private Sector: Businesses not owned by the state (government) but by individuals or groups of individuals.

• Public Sector: Organisations where the activities are carried out either by national or local government.

• Chain of Production: The stages through which a product will pass during production.

• Primary Sector: Industries which extract natural resources. E.g farming, oil drilling & mining.

• Secondary Sector: Industries which manufacture, assemble, process and construct goods.

• Tertiary Sector: Industries which provide services both to individuals and other sectors of industry.

Business Environment Key Terms

International • Exchange Rate: The price or value of one currency compared to another.

• Exports: Goods and services sold to other countries.

• Imports: The purchase of goods or services from overseas.

• Globalisation: The increase in worldwide competition between businesses

• Multinational: A firm that operates in more than one country.

A Bit More • Market Leader: The number one firm in the market for a particular product

measured by its percentage share of the market.

• Market Share: The proportion of the total sales of a product that has been

gained by a brand or company.

• Maximisation: Making the most of something.

• Monopoly: A business which controls the market for a product.

• Opportunity Cost: The cost of the alternative that has to be given up when a choice is made.

• Subsidy: An amount granted to a business to help them keep trading or to keep prices down.

• Suppliers: Individuals and organisations that sell goods and services to a business.

• PEST: An analysis of the business environment by identifying political, economic, social and technological

factors.

• Economies of Scale: These are the advantages of producing large quantities of output. These should help

the firm to reduce unit costs.

• Enterprise Zone: A small area usually with high unemployment given special help by the government to at-

tract new business and industry to locate there. E.g. Kingsway Business Park.

• Infrastructure: Transport and communication networks.

Business Environment Key Terms

International • Exchange Rate: The price or value of one currency compared to another.

• Exports: Goods and services sold to other countries.

• Imports: The purchase of goods or services from overseas.

• Globalisation: The increase in worldwide competition between businesses

• Multinational: A firm that operates in more than one country.

A Bit More • Market Leader: The number one firm in the market for a particular product

measured by its percentage share of the market.

• Market Share: The proportion of the total sales of a product that has been

gained by a brand or company.

• Maximisation: Making the most of something.

• Monopoly: A business which controls the market for a product.

• Opportunity Cost: The cost of the alternative that has to be given up when a choice is made.

• Subsidy: An amount granted to a business to help them keep trading or to keep prices down.

• Suppliers: Individuals and organisations that sell goods and services to a business.

• PEST: An analysis of the business environment by identifying political, economic, social and technological

factors.

• Economies of Scale: These are the advantages of producing large quantities of output. These should help

the firm to reduce unit costs.

• Enterprise Zone: A small area usually with high unemployment given special help by the government to at-

tract new business and industry to locate there. E.g. Kingsway Business Park.

• Infrastructure: Transport and communication networks.