Definitions – Business Management

Adding value – the practice of producing a good or service that is worth more than the cost of
resources used in the production process (a positive difference between the selling price of a
product and the cost of producing the good or service)

Businesses – decision making organisations involved in the production of good and/or the
provision of services

Consumers – people or organisation that actually use a product

Customers – people or organisation that buy the product

Capital goods – physical products bought by businesses to produce other goods and/or
services

Consumer goods – products sold to the general public, rather than to other businesses

Entrepreneurs – an individual who has an idea for a new business and takes the financial risk
of starting up and managing it

Entrepreneurship – refers to the collective knowledge, skills and experiences of entrepreneurs

Goods – physical products produced and sold to customers

Inputs – resources that a business uses in the production process (labour, raw materials)

Needs – the basic necessities that a person must have to survive, including food, water,
warmth and shelter

Primary sector – businesses operating in the primary sector are involved with the extraction,
harvesting and conversion of natural resources

Production – the process of converting inputs such as land, labour and capital into saleable
goods

Quaternary sector – businesses that operate in the quaternary sector are involved in
intellectual and knowledge-based activities that generate and share information

Secondary sector – businesses that operate in the secondary sector are involved with the
construction and manufacturing of products

Services – intangible products provided by businesses

Tertiary sector – businesses that operate in the tertiary sector specialize in providing services
to the general population and other organisations

Wants – people’s desires; something they would like to have

Working capital – the money available for the daily running of the business
adding value – the positive difference between the selling price of a product and the cost of
producing the good or service

business – a decision making organization involved in the production of goods/provision of

services

entrepreneur – an individual who has an idea for a business and takes the financial risk of
starting up and managing it

profit – the positive difference between total revenue and total costs

shareholders – individuals or other business that have invested money to provide share capital
for the money

social enterprise- revenue generating businesses with social objectives at the core of their
operation
revenue generating businesses with social objectives at the core of their operation
revenue generating businesses with social objectives at the core of their operation

cooperatives – for profit social enterprises that is owned and run by their members – their
main aim is to create value for their members by operating in a sustainable way

non-profit social enterprises – businesses run in a commercial way, without profit being the
main goal

vision statement – outlines an organizations aspiration (where it wants to be in the distant

future)

mission statement – a simple declaration of the underlying purpose of an organization’s

existence and the core values

dividends – a proportion of profits that are distributed to shareholders

ethics – moral principles that guide decision making and strategies – concerned with what is
considered to be right or wrong

corporate social responsibility – the conscientious consideration of ethical and environmental

practice related to business activity

stakeholder – an individual, group or organisation with a direct involvement in the operations

and performance of a business

pressure groups –

consists of individuals with a common interest to place demands on organisation to act in a

certain way/ influence a change in their behaviour
stakeholder conflict – refers to differences in the varying needs and priorities of different
stakeholders groups of businesses