Unit 1: Business Organization and Environment

Business Inputs: anything that goes into a business

Business Outputs: anything that is produced/offered by the business

Consumer Goods: any physical/ tangible goods sold to the regular public

Consumer Services: non-tangible goods that are sold to the public

Capital Goods: physical goods that are used to produce other goods

Primary Sector of Business: extraction of natural resources so they can be used by other companies.

Public Sector: organizations and businesses run by the local or central government

Stakeholders: groups of people that have interests/relationships with your company

Mission Statement: states the core reason(s) to why you are operating. Guides all future business actions

STEEPLE Analysis: looks at the external environment of a company through 7 lenses: social, technological, economic, environmental, political, legal and ethical

Secondary Sector of Business: manufacturing/ processing of natural resources into products

Tertiary Sector of Business: providing services to other businesses

Quaternary Sector of Business: focuses on information technology and information service providers

Throughputs: information or material that passes through the business. (input>throughputs>outputs)

Human Resources: area of the business function whose purpose is to hire, train, appraise and/or fire workers. (human capital)

Marketing: responsible for analyzing what the public wants and making sure that a product is properly prices, promoted and distributed. (selling)

Finance: responsible for monitoring the flow of finance into and out of the business. (capital)

Operations: ensures that the products are produced properly, taking care of the industries and production effectively. (processes)

Private Sector: organizations and businesses run by entrepreneurs (individuals/ groups)

Free-market Economy: economic resources are mostly run by the private sector, with very little government intervention

Mixed Economy: the economic resources are owned by both the private and public sector, with moderate interference from the government

Command Economy: economic resources are owned by the state, this type of economy is more common in communist governments

For-Profit Organizations: all profit goes to the business owners

Social Enterprise: some of the profit goes to the owners, while the rest goes towards society and social goals

Non-Profit: the company has profit, but it's all reapplied to the business, so that no one makes money off of it

Sole Trader: a business that is owned by only one person, they have 100% ownership and liability

Partnership: a business that is owned by two or more people, they all have equal ownership and liability

Limited Company (LTD): a group of people own different amounts of a company, the quantity of shares in % is proportional to their ownership and liability

Public Limited Company (PLC): company that’s listed in the stock exchange and anyone can buy shares, the quantity of shares in % is proportional to their ownership and liability

For-profit Social Enterprises: a business whose profits are mostly reinvested into itself, with some of it to the owners

Cooperatives: a group of people or businesses that join to meet the common needs and aspirations

Microfinance: very small loans by companies to smaller entrepreneurs that can’t access banks

Public-Private Partnership: involvement of both the private and public sectors in a company. Can have private sector funding, but run by the public sector, and vice-versa

Vision Statement: broad idea of where your company sees itself in the long run

Objectives: plans for how to achieve mission and vision, change occasionally

Strategies: smaller plans to achieve the objectives, usually one or a few more per year

Tactics: daily tasks to achieve the strategies and objectives, change often

Ethical Code: a document detailing a company’s rules and guidelines on staff behaviour that is followed by employees

Stakeholders: people or groups that can be affected by the action of an organization

Auditing: independent report on the impact that a business has on society

SMART Objectives: most efficient business objectives have specific, measurable, achievable, realistic and relevant, and time-specific objectives


Hierarchy of Objectives: this hierarchy splits the objectives into parts: aims, corporate objectives, divisional objectives, departmental objectives, individual targets

Internal Stakeholders: employees, labor managers, enterprise

External Stakeholders: customers, suppliers, government, banks and other creditors, pressure groups and competitors

Stakeholder Conflicts: conflicts in interest between two stakeholders

Mapping Matrix: matrix separated between two variables

Lense 1- Social: aging population, size, structure, lifestyle, age groups, education levels and culture

Lense 2- Technological: state and advancements of new technologies

Lense 3- Economic: GDP growth rate, inflation, interest rates, exchange rates and anything to do with money and the economy

Lense 4- Environmental: weather and climate, flora and sauna, pressure groups

Lense 5- Political: government’s ideology and effect on business activity

Lense 6- Legal: what laws are in place that can affect my business

Lense 7- Ethical: culture and ethical code of conduct in the area

Fishbone Diagram: defines the possible causes of an effect with the 6Ms: methods, machines, manpower, materials, measurements and mother nature

Gantt Chart: visual representation of what will happen and when

Lewin’s Force Field: analysing a situation/decision and their driving and restraining forces

Decision Tree: A diagram that sets out the option connected with a decision and the outcomes and economic returns of each

Scale of Business: determines the size of your business

Small Operations: business’ that are smaller in scale

Large Operations: business’ that are larger in scale

Economies of Scale: unit costs and fixed costs, show how much a business spends in production

Growth: A company becomes more successful and expands its operations for increasing profits

Internal Growth: opening new shops and branches on your own

External Growth: you buy other operations or merge

Backwards Vertical: buying a company that’s your supplier

Forwards Vertical: buying a company that is your consumer

Horizontal: buying a company that is your competitor

Conglomerate Diversification: buying a company from a completely different supply chain

Globalization: the interaction and integration of people, businesses’ and governments all over the world

Positive Effects of Globalization: wider availability of products, content and people. Increased competition means improvement and innovation. Specialization leads to economies of scale. Increase access to external capital. Social inequalities and human rights violations are exposed

Negative Effects of Globalization: ideological shocks are common and prove to be a great source of friction. Increased competition means higher operating risk for companies. Specialization leads to higher competition. Stakes are higher for acquiring external capital. Social inequalities and human rights violations are exploited

Multinationals: businesses that have a headquarter in one country, but are operating in other countries with branches, factories and/or stores

Positive Effects of Multinationals: access to foreign currency and further investments. Higher employment opportunities and professional development. Economic growth and increased tax revenues for the government. Increased innovation due to competition

Negative Effects of Multinationals: exploitation of the workforce with cheap labor and low quality job conditions. Pollution and environmental hazards into the local flora and fauna. Competition can drive out local players and smaller firms. Cultural appropriation or disrespect