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Assessment D Ivan Kalaydzhiev

KAIKC03

1. Assets: Assets in economic theory mean something that is beneficial to its holder. Anything tangible or intangible that is capable of being owned or controlled to produce value and that is held to have positive economic value is considered as an asset. 2. A Balance sheet: A financial statement that summarizes a company's assets, liabilities and shareholders' equity at a specific point in time. These three balance sheet segments give investors an idea as to what the company owns and owes, as well as the amount invested by the shareholders. 3. Bureaucracy: Bureaucracy in a modern social science is defined as the administrative system of trained professionals who continuously work in accordance with certain rules. This system of administration is distinguished by its clear hierarchy of authority, rigid division of labour, written and inflexible rules, regulations and procedures. 4. Cartel: Group of firms or nations who attempt to control price or supply of a commodity through mutual restraint on production. For example, we have Cartel of tobacco growers. 5. Price Elasticity of Demand: The price of elasticity of demand measures the rate of response of quantity demanded due to a price change. Examples of goods that exhibit price elasticity of demand could be tea, coffee, sugar. 6. Economies of Scale: Achievement of lower production costs, not only through higher production volume but generally through large scale activities. Economics of scale can be internal to an organization or external. 7. Entrepreneur: Simply said, entrepreneur is someone who takes a new initiative for profit. For example Bill Gates is the most successful entrepreneurs on Earth. 8. Capitalism: Economic system based on private ownership of the factors of production employed in generation of profits. It is the oldest and most common of all economic systems and, in general, is synonymous with the free market. UK is a good example of Capitalism. 9. Globalisation: The worldwide movement toward economic, financial, trade and communications integration. The goal is to increase material wealth, goods and services. The globalisation can help a particular company to increase its sells and therefore its profits. For example, Coca Cola, McDonalds, Microsoft, Mercedes etc. These are global companies which managed to take benefit from the world globalisation.

07/07/2011 1

Assessment D Ivan Kalaydzhiev

KAIKC03

10. Horizontal integration: Basically horizontal integration means the merger of companies from the same industry, usually to reduce competition and to achieve economies of scale. In other words, it is a merger of competitors. When all producers of a good or service in a market merge, they create monopoly.

11. Vertical integration: This is a merger of two companies that operate at different stages of the production process. Foe example the merge between food producer and distribution networks or supermarkets. 12. Monopoly: Monopoly market structure is where one producer controls supply of good or service and where the entry of new producers is prevented or highly restricted. Usually monopolist firms keep prices high and do not care about customer needs. Most governments try to control monopolies by imposing price contro. For example, if the biggest brands in the fast food industry such as McDonalds, Burger King, Subway and KFC merge they will create a monopoly, therefore they will set the prices and basically this merger will destroy all competitors. 13. Oligopoly: Oligopoly is a market structure in which the production and sales in certain segments of the market is controlled by a small number of competing firms. Insignificant number of sellers is explained by the fact that it is difficult for new firms to penetrate in this market. Examples includes airline, automotive, banking and petroleum markets. 14. Outsourcing: Outsourcing is an arrangement in which one company provides services for another company that could also be or usually have been provided in-house. In some cases, the entire information management of a company is outsourced, including planning and business analysis as well as the installation, management, and servicing of the network and workstations. 15. Productivity: Productivity is a measure relating a quantity or quality of output to the inputs required to produce it. Often means labour productivity, which is can be measured by quantity of output per time spent or numbers employed. Could be measured in, for example, GBP per hour. 16. Revenue: The income generated from sale of goods or services, or any other use of capital or assets, associated with the main operations of an organization before any costs or expenses are deducted. Revenue is shown usually as the top item in an income statement from which all charges, costs, and expenses are subtracted to arrive at net income. Also called sales.

07/07/2011 2

Assessment D Ivan Kalaydzhiev

KAIKC03

17. SMEs: Small and medium enterprises Any firm from a small-office, home-office to a large corporation may be called a SME. In other words, a firm with 50 to 250 employees, annual turnover of Euro 7 to 40 million, total assets less than Euro 27 million, and not more than 25 percent ownership by a large corporation, may be classified as a SME. 18. Subsidies: Subsidy is a monetary assistance granted by a government to a person or group in support of an enterprise regarded as being in the public interest. The subsidy is usually given to remove some type of burden. 19. Trade Union: An organization whose membership consists of workers and union leaders, united to protect and promote their common interests. The principal purposes of a labour union are to negotiate wages and working condition terms, regulate relations between workers and the employer, etc. 20. Financial statement: Summary report that shows how a firm has used the funds entrusted to it by its stockholders and lenders, and what is its current financial position. The three basic financial statements are the balance sheet, income statement and cash flow statement.

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