Shareholder
A shareholder is someone who owns shares of a company (one or more), making them a part owner of said business
Stakeholder
Individuals or groups interested and affected by the actions of a business
Organic/Internal Growth
Internal or organic growth is when a company grows from within by reinvesting profits, selling shares and via loans
External Growth
When a business expands via other companies, such as mergers and acquisitions
Merger
A merger is when two companies come together to become one
Takeover
A takeover, which is more hostile, is when one company takes over control of another company
Horizontal Integration
This is when two companies in the same industry and the same stage of production come together.
Vertical Integration
This is when two companies in the same industry but at different stages of production come together.
Forward Vertical Integration
This is when one company mergers with another company that is closer to the tertiary stage (stage closer to the consumer). Eg: when a coffee manufacturer buys a coffee shop
Demerger
This is when a business sells off one or more of the businesses that it owns into a separate company.
Cost-plus pricing
A strategy used by businesses to set prices based on the cost of producing the product or service, plus an added markup to cover expenses and generate a profit
Sales maximisation
This is where a firm makes the maximum possible sales whilst still marking normal profits.
Sales Maximisation: AC=AR
Revenue maximisation
This is where firms focus on making the most sales revenue possible.
Revenue maximisation: MR=0
Satisficing
a decision-making process in which an individual or organisation settles for a satisfactory solution rather than striving for the optimal solution due to constraints in time, resources and information
Revenue
The amount of money a company receives for selling its goods and services.
Revenue= Price X Quantity
Average Revenue
This is the amount of money received per unit of output sold
AR= TR/Q
Marginal Revenue
This is the amount of money received from selling an extra unit of output sold
MR= ΔTR/ΔQ
Variable costs
A variable cost is a cost that changes with output.
Fixed costs
A fixed cost is a cost that does not change with output.
Total costs
This is the total cost of producing a good or service.
Total cost= total variable cost + total fixed cost
Average total costs
This is the cost of producing a single item.
Average cost= total cost/ output
Average variable and Average fixed costs formula
Average variable cost= variable cost/ output
Average fixed cost= fixed cost/ output
Marginal costs
This is the cost associated with producing an additional item
Marginal cost= Δtotal cost/ Δoutput
Explain the relationship between marginal cost and productivity
They have a negative relationship
