1.2 Types of business entities Flashcards
Share
A certificate confirming part ownership of a company. Most types of share entitle shareholders to dividends from profits
Privately held company
A business that is owned by shareholders who are often members of the same family; this company cannot sell shares to the general public
Publicly held company
A limited company with the legal right to sell shares to financial institutions and the general public; its share price is quoted on the national stock exchange
Private sector
Comprises businesses owned and controlled by individuals or groups of individuals
Initial public offering (IPO)
The process of offering for sale the shares of a privately held company to financial institutions and the general public
Shareholders
Individuals or institutions that buy/own shares in a limited company
Public sector
Comprises organisations accountable to and controlled by central or local government (the state)
Mixed economy
Economic resources are owned and controlled by both private and public sectors
Free-market economy
Economic resources are owned largely by the private sector, with very little state intervention
Command economy
Economic resources are owned, planned and controlled by the state
Privatisation
The sale of public sector organisations to the private sector
Privatisation
The sale of public sector organisations to the private sector
Sole trader
A business that is exclusively owned by one person who has full control of it and is entitled to all of the profit (after tax)
Partnership
A business formed by two or more people to carry on a business together, with shared capital investment and, usually, shared responsibilities
Limited liability
The only liability - or potential loss - a shareholder (or partner in a limited liability partnership) has if the company fails is the amount invested in the company, not the total wealth of the shareholder
Social enterprise
A business with social and/or environmental objectives that reinvests most of its profits into benefiting society rather than maximising returns to owners
Social entrepreneur
A person who establishes an enterprise with the aim of solving social problems or achieving social change
Charity
An organisation set up to raise money to help people in need or to support causes that require funding
Triple bottom line
The three objectives of social enterprises: economic, social and environmental
Public corporation
A business enterprise owned and controlled by the state
cooperative
a group of people acting together to meet the common needs and aspirations of the members, sharing ownership and making decisions democratically
non-profit organisation
any organisation that has aims other than making and distributing profit and which is usually governed by a voluntary board
Non-governmental organisation (NGO)
A legally constituted body that functions independently of any government and that has a specific humanitarian or social aim/purpose
