1.5 Business key terms

Question 1

entrepreneur

Answer 1

an individual who sets up and runs a new business and takes on the risks accossiated with the business

Question 2

intrapreneur

Answer 2

employees who use entrepreneurial skills, without having to risk their own money, to find and develop opportunities that will have financial benefits for their employers

Question 3

profit maximisation

Answer 3

an attempt to make as much profit as possible in a given time period

Question 4

profit satisfaction

Answer 4

making enough profit to satisfy the needs of business owner(s)

Question 5

aims

Answer 5

what a business tries to achieve in the long term

Question 6

objectives

Answer 6

the goals or targets set by a business to help achieve its long term purpose

Question 7

sales maximisation

Answer 7

an attempt to sell as many goods and/or services in a given time period (to generate as much sales revenue as possible in a given time period)

Question 8

articles of association

Answer 8

a document that provides details of the internal running of a limited company

Question 9

certificate of incorporation

Answer 9

a document that declares a business is allowed to trade as a limited company

Question 10

co-operative

Answer 10

a business organisation owned by its members, who have equal voting rights

Question 11

deed of partnership

Answer 11

a binding (an agreement involving an obligation that cannot be broken) legal document that states the formal rights of partners

Question 12

franchise

Answer 12

when a franchisor grants a licence (franchise) to another business (franchisee) to allow it trade using the brand / business format

Question 13

lifestyle business

Answer 13

a business that aims to make enough money and provide flexibility needed to support a particular lifestyle for the owner

Question 14

limited company

Answer 14

a business organisation that has separate legal entity from that of its owners

Question 15

limited liability

Answer 15

a legal status which means that a business owner is is only liable for the original amount of money invested in the business

Question 16

limited partnership

Answer 16

a partnership where some members contribute capital and enjoy a share of profit, but do not participate in the running of the business
at least one partner must have unlimited liability

Question 17

unlimited liability

Answer 17

a legal status which means that the owner of a business is personally liable for all business debts

Question 18

private limited company

Answer 18

a company whose shares are not sold on the stock exchange market, but can be sold to friends and family (external source of finance)

Question 19

memorandum of association

Answer 19

a document that sets out the constitution and states key external details about a limited company
these include:
- company's name
- name of its members
- location of its registered office

Question 20

mutual organisation

Answer 20

a business owned by its members, who are customers not shareholders

Question 21

online business

Answer 21

a business that uses the global communications infrastructure of the internet as a trading base

Question 22

partnership

Answer 22

a business organisation that is usually owned by between 2-20 people

Question 23

primary sector

Answer 23

production involving the extraction of raw materials from earth

Question 24

secondary sector

Answer 24

production involving the conversion of raw materials into finished and semi-finished goods

Question 25

tertiary sector

Answer 25

the production of goods and services in the economy

Question 26

sleeping partner

Answer 26

a partner that contributes to capital ad enjoys a share of the profit, but takes no active role in running the business

Question 27

social enterprise

Answer 27

a business that trades with the objective of improving human or environmental well-being

• charities
• workers’ co-operatives

Question 28

sole trader/sole proprietor

Answer 28

a business organisation that has a single owner

Question 29

private equity company

Answer 29

a business usually owned by private individuals backed by financial institutions

Question 30

public limited company

Answer 30

a company owned by shareholders where the shares can be traded openly on the stock exchange market

Question 31

stock market

Answer 31

a market for second hand shares

Question 32

stock market flotation
or
initial public offering (IPO)

Answer 32

the process of a company going public - making shares available to the public on the stock exchange market for the first time
(from ltd to plc)

Question 33

choices

Answer 33

in business, deciding between alternative uses of resources

Question 34

opportunity cost

Answer 34

when choosing between different alternatives, the opportunity cost is the benefit lost from the next best alternative to the one that has been chosen
(represents the benefits that could have been gained by taking a different decision)

Question 35

trade-off

Answer 35

where a decision maker faces a compromise between two different alternatives - in which both cannot be achieved, having more of one thing results in having less of the other

e. g.
- choosing not to invest into proper market research in order to reduce costs, the trade off is the product being less successful as consumers needs and wants were not met adequately