3. Glossary Flashcards
Capital employed
Definition
The total value of all long-term invested in the business
Market Capitalisation
Formula and definition
The total value of a company’s issued shares
Current share price * total number of sales
Market Share
Formula and definition
Sales of the business as a proportion of total market sales
sales of business / sales of market * 100
Family-owned business
Definition
Business that are actively owned and managed by at least two members of the same family.
Organic (internal) growth
Definition
Expansion of business by means of opening new branches, shops or factories.
External growth
Definition
Business expansion achieved by integrating with another business by either merger or takeover.
Merger
Definition
An agreement by representatives of two businesses to bring them together in a new combined business.
Takeover
Definition
Whem a company buys more than 50% of the shares of another company and becomes its controlling owner. (Acquisition)
Horizontal Integration
Definition
Integration with business in a same industry and at the same stage of the production
Vertical Forward integration
Definition
Integration with a business in the same industry with customer business
Backward Vertical Integration
Definition
Vertical integration with a supplier business.
Conglomerate Integration
Definition
Integration with a business in a completely different industry.
Synergy
Definition
The whole is greater then the sum of parts
Strategic alliance
Definition
Agreement between two businesses to commit resources to achieving a specific objeective while remaining independent.
