Buisness Unit 1 Key Terms

Question 1

Aims and objectives

Answer 1

Are the things that a business is trying to achieve, such as grow larger, or make more profit

Question 2

Backwards vertical growth

Answer 2

When a business merges with, or takes over a business that supplies it with goods or services

Question 3

Business objectives

Answer 3

What the business aims to achieve, and include survival, profit, growth and providing a service

Question 4

Business plans

Answer 4

A simple plan which sets out details on the products or service being sold, where the finance is to come from to start the business, how the product or service is to be marketed, and the market research to show there is a need for what is being sold

Question 5

Capital

Answer 5

Money raised to start or develop a business

Question 6

Deed of

partnership

Answer 6

A document setting out the operations of the partnership, including
amount of capital to be invested and how profits will be shared

Question 7

Diversification

Answer 7

When a business merges with or takes over another business with

which there is no connection

Question 8

Dividend

Answer 8

The money paid to a shareholder from the profits of a limited
company. This is the reward for the shareholder taking a risk by
investing money in the company

Question 9

Entrepreneur

Answer 9

A person who takes the risk of starting and running a business

enterprise

Question 10

Enterprising

characteristics

Answer 10

The features of an entrepreneur, which include being determined,
creative and having the ability to take risks

Question 11

External growth

Answer 11

Growth of a business by takeover or merger

Question 12

External

stakeholders

Answer 12

The local community, suppliers, customers and government

Question 13

Finance

Answer 13

A business word used instead of money. The finance needed to start

a business is the money needed to do so

Question 14

Forwards vertical

growth

Answer 14

When a business merges with, or takes over a business that it
supplies good or services to

Question 15

Growth

Answer 15

Where a business becomes larger, for example by making more

products or opening more places where goods and services are sold

Question 16

Horizontal growth

Answer 16

A merger or takeover where two businesses are involved in a similar
operation, e.g. two electrical producers or two shops selling fashion
clothing

Question 17

Internal

stakeholders

Answer 17

The business owners and people who work in the business

Question 18

Limited liability

Answer 18

Where the responsibility for the debts of a business is limited to the
amount invested by a shareholder. A feature of private and public
limited companies

Question 19

Limited liability

partnerships

Answer 19

Part partnership, part limited company. Owners are members, not
partners. They have limited liability and have to make their finances
available to the public

Question 20

Markets

Answer 20

Where a business sells its goods and services

Question 21

Market share

Answer 21

The share of the total market for a product or service and is shown
as a percentage

Question 22

Merger

Answer 22

Where two or more businesses agree to join together

Question 23

Operate

Answer 23

A term used to explain how a business works

Question 24

Organic growth

Answer 24

Growth of a business internally by increasing sales. Sales can be

increased in a number of different ways

Question 25

Partnership

Answer 25

A business owned by between two and twenty partners

Question 26

Private limited

company

Answer 26

A smaller business owned by at least two shareholders. Shares
cannot be sold to the general public. Has Ltd after its name

Question 27

Profit

Answer 27

The difference between revenue and costs

Question 28

Providing a

service

Answer 28

Where a business makes sure that the needs of the customers are
being met

Question 29

Public limited

company

Answer 29

A large business where shares can be sold to the general public
enabling vast sums of money to be raised to develop the company.
Has plc after its name

Question 30

Resources

Answer 30

The things a business sells needs to make it work, including finance,

staff and materials

Question 31

Satisficing

Answer 31

Making just enough profit to provide the business owner with a

decent living. More common in smaller businesses

Question 32

Shareholders

Answer 32

Are the owners of a private or public limited company

Question 33

Sleeping partner

Answer 33

A partner who invests in a partnership but has no part in the running

of the business

Question 34

Sole trader

Answer 34

A business owned by one person

Question 35

Sole trader

Answer 35

A business owned by one person

Question 36

Spotting an

opportunity

Answer 36

The ability to see the need for a particular product or service that
customers need

Question 37

Stakeholders

Answer 37

Groups or individuals who have an interest in business

Question 38

Stakeholder

group

Answer 38

Owners, employees, customers, suppliers, government, local

community

Question 39

Success

Answer 39

For a business, can take many forms, including making profit,
surviving and providing a good service to customers

Question 40

Survival

Answer 40

When a business just manages to keep going

Question 41

Takeover

Answer 41

Where a business takes a controlling interest in another business

Question 42

Unlimited liability

Answer 42

Where the responsibility for all the debts of a business rests with the
owners of the business. A feature of sole traders and partnerships