business activity

Question 1

Aims and objectives

Answer 1

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

Objectives should be SMART targets – how they will achieve their aims

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 plans

Answer 3

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 4

Deed of partnership

Answer 4

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

Question 5

Diversification

Answer 5

When a business merges with or takes over another business with which there is no connection

Question 6

Dividend

Answer 6

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 7

Enterprising characteristics

Answer 7

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

Question 8

External growth

Answer 8

Growth of a business by takeover or merger

Question 9

External

stakeholders

Answer 9

Has an interest in the business from the outside – examples include the local community, suppliers, customers, and government

Question 10

Forwards vertical

growth

Answer 10

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

Question 11

Horizontal growth

Answer 11

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 12

Internal

stakeholders

Answer 12

Interested in the business from the inside

– examples include the business owners and people who work in the business

Question 13

Limited liability

Answer 13

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 14

Limited liability

partnerships

Answer 14

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 15

Market share

Answer 15

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

Question 16

Merger

Answer 16

Where two or more businesses agree to join together

Question 17

Organic growth

Answer 17

Growth of a business internally by increasing sales. Sales can be increased in a number of different ways including opening more stores or developing new products

Question 18

Partnership

Answer 18

A business owned by between two and twenty partners

Question 19

Private limited

company

Answer 19

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

Question 20

Public limited

company

Answer 20

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 21

Shareholders

Answer 21

Are the part owners of a private or public limited company

Question 22

Sleeping partner

Answer 22

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

Question 23

Sole trader

Answer 23

A business owned by one person

Question 24

Stakeholders

Answer 24

Groups or individuals who have an interest in business

Question 25

Unlimited liability

Answer 25

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