business activity Flashcards
Aims and objectives
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
Backwards vertical growth
When a business merges with or takes over a business that supplies it with goods or services
Business plans
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
Deed of partnership
A document setting out the operations of the partnership, including the amount of capital to be invested and how profits will be shared
Diversification
When a business merges with or takes over another business with which there is no connection
Dividend
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
Enterprising characteristics
The features of an entrepreneur, which include being determined, creative, and having the ability to take risks
External growth
Growth of a business by takeover or merger
External
stakeholders
Has an interest in the business from the outside – examples include the local community, suppliers, customers, and government
Forwards vertical
growth
When a business merges with or takes over a business that it supplies goods or services to
Horizontal growth
A merger or takeover where two businesses are involved in a similar operation,
e.g. two electrical producers or two shops selling fashion
clothing
Internal
stakeholders
Interested in the business from the inside
– examples include the business owners and people who work in the business
Limited liability
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
Limited liability
partnerships
Part partnership, part limited company. Owners are members, not partners.
They have limited liability and have to make their finances available to the public
Market share
The share of the total market for a product or service and is shown as a percentage
Merger
Where two or more businesses agree to join together
Organic growth
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
Partnership
A business owned by between two and twenty partners
Private limited
company
A smaller business owned by at least two shareholders. Shares cannot be sold to the general public. Has Ltd after its name
Public limited
company
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
Shareholders
Are the part owners of a private or public limited company
Sleeping partner
A partner who invests in a partnership but has no part in the running of the business
Sole trader
A business owned by one person
Stakeholders
Groups or individuals who have an interest in business
Unlimited liability
Where the responsibility for all the debts of a business rests with the owners of the business. A feature of sole traders and partnerships
