Business structure Flashcards
Definitions
Private limited company
A business that is owned by shareholders who are often members of the same family; this company cannot sell shares to the general public.
Initial public offering (IPO)
An offer to the public to buy shares in a public limited company.
Public limited company (plc)
A company whose shares are traded on a stock exchange and can be bought and sold by the public.
Primary sector business activity
Firms engaged in farming, fishing, oil extraction and all other industries that extract natural resources so that they can be used and processed.
Secondary sector business activity
Firms that manufacture and process products from natural resources, including computers, brewing, baking, clothes-making and construction.
Tertiary sector business activity
Firms providing services to consumers and other businesses, such as retailing, transport, insurance, banking, hotels and tourism.
Quaternary sector business activity
Businesses providing information services, such as computing, web design, ICT (information and communication technologies), management consultancy and R&D (research and development, particularly in scientific fields).
Public sector
Organisations accountable to and controlled by central or local government (the state).
Private sector
Businesses owned and controlled by individuals or groups of individuals.
Mixed economy
Economic resources are owned and controlled by both private and public sectors.
Free-market economy
Economic resources are owned largely by the private sector with very little state intervention.
Command economy
Economic resources are owned, planned and controlled by the state.
Public corporation
A business enterprise owned and controlled by the state-also known as a nationalised industry.
Sole trader
A business in which one person provides the permanent finance and, in return, has full control of the business and is able to keep all of the profits.
Unlimited liability
Business owners have full legal responsibility for the debts of the business.
Partnership
A business formed by two or more people to carry on a business together, with shared capital investment and, usually, shared responsibilities.
Limited liability
The potential loss-a shareholder has, if the company fails, is the amount invested back in the company, not the total wealth of the shareholder.
Share
A certificate confirming part-ownership of a company and entitling the shareholder owner to dividends and certain shareholder rights.
Shareholder
A person or institution owning shares in a limited company.
Memorandum of Association
This states the name of the company, the address of the head office through which it can be contacted, the maximum share capital for which the company seeks authorisation and the declared aims of the business.
Articles of Association.=
This document covers the internal workings and control of the business, the names of directors and the procedures to be followed at meetings.
Cooperative
A jointly owned business operated by members for their mutual benefit, to produce or distribute goods or services-as in consumers’ cooperatives or farmers’ cooperatives.
Franchise
The legal right to use the name, logo and trading systems of an existing successful business.
Franchiser
A person or business that sells the right to open stores and sell products or services, using the brand name and brand identity.
Franchisee
A person or business that buys the right from the franchiser to operate the franchise.
Joint venture
Two or more businesses agree to work closely together on particular project and create a separate business division.
Social enterprise
A business with mainly social objectives that re-invests most of its profits into benefiting society rather than maximising returns to owners.
