Chapter 2: Business Structure Flashcards
Define primary sector business
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 by other firms.
Define secondary sector business
Secondary sector business activity: firms that manufacture and process products from natural resources, including computers, brewing, baking, clothes-making and construction.
Define tertiary sector business
Tertiary sector business activity: firms that provide services to consumers and other businesses, such as retailing, transport, insurance, banking, hotels, tourism and telecommunications.
Define command economy
Command economy: economic resources are owned, planned and controlled by the state.
Define public sector
Public sector: comprises organisations accountable to and controlled by central or local government
(the state).
Define private sector
Private sector: comprises businesses owned and controlled by individuals or groups of individuals.
Define mixed economy
Mixed economy: economic resources are owned and controlled by both private and public sectors.
Define free market economy
Free-market economy: economic resources are owned largely by the private sector with very little state intervention.
Define sole trader
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.
Define partnership
Partnership: a business formed by two or more people to carry on a business together, with shared capital investment and, usually, shared responsibilities.
Define limited liability
Limited liability: the only liability–or potential loss–a shareholder has if the company fails is the amount invested in the company, not the total wealth of the shareholder.
Define private limited company
Private limited company: a small to medium-sized business that is owned by shareholders who are often members of the same family; this company cannot sell shares to the general public.
Define share
Share: a certificate confirming part ownership of a company and entitling the shareholder owner to dividends and certain shareholder rights.
Define shareholder
Shareholder: a person or institution owning shares in a limited company.
Define public limited company
Public limited company: a limited company, often a large business, with the legal right to sell shares to the general public – share prices are quoted on the national stock exchange.
Define memorandum of association
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.
Define articles of association
Articles of Association: this document covers the internal workings and control of the business – for example, the names of directors and the procedures to be followed at meetings will be detailed.
Define franchise
Franchise: a business that uses the name,logo and trading systems of an existing successful business.
Define holding company
Holding company: a business organisation that owns and controls a number of separate businesses, but does not unite them into one unified company.
Define public corporation
Public corporation: a business enterprise owned and controlled by the state – also known as nationalised industry.
Define joint venture
Joint venture: two or more businesses agree to work closely together on a particular project and create a separate business division to do so.
Define quaternary sector
Quaternary sector involves knowledge based, high value services eg. ICT, biotechnology, finance services
Define industrialization
Industrialization is the process of transforming an economy from agricultural or primary sector to manufacturing or secondary sector
Define unlimited liability
Unlimited liability is when the owners of a business have no limit on their personal financial responsibilities for debts of the business
Define Cooperative
A cooperative is a business owned and controlled by its members who share common goals and operate with democratic decision making
Define social enterprise
Social enterprise is a business that combines social or environmental objectives aiming to achieve financial sustainability while making a positive impact on the environment
