Chapter 8 Flashcards
Sole proprietorship
A business that is established, owned, operated, and often financed by one person
Partnership
An association of two or more individuals who agree to operate a business together for profit
General partnership
A partnership in which all partners share in the management and profits. Each partner can act on behalf of the company and has unlimited liability for all its business obligations
Limited partnership
A partnership with one or more general partners who have unlimited liability, and one or more limited partners whose liability is limited to the amount of their investment
General partners
Partners who have unlimited liability for all of the company’s business obligations and who control its operations
Limited partners
Partners whose liability for the company’s business obligations is limited to the amount of their investment. They help to finance the business but do not participate in the company’s operations.
LLP
Limited Liability Partnership:
In a limited liability partnership, each individual partner is protected from responsibility for the acts of other partners, and each party’s liability is limited to harm resulting from that party’s own actions
Corporation
A legal entity with its own rights and responsibilities separate from its shareholders, who therefore are not personally liable for the entity’s actions and liabilities
Public corporation
A corporation whose shares are widely held and available to the general public
Private corporation
A corporation whose number of shareholders is limited; there are normally restrictions on the transfer of shares to third parties, and its shares do not trade on a recognized stock exchange
Shareholders
The owners of a corporation who hold shares of stock that provide certain rights; also known as stockholders
Board of directors
A group of people elected by the shareholders to handle the overall management of a corporation, such as setting major corporate goals and policies, hiring corporate officers, and overseeing the company’s operations and finances
One-person corporation
A corporation with only one person as the shareholder; common in professional practices (e.g., medical doctors, accountants, or lawyers) and in trades (e.g., plumbers and electricians)
Crown corporations
Companies that only the provincial and federal governments can set up
Cooperative
A legal entity typically formed by people with similar interests, such as suppliers or customers, to reduce costs and gain economic power. A cooperative has limited liability, an unlimited life span, an elected board of directors, and an administrative staff; all profits are distributed to the member-owners in proportion to their contributions
Joint venture
Two or more companies that form an alliance to pursue a particular project for a specified time period
Direct selling
Direct selling is a popular marketing structure that connects the sellers “directly” with the customers
Merger
The combination of two or more companies to form a new company, which often takes on a new corporate identity
Acquisition
The purchase of one company by another company or by an investor group; the identity of the acquired company might be lost
Friendly takeover
A takeover that is supported by the management and board of directors of the targeted company
Hostile takeover
A takeover that goes against the wishes of the target company’s management and board of directors
Horizontal merger or acquisition
A merger or acquisition involving companies at the same stages of the supply chain in the same industry; done to reduce costs, expand product offerings, or reduce competition
Conglomerate merger or acqusition
A merger or acquisition involving companies in unrelated businesses; done to reduce risk
Vertical merger or acqusition
Mergers or acquisitions involving companies at different stages of the supply chain in the same industry; done to gain control over supplies of resources or to gain access to different markets
LBO
Leveraged Buyout:
A corporate takeover financed by large amounts of borrowed money; can be done by outside investors or by a company’s own management
Franchising
A form of business organization based on a business arrangement between a franchisor, which supplies the product concept, and the franchisee, which sells the goods or services of the franchisor in a certain geographic area
Franchisor
In a franchising arrangement, the company that supplies the product concept to the franchisee
Franchisee
In a franchising arrangement, the individual or company that sells the goods or services of the franchisor in a certain geographic area
Franchise agreement
A contract setting out the terms of a franchising arrangement, including the rules for operating the franchise, the services provided by the franchisor, and the financial terms. Under the contract, the franchisee is allowed to use the franchisor’s business name, trademark, and logo
