Key Terms Flashcards
Chain of Production
Stages a product goes through from raw material to finished good
Interdependence
The way in which businesses in different sectors depend on each other
De-Industrialisation
The reduction of importance in the secondary sector
Added Value
When a business increases the value of a product
Business Objectives
What the business in trying to achieve
ie Growth, Survivial, Profit
Satisficing
The business will make enough profit to meet its needs, and not as much as possible
Dividend
Payment made to shareholders from profits
Market Share
Amount of a market a business controls, %
Private Sector
Business activity owned by private individuals
Public Sector
Business activity controlled by local or national government
Stakeholders
People who have an interest in the business
Incorporated
A limited company owned by shareholders, with limited liability (owner separate from business)
Unincorporated
Has unlimited liability
Co-operatives
Trading organisation where a number of independent producers work together
Sole Proprietor
One person owns a business
Partnership
Between 2 and 20 people own a business
Unlimited Liability
Owners are responsible for all the debts
Limited Liability
Owner does not risk losing personal possessions in order to pay off debts
Bankruptcy
Affects unincorporated businesses where their liabilities are greater than their assets
Insolvency
Affects limited companies where their liabilities are greater than their assets
Ltd
A business owned by shareholders who are usually family and friends
PLC
A business owned by shareholders, who buy their shares on the stock exchange
Merger
2 or more businesses join together to make a larger business
Take-Over
One business buys control of another
Conglomerate
Merger or takeover of another business in a totally different business activity
Diversification
A process of spreading risk by reducing dependence on one product or service
Footloose
A business is able to locate anywhere it chooses
Uniform Business Rate
Tax paid by businesses to cover provision of local services
Grants
Payment of money from the government which doesn’t have to be paid back
Infrastructure
Roads, power supplies, water supplies
Economies of Scale
Increase in scale of production reduces average cost per product
Sleeping Partner
A person who invests capital but takes no active part in running a business
Deed of Partnership
Legal agreement between partners stating their responsibilities
LLP
Limited liability partnership
Registrar of Companies
Maintains records of all limited companies
Board of Directors
Elected by shareholders to run the company
AGM
Annual general meeting
When directors are elected
Managing Director
Responsible for putting into action decisions made by directors
Institutional Investors
Banks and investment companies who own a large part of a company
Franchise
Marketing arrangement that allows another business to trade in the same style as an existing business
Royalty
Payment made to franchisor based on sales and revenue of the franchise
Globalisation
The world interdependence of business activity
Multinational Company
Operates in several countries
Public Corporation
An organisation owned by the national government
ie BBC
