Types and Sizes of Businesses Flashcards
What are private sector organizations
organizations of the economy that is run by individuals and companies and is not state controlled.
Who are shareholders
A shareholder is any person, company, or institution that owns shares in a company’s stock.
What is a sole trader/proprietor
A business where only one person owns and controls the business, who has unlimited liability.
What is a partnership
a type of business organization where two or more people own the business and have unlimited liability.
What is a limited company
A type of business organization where the owners are its shareholders; with limited liability to the shareholders.
What is dividends
A share of profit of a company that is distributed to its shareholders according to the number of shares held by them.
What are Co-operatives
A firm owned, controlled and operated by a group of people; where shareholders are its members who are entitled to equal voting rights on company activities. (Eg. Amul)
What are not for profit organizations
organizations that do not have making profit as a goal but may use any profit or surplus they generate to support their aims. (Eg. Salvation army, American red cross)
What is a joint venture
Where a separate business entity is created by two or more parties. It involves sharing ownership, risks and returns of the new project for which the joint venture was set up. (Eg. Sony and Disney deal for the ‘spiderman’ movies)
What is organic growth
a firm increasing its size through investment in capital equipment or an increase labor force.
What is horizontal integration
a joining together of two or more companies in the same industry at the same stage of production. Eg. Walt Disney and Pixar animation studios
What is vertical integration
a joining together of two or more companies in the same industry at different stages of production. Eg Ikea (vertically integrated supply chain)
What is forward vertical integration
when the supplier merges with one or more of its buyers
What is backward vertical integration
where the purchaser merges with its supplier (Eg Ikea)
What is conglomerate integration
a joining together into one firm of two or more firms producing unrelated goods separate industries. Eg Google and YouTube, Walt Disney and American broadcasting company, Facebook and Oculus.
What are synergies
When two or more firms put together can lead to greater outcomes than the sum of the individual parts
What is asset stripping
The practice of buying a company cheaply and selling all the assets it owns to make a quick profit
Eg Fontainebleau Las Vegas LLC case
What is a business objective
a result that a firm aims to achieve
What does short run profit maximization imply
That business can operate even at a loss in the short run as long as it’s price is above the variable cost. In the long run, firms must cover all costs.
What is profit maximization
occurs when the difference between total revenue and total cost is at its highest; or MR=MC
What is revenue maximization
occurs when total revenue is highest and when MR=0
What is profit satisficing
making sufficient profit to satisfy the demands of owners, such as shareholders
What is sales volume maximization
occurs when the volume of sales is greatest. At the point AC=AR, TC=TR
