Types of business entities Definitions Flashcards
Private sector
the part of the economy not owned or directed by the government
Multinational company
a company that operates in at least two countries(one of which is not the company’s home country)
Profit
total revenue - total costs
Public sector
the part of the economy controlled or owned by the government
For-profit commercial enterprise
a business that earns profits which are distributed to owners or shareholders(profits may have priority over other objectives)
Sole trader
an individual who runs and owns a business alone
Unlimited liability
a situation where the owners of a business are personally responsible for all the debts of a business if it fails(the owners and the business are not legally separated)
Partnership
a business run by two or more people who share the responsibility for the business and the profits/losses
Company
a business owned by multiple shareholders who have limited liability
Shareholder
someone who owns a share of a business
Dividend
a sum of money paid regularly(usually annually) by a company to its shareholders out of its profits
Reserve
part of a company’s profits added to capital rather than paid as a dividend
Limited liability
a situation where the owners of a business are not personally responsible for the debts of the business if it fails(owners and business are legally separated)
Initial public offering(IPO)
a situation where a business sells all or part of the business to external stakeholders for the first time
Takeover
a type of acquisition where a company takes control of another company(by buying the majority of the target company’s shares). It can either be hostile or friendly(usually hostile)
Social enterprise
an organisation that has a social and/or environmental purpose at its core(it describes the primary purpose of a business, not its legal form)
For-profit social enterprise
a type of social enterprise that earns revenue and profits, but integrates social and/or environmental impact directly into its business model
Public sector for-profit social enterprise
a type of social enterprise that produces goods and services that are typically provided by the public sector
Private sector for-profit social enterprise
a type of social enterprise that produces goods and services that are typically sold in markets for a price by for-profit businesses
Cooperative
a business owned and operated by its members, who share the profits
Grant
a sum of money given by a government or other organisation for a particular purpose
Patient capital
a long-term investment where investors are prepared to ait for an extended period of time before seeing any returns
Greenwashing
the act of making a false impression or giving misleading information about how a company’s products are environmentally sound
Social washing
the act of presenting a company as socially responsible or ethical(through misleading information) despite their lack of social initiatives
Offshoring
the process in which a business moves some of its business operations to another country
Non-profit social enterprise
a type of social enterprise that produces goods and services to meet human needs, where no profits can be earned(any surpluses must be, by law, reinvested into the business)
Surplus
(specifically for non-profits)the total revenue left after total costs(it must be reinvested back into the business)
Endowment
a gift of money given to a non-profit social enterprise
Non-governmental organisation
a non-profit, private organisation which aims to benefit society and the government and operate outside of governmental control
