Unit 1 Flashcards
Aims and objectives
Are the things that a business is trying to achieve, such as grow larger, or make more profit
Example sentence: The aims and objectives of the company are to expand into new markets and increase profitability.
Backwards vertical growth
When a business merges with, or takes over a business that supplies it with goods or services
Example sentence: The company achieved backwards vertical growth by acquiring its main supplier.
Business objectives
What the business aims to achieve, and include survival, profit, growth and providing a service
Business plans
A simple plan which sets out details on the products or service being sold and the market research to show there is a need for what is being sold
Capital
Money raised to start or develop a business
Deed of partnership
A document setting out the operations of the partnership, including amount of capital to be invested and how profits will be shared
Diversification
When a business merges with or takes over another business with which there is no connection
Dividend
The money paid to a shareholder from the profits of a limited company. This is the reward for the shareholder taking a risk by investing money in the company
Entrepreneur
A person who takes the risk of starting and running a business enterprise
Enterprising characteristics
The features of an entrepreneur, which include being determined, creative and having the ability to take risks
Merger
Where two or more businesses agree to join together
Operate
A term used to explain how a business works
Organic growth
Growth of a business internally by increasing sales. Sales can be increased in a number of different ways
Partnership
A business owned by between two and twenty partners
Private limited company
A smaller business owned by at least two shareholders. Shares cannot be sold to the general public. Has Ltd after its name
Profit
The difference between revenue and costs
Providing a service
Where a business makes sure that the needs of the customers are being met
Public limited company
A large business where shares can be sold to the general public enabling vast sums of money to be raised to develop the company. Has PLC after its name
Resources
The things a business sells needs to make it work, including finance, staff and materials
Satisficing
Making just enough profit to provide the business owner with a decent living. More common in smaller businesses
Shareholders
Are the owners of a private or public limited company
External growth
Growth of a business by takeover or merger
External stakeholders
The local community, suppliers, customers and Government
Finance
A business word used instead of money. The finance needed to start a business is the money needed to do so
Forwards vertical growth
When a business merges with, or takes over a business that it supplies good or services to
Growth
Where a business becomes larger, for example by making more products or opening more places where goods and services are sold
Horizontal growth
A merger or takeover where two businesses are involved in a similar operation, e.g. two electrical producers or two shops selling fashion clothing
Internal stakeholders
The business owners and people who work in the business
Limited liability
Where the responsibility for the debts of a business is limited to the amount invested by a shareholder. A feature of private and public limited companies
Limited liability partnerships
Part partnership, part limited company. Owners are members, not partners. They have limited liability and have to make their finances available to the public
Markets
Where a business sells its goods and services
Market share
The share of the total market for a product or service and is shown as a percentage
Sleeping partner
A partner who invests in a partnership but has no part in the running of the business
Sole trader
A business owned by one person
Spotting an opportunity
The ability to see the need for a particular product or service that customers need
Stakeholders
Groups or individuals who have an interest in business
Stakeholder group
Owners, employees, customers, suppliers, government, local community
Success
For a business, can take many forms, including making profit, surviving and providing a good service to customers
Survival
When a business just manages to keep going
Takeover
Where a business takes a controlling interest in another business
Unlimited liability
Where the responsibility for all the debts of a business rests with the owners of the business. A feature of sole traders and partnerships
