Unit 1 What Is A Business Keywords

Question 1

Private Sector

Answer 1

The part of her economy which is run by private individuals or groups usually as a means of enterprise for profit and is not controlled by the state.

Question 2

Public Sector

Answer 2

The part of the economy concerned with providing various government services eg NHS, police

Question 3

Takeover

Answer 3

When one company acquires control of another by buying more than 50% of its share capital.

Question 4

Privatisation

Answer 4

When the state sells businesses that it has previously owned and managed to private individuals and businesses eg Royal Mail

Question 5

Market Capitalisation

Answer 5

The market value of the issued share capital in a public limited company. Calculated by multiplying the total number of issued shares by the current market price of an individual share.

Question 6

Share Price

Answer 6

The price of a single share in a company; share prices are usually determined by the supply and demand for shares.

Question 7

Legal Structure

Answer 7

Defines the ownership of the business

Question 8

Unincorporated business

Answer 8

Business that have the same legal identity as its owner(s). The owner is therefore liable for all the debts of the business (unlimited liability).

Question 9

Incorporated business

Answer 9

Registered with companies house. It has a separate legal identity from its owner(s). It is called a company.

Question 10

Company

Answer 10

Is a business which has been registered with companies house and has its own legal identity. It’s owners have limited liability. Can either be Ltd or PLC.

Question 11

Sole Trader

Answer 11

Is an individual who owns an unregistered business

Question 12

Divorce of Ownership and Control.

Answer 12

Ownership (shareholders) is separate from control (directors)

Question 13

Shareholder

Answer 13

Person who invests money into a business in exchange for a share of their profit.

Question 14

Dividend

Answer 14

A share of the profit paid to the shareholder as a reward for their investment.

Question 15

Public Limited Company

Answer 15

A registered business that is able to sell shares on the stock exchange. Minimum of 50,000 share capital, at least two shareholders and has PLC after its name. Anyone can buy shares in the business through the stock exchange

Question 16

Limited liability

Answer 16

A business owner is not responsible for the business debts. The owners potential loss is unlimited and she/he may need to sell his/her own property to pay for the business debts

Question 17

Not for profit

Answer 17

A business who’s motives are not financial gains for the owners but to provide a service/benefit society. Profits made by the business are not distributed to the owners but are kept in the business to support its aim.

Question 18

Social Enterprise

Answer 18

Another name for not for profit business eg Divine Chocolate, Eden profit

Question 19

Mutual business

Answer 19

An organisation (which is often but not always a company or a business) based on the principle of mutuality. Unlike a true cooperative members usually do not contribute to the capital of the company by direct investment but derive their right to profits and votes through there customer relationship. A mutual organisation or society isoften simply referred to as a mutal.

Question 20

Cooperative

Answer 20

A group of people acting together to meet the common needs and aspirations of its members sharing ownership and making decisions democratically. It is not about making big profits for shareholders but creating value for customers.

Question 21

Private Limited Company

Answer 21

A business registered with companies house. It can be owned by one or more shareholders who have limited liability. Shares can only be bought and sold privately (the shareholders have a ‘say’ as to whom can invest in the business.) it has Ltd after its names.