Business Chapter 2

entrepreneur

a person who has an idea for a new business, starts it up and accepts the risks of the new business venture

business plan

a written document that describes a business, its objectives, its strategies, the market it is in and its financial forecasts

capital employed

the total amount of capital invested in a business for the purpose of generating profits

internal growth

when a business expands its existing operations

external growth

when a business takes over or merges with another business, It is often called integration as one business is integrated into another one

takeover

when one business buys out the owners of another business, which then becomes part of the ‘predator’ business

merger

when the owners of two businesses agree to join their businesses together to make one business

horizontal integration

when one business merges with or takes over another one in the same industry at the same stage of production

vertical integration

when one business merges with or takes over another one in the same industry at a different stage of production

vertical forward

when a business integrates with another business which is at a later stage of production which is closer to the customer/consumer

vertical backward

when a business integrates with another business at an earlier stage of production (closer to the sources of supplies the business needs.)