Unit 3: Chapter 8-9(Types of Business Organizations, The Role of Labor)

Business Organization

An enterprise that produces goods or provides services, usually in order to make a profit.

Sole Priorietorship

A business organization owned and controlled by one person.

Limited Life

A situation where a business closes if the owner dies, retires, or leaves for some other reason.

Unlimited Liability

A business owner is responsible for all the business’s losses and debts.

Partnership

A business co-owned by two or more partners who agree on how responsibilities, profits, and losses of that business are divided.

General Partnership

Partners share management of the business and each one is liable for all business debts and losses.

Limited Partnership

At least one partner is not involved in the day-to-day running of business and is liable only for the funds he or she has invested.

Limited Liability Partnership

LLP

All partners are limited partners and not responsible for the debts and other liabilities of other partners.

Corporation

A business owned by stock- holders, who own the rights to the company’s profits but face limited liability for the company’s debts and losses.

Stock

A share of ownership in a corporation.

Dividend

Part of a corporation’s profit that is paid out to stockholders.

Public Company

Issues stock that can be publicly traded.

Private Company

Controls who can buy or sell its stock.

Bond

A contract issued by a corporation that promises to repay borrowed money, plus interest, on a fixed schedule.

Limited Liability

A business owner’s liability for debts and losses of the business is limited.

Unlimited Life

A corporation continues to exist even after an owner dies, leaves the business, or transfers his or her ownership.

Horizontal Merger

The combining of two or more companies that produce the same product or similar products.

Vertical Merger

The combining of companies involved in different steps of producing or marketing a product.

Conglomerate

A business composed of several companies, each one producing unrelated goods or services.

Multinational Corporation

A large corporation with branches in several countries.

Franchise

A business that licenses the right to sell its products in a particular area.

Franchisee

A semi- independent business that buys the right to run a franchise.