Business chapter 1

Enterprise, business structure, business size etc

factors of production

resources used by a business to produce goods or services, may include Location, labour, capital and enterprise

consumer goods

the physical and tangible goods sold to consumers that are not intended for resale. e.g a car/ food and drinks

consumer services

the non-tangible goods sold to consumer that are not inteded for resale

added value/ (adding) value

(increasing) the difference between the cost of brought in inputs and the selling price of finished goods

branding

the process of differentiating a product by developing a symbol, name, image or trademark.

multinational business

a business organization that has its headquarters in one country but with operating branches and factories in other countries

intrapreneur

a business employee who takes direct responsibility for turning an idea into a profitable new product or business venture

business plan

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

private limited company

a business that is owned by its shareholders who are often members if the same family, and cannot sell shares to the public

initial public offering

an offer to the public to buy shares in a public limited company

public limited company

a company whose shares are traded in a stock exchange and can be bought and sold by the public

public sector

organizations accountable to and by central or local government

private sector

business owned and controlled by individuals or a group of individuals

mixed economy

economic resources that are controlled and owned by the publuc and private sector

free market economy

economic resources are owned largely by the private sector with very little state intervention

command economy

economic resources are owned, planned and controlled by the state

public corporation

a business owned and controlled by the state, also known as a nationalized industry or state own enterprise

sole trader

a business in which one person provides a permanent finance and in return has full control and is able to keep all the benefits

unlimited liability

business owners have full legal responsibility for debts of the business

partnership

a business formed by two or more people to carry on a business together with shared capital investment and usually shared responsibilities

limited liability

the only liability a shareholder has if the company fails is the amount invested

share

a certificate confirming part-ownership of a company and entitling the shareholder to dividends and certain shareholder rights

shareholder

a person or institution owning shares in a limited company

memorandum of association

states the name of the company, the address of the head office through which it can be contacted, the maximum share capacity which the company seeks authorization and the declared aims of a business

articles of association

a document that covers the internal coworking and control of the business the names of directors and procedures to be followed at meetings.

cooperative

a jointly owned business operated by members for their mutual benefit, to produce goods and services

social enterprise

a business with mainly social objectives that re-invests most of its profits into benefiting society rather than maximizing returns to owners

capital employed

the total value of all long-term finance invested into a business

market capitalization

the total value of the company’s issued share

external growth

business expansion achieved by integrating with another business by either merger or takeover

merger

an agreement by owners and managers of two businesses to bring them together in a new combined business

takeover

when a company buys more than 50% of shares of another company and becomes its controlling owner

synergy

means ‘the whole is greater than sum of parts’

What are the advantages of a partnership?

Advantages of a partnership include shared resources and expertise, easier decision-making, and the ability to raise capital more easily than a sole proprietorship.

What is the significance of a limited liability structure?

A limited liability structure protects owners' personal assets from business debts, encouraging investment and entrepreneurship by reducing financial risk.

How can a business structure impact its operational efficiency?

The chosen structure affects decision-making processes, communication flow, and resource allocation, influencing overall operational efficiency and responsiveness to market changes.

How can a business transition from one ownership structure to another?

Transitioning may involve legal restructuring, obtaining necessary approvals, and communicating changes to stakeholders, ensuring compliance with regulations and minimizing disruptions.