Key terms business organisation

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Key terms business organisation

  1. 1. Business Organisation Key Terms Small Business Ownership • Sole Trader: A business owned by one person. • Partnership: An agreement between 2-20 people to jointly run a business and to share profits and risks. • Deed of Partnership: This is a legal document which shows how responsibilities, profits and workload are to be shared. • Sleeping Partner: A partner who puts in finance but does not take part in running the business. • Unlimited Liability: Responsibility for the debts of a business extends to the owner’s personal wealth. E.g their home and possessions could be used to pay off debts. Large Business Ownership • Limited Companies: A business structure which has a separate legal identity to its owners known as share- holders. • Memorandum of Association: The document which outlines the external information of the company. • Limited Liability: Responsibility for debt is limited to the amount of money put into a business. • Private Limited Company (Ltd): A company that is owned by shareholders but shares are not for sale to the general public. • Public Limited Company (PLC): company where shares may be sold to the general pub- lic through the stock exchange. • Board of Directors: Are appointed by shareholders to decide policy and run the com- pany. • Dividend: Payments made to shareholders from the profits of a company. • Franchise: The right to trade under an established name. • Franchisee: The person or organisation buying the right to operate a franchise outlet. • Franchisor: The person or organisation selling the right to operate a franchise. Business Organisation Key Terms Small Business Ownership • Sole Trader: A business owned by one person. • Partnership: An agreement between 2-20 people to jointly run a business and to share profits and risks. • Deed of Partnership: This is a legal document which shows how responsibilities, profits and workload are to be shared. • Sleeping Partner: A partner who puts in finance but does not take part in running the business. • Unlimited Liability: Responsibility for the debts of a business extends to the owner’s personal wealth. E.g their home and possessions could be used to pay off debts. Large Business Ownership • Limited Companies: A business structure which has a separate legal identity to its owners known as share- holders. • Memorandum of Association: The document which outlines the external information of the company. • Limited Liability: Responsibility for debt is limited to the amount of money put into a business. • Private Limited Company (Ltd): A company that is owned by shareholders but shares are not for sale to the general public. • Public Limited Company (PLC): company where shares may be sold to the general pub- lic through the stock exchange. • Board of Directors: Are appointed by shareholders to decide policy and run the com- pany. • Dividend: Payments made to shareholders from the profits of a company. • Franchise: The right to trade under an established name. • Franchisee: The person or organisation buying the right to operate a franchise outlet. • Franchisor: The person or organisation selling the right to operate a franchise.
  2. 2. Business Organisation Key Terms Growth • Diversification: This is when a business expands by moving into new markets. This might be achieved by a merger. • Horizontal Integration: One firm merging with another in the same industry at the same stage of produc- tion. • Lateral Integration: A firm expands by moving into a smaller, but different, area of production eg. build- ing society buys an estate agent. • Merger: The owners of two businesses agree to join their firms together to make one larger business. • Vertical Integration: One firm merges with another at a different stage in the production chain. Structure & Organisation • Business Plan: A detailed outline of a business’ intention over a period of time. • Chain of Command: A structure within a firm allowing instructions to be passed downwards through the organisation. • Objectives: Targets for a business to judge its success over a period of time. Objectives must be S.M.A.R.T • Organisational Structure: The levels of management and division of responsibilities within an organisation. • SWOT: An analysis of the strengths, weaknesses, opportunities and threats of a business. • Start up Costs: Costs paid out when setting up a new business or when expanding an existing one. Business Organisation Key Terms Growth • Diversification: This is when a business expands by moving into new markets. This might be achieved by a merger. • Horizontal Integration: One firm merging with another in the same industry at the same stage of produc- tion. • Lateral Integration: A firm expands by moving into a smaller, but different, area of production eg. build- ing society buys an estate agent. • Merger: The owners of two businesses agree to join their firms together to make one larger business. • Vertical Integration: One firm merges with another at a different stage in the production chain. Structure & Organisation • Business Plan: A detailed outline of a business’ intention over a period of time. • Chain of Command: A structure within a firm allowing instructions to be passed downwards through the organisation. • Objectives: Targets for a business to judge its success over a period of time. Objectives must be S.M.A.R.T • Organisational Structure: The levels of management and division of responsibilities within an organisation. • SWOT: An analysis of the strengths, weaknesses, opportunities and threats of a business. • Start up Costs: Costs paid out when setting up a new business or when expanding an existing one.

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