Business 2 key terms

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Business Test 2 KEY TERMS
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Franchise Marketing arrangement not business organisation
Franchisor The established business
Franchisee The person or individual buying the franchise and the right to use products, logos and services
Royalty The payment made to a franchisor based on the profit/sales revenue of the franchise
Globalisation The worldwide interdependence of business activity
Multinational Company A company with facilities in several countries
Public Sector Owned by the local or national government
Public corporation Owned by National government
Name two advantages and disadvantages for Multinational Companies Name two advantages and disadvantages for Franchises
Name a Public Corporation BBC, NHS
Incorporation The complicated legal process of becoming a limited liability company
Registrar of Companies Person responsible in the Uk for maintaining records relating to the activities of plc and ltd.
Certificate of Incorporation Legal document issued by the Registrar of Companies allowing a business to trade as a limited liability business
Board of Directors People elected by shareholders to represent their interests
AGM ANNUAL GENERAL MEETING. held every year(among shareholders) electing board directors and the amount of dividend to be paid
Chair of the board of the directors The person who manages the board of directors
Capital Money raised through share of sales.
Issued Share Capital The amount of share capital issued to investors
Minority Shareholders Own a small percentage of company
Major Shareholders Own a large percentage of the company
Instituitonal Investors Invest money on behalf of themselves or the company. Probably own a large percentage of shares of a company
Sole Proprietor Unincorporated business owned by one person.
Start up Capital money needed to start a business
Economies of Large scale production scale of Business activity increases resulting in a reduction of average costs of production
Silent or sleeping Partner invested money in the business but does not take an active part in running it
Deed of partnership a legal agreement drawn up between the partners of the business stating the responsibilities of the partners and how profits and losses are divided, and how the business operates
LLP Limited Liability Partnership. trades as a partnership but with limited liability.
Incorporated A form of business organisation which is a separate legal entity. Limited liability. Owned by shareholders
Unincorporated Unlimited liability
Co-operatives Trading organisations where a number of independent producers work together
Sole Proprietor One person owns the business
Partnership more than one person(2-20)
Unlimited Liability Owners of the business are liable for the debts
Limited Liabilty Owners does not risk losing personal possessions in order to pay off debts
Bankruptcy Liabilities are greater than assets
LTD Owned by shareholders.
PLC Owned by shareholders . Can sell shares freely on the stock exchange.
Insolvency A limited liability company is said to be insolvent when liabilities are greater than assets
Entrepeneur A person who sees an opportunity and accepts the risks involved in running a business
Merger Two or more business join
Take over Business controls the other business
Horizontal Merger or Takeover involved in industry at same stage of production
Vertical Merger or Takeover in same industry at different stage of production
Diversification Spreading risks by reducing dependance on one particular product or service
Conglomerate Merger or takeover of another business which is involved in a different business activity
Footloose Business is able to locate anywhere
Grants Payment of money for a specific purpose
Infrastructure The name given to basic services needed by a business in order for it to operate effectively.
Business Objectives What the business is trying to achieve
Mission Statement Brief summary of the main objectives a business has
Dividend A payment made to shareholders from the profits (plc or ltd)
Market Share Amount of market that a business controls
Private Sector OWNED BY PRIVATE INDIVIDUALS e.g.- sole traders. partnerships, plc and ltd
Public Sector owned by local or national government.
Public corporation owned by national government
Stakeholders has an interest in the business
Chain of production The process of a product starting as a raw material and then being serviced in some way in the tertiary section.
Primary Sector The first stage . Involving the extraction of raw materials.
Secondary Sector Second stage. Raw materials are manufactured into finished products.
Tertiary Sector Third Stage Service is provided
Specialisation Business focuses on one particular activity
Added Value Increases vale of a product
De industrialisation The reduction of importance of the secondary sector of business activity in a country
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