business studies

business organisation key terms

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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.

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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.…read more

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